Commentary courtesy of Aetna:
Soaring costs and the slowing economy have put a damper on comprehensive health care reform efforts across the country, most notably in California earlier this year. More limited health care reforms continue unabated, of course, but the cost of comprehensive reform appears more daunting than ever. New Jersey, however, appears to be bucking the trend with a new comprehensive reform package that would cost an estimated $28.8 million in its first phase and $1 billion in its second phase. The plan (see below) includes an individual coverage requirement and creation of a new state-sponsored health plan. Supporters of the package vow the plan would be implemented without raising taxes. But an important player in the process, Governor Jon Corzine, provided the proverbial splash of cold water when he said that current budget circumstances will greatly impair the state’s ability to achieve universal coverage. The governor, however, may announce support for a portion of the proposal. Whether New Jersey is able to join the small number of states with universal health care plans remains to be seen. But State Sen. Joseph Vitale, one of the architects of the plan, has a lot in common with many state legislators across the country in believing that the state has to try. “We can’t wait for national reform,” he said.
Health care-related developments in Washington, D.C. and state legislatures across the country:
Federal
Congress was in recess last week. No report this week.
States
CONNECTICUT: Many of the health care measures approved by the Insurance Committee last week are focused on the high cost of health care. One of the committee-approved proposals would establish a wellness tax credit for small businesses; another would allow more flexibility to offer lower-cost health plans. Another proposal would allow municipalities to collaborate together to purchase health insurance. The House put forth the Healthy Steps Program, which permits the sale of reduced-mandate products, requires a cost-benefit analysis of mandates and establishes business tax credits for providing employees with health insurance. The Insurance Committee did not act on the “pay or play” health care tax bill, nor did it act on legislation that would dictate the provisions and terms included in the contracts between health insurers and physicians. Disposing of these proposals early in the session provides a boost to the business climate in Connecticut.
FLORIDA: Governor Charlie Crist’s “Cover Florida” plan for the uninsured passed out of its first committee last week and continues to move forward. Aetna has worked with the Governor’s office for several months on this proposal and has been successful in seeing a number of suggestions incorporated into this version. Health plan participation in the plan would be voluntary. Though Cover Florida still contains guaranteed issue language affecting participating plans, the plan would allow pre-existing condition exclusions as well as benefit limits.
GEORGIA: Action on the Georgia Medical Association’s prompt-pay proposal was postponed last week, but it may be acted on in committee this week. While it still contains language applying the prompt-pay requirements to self-insured plans, Aetna has been able to help reduce the bill’s impact by assuring health plans are not assessed penalties regarding prompt payment of claims unless they are below a 95 percent compliance standard. Also, the interest penalty has been reduced from 18 percent to 12 percent.
INDIANA: The Legislature adjourned the 2008 session on March 14. In recent weeks, an Assignment of Benefits bill died in the Senate. However, a “Silent PPO” bill made it through the process. After much negotiation, the industry supported the bill, which requires greater disclosure of information regarding the rental of PPO networks. The provider community attempted to include much more far-reaching, costly, and unnecessary items to the bill, but those were ultimately defeated.
MAINE: Although the legislative session does not adjourn until April 7, an agreement on Dirigo funding and individual market reform looks unlikely. It appears that three versions of a Dirigo bill will be reported out of the Insurance Committee, with none having enough support to pass. That will leave the industry with the current savings offset payment (SOP) mechanism to fund Dirigo’s Year 4. Although the Dirigo Health Agency will no doubt seek to double the SOP to the full 4 percent, it will be hard to defend. Dirigo’s enrollment has been frozen for the better part of a year, so a substantial increase in savings to the health care system based on new enrollment will be hard to justify. However, the Dirigo Health Agency still may find a way to increase the current 1.7 percent SOP, perhaps significantly.
MASSACHUSETTS: Commonwealth Choice health insurance premiums projected for this summer will average 5 percent more than last July’s rates. A state panel last week approved a contract to pay insurers about 10 percent more for each person enrolled in the subsidized insurance program starting July 1, making the lowest premiums in Commonwealth Care $39 a month to $116 a month. Insurers had asked for an increase of about 15 percent but agreed to less after weeks of negotiations. Under the contract, the state also would assume more of the financial risk if the enrollees were to use more medical care than expected. The Connector’s Executive Director John Kingsdale recently reported that more than 300,000 Massachusetts residents have enrolled who were previously uninsured. This large number suggests that the state’s official estimate of the number of uninsured (372,000) was low, so the cost of solving this bigger problem is going to be significantly more than originally thought (an estimated $869 million in FY ‘09 instead of $725 million).
NEW JERSEY: Senators Joseph Vitale and Robert Singer and Assemblymen Neil Cohen and Lou Greenwald joined David Knowlton, President of the New Jersey Health Care Quality Institute, last week in announcing a comprehensive health care reform initiative – the Vitale Plan – with the goal of achieving universal coverage in New Jersey. Phase One would feature a Kids First mandate requiring coverage of all children under 18; expansion of New Jersey Family Care to 200 percent of the federal poverty level; and small group and individual market reforms, including prior approval by the Department of Banking and Insurance for premium increases of more than 15 percent, an increase in MLR from 75 percent to 80 percent, and a requirement that insurers selling small group market products also sell in the individual market. Phase 2 would feature an individual coverage requirement, and establishment of a state-operated health insurance plan administered (ASO) by two insurance carriers. Projected costs for the first year total $28.8 million (of which $20.5 is for the children’s component), and funding is purportedly available at present in the form of surpluses totaling $180 million in the state’s Family Care and Medicaid Programs.
NEW YORK: New Governor David Paterson has asked all Commissioners and agency heads to submit their resignations. While he says this is a formality, it is unclear who will be asked to stay. There is widespread belief at the Capitol that Commissioner of Health Richard Daines will be asked to stay along with Deputy Director Dennis Whelan, but the fate of Superintendent of Insurance Eric Dinallo is less clear. Budget talks remain stalled. As expected, the Assembly is proposing the richest spending package, the Senate the leanest. Governor Paterson already has reduced the Spitzer spending proposal by $800 million. But faced with a $4.5 billion dollar deficit, the state has a deep hole to fill. Getting a state budget adopted by the April 1 deadline does not look likely.
SOUTH DAKOTA: The Legislature adjourned its 2008 session on March 17. Recent legislative action includes passage of a transparency bill, which requires licensed hospitals to report charges for any procedure for which the hospital had at least 10 cases. The data will be reported to the South Dakota Association of Healthcare Organizations, which is required to develop a web-based system for making the information available to the public via a link from the Department of Health’s website. In addition, the law requires the dissemination of information about physicians’ charges for certain outpatient procedures.
TENNESSEE: The Tennessee Medical Association this week announced it now officially supports the “Silent PPO” legislation originally introduced by some individual providers. The bill closely follows the AMA model on this issue and contains significant restrictions on insurers’ ability to operate rental networks. Aetna is working with the industry to defeat this legislation.
WASHINGTON: The Legislature last week sent to the Governor a measure to mandate a minimum level of reimbursement for contracting chiropractors. The bill would damage the ability of insurers to contract with needed health care professionals and severely limit the ability of insurers to use competitive market forces to lower health care costs. Specifically, this bill requires insurers to reimburse chiropractors no less than other providers who bill under the same billing code as chiropractors. In other words, carriers must reimburse an orthopedic surgeon no more than a chiropractor for an office visit, in spite of the differences in training, education and costs of maintaining a practice. Aetna has submitted a veto request letter to Governor Chris Gregoire. The Governor has until April 5 to sign or veto the bill.
