Week of June 27, 2011

A McKinsey Quarterly report that found 30 percent of employers were likely or highly likely to stop offering health insurance after 2014 as a result of the health care reform law has continued to generate much follow-up discussion in the past three weeks.  The debate over the results included sharply worded criticism from the White House, which led McKinsey to publish on its website follow-up information about the methodology of the survey. The McKinsey report, however, is just one of many that have examined the potential impact of the Affordable Care Act (ACA), with differing results, The Robert Wood Johnson Foundation last week released studies that show employer coverage has eroded significantly in the past decade, from 69 percent in 2000 to 61 percent in 2009, but that the ACA is expected to help reverse the trend among small employers. An Urban Institute brief released last week anticipates that the ACA will have a similarly positive impact on small businesses and their workers. 

 
 
Federal 

Vice President Biden's bipartisan group of negotiators, which has been trying to work out an agreement to raise the debt ceiling, hit a roadblock last week when key Republicans withdrew from the negotiations.  House Majority Leader Eric Cantor (R-VA) announced that he would not participate in Thursday's session and called for President Obama to resolve an apparent standoff over Democrats' demands to raise revenue as part of the agreement and Republicans' opposition to tax increases. As a result, talks have been elevated to President Obama, who has scheduled separate meetings at the White House with Senate Majority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY). Negotiations also are expected between the President and Speaker of the House John Boehner (R-OH). Prior to Thursday, Biden's group reportedly had agreed to about $1 trillion in savings, potentially impacting health care programs such as Medicare and Medicaid. It is unlikely that the President will negotiate an agreement with Republicans by the July 1 deadline that Biden's group had set for themselves. Separately, Sen. Mark Warner (D-VA) said last week that the Senate Group of Five would aim to release a deficit reduction proposal in a week or so.

States 

ARIZONA: The Department of Insurance (DOI) hosted two recent meetings related to health care reform using HHS grant funding. The first was an exchange workgroup discussion that focused on risk adjustment, transitional reinsurance and quality measures. The consensus among health plans was that existing measures of quality, such as HEDIS, NCQA and URAC, should be used to assess plans participating in an exchange. Absent additional guidance from HHS, the discussion around risk adjustment was less fruitful and will be continued in a future meeting.

The second meeting concerned rate review, providing participants with an opportunity to compare and contrast existing statutory authority and regulations in the individual and small group markets. While the individual market has a somewhat robust regulatory review scheme, the DOI currently receives a minimal amount of information on small group rate filings. The Assistant Director has voiced some concern about whether the state's process is "effective" in the context of ACA.

CALIFORNIA:  The California HealthCare Foundation has released a report that recommends an end to California's bifurcated insurance regulatory structure. Currently, the California Department of Insurance (CDI) and Department of Managed Health Care (DMHC) oversee different health insurance segments.  The authors stressed that it is "imperative" to merge oversight of health insurers because of marketplace changes mandated by ACA. The new federal government role in health insurance oversight compels California to apply the new rules consistently and uniformly across the board.  The authors also suggest that ACA will bring the products closer together, leading to increased uniformity in product design.

The report suggests criteria by which to assess health insurance regulatory reform and presents two options: 1)  consolidating into one regulatory agency, or 2) institutionalizing coordination and consistency between the two agencies. The criteria include: improving the consumer experience; ensuring transparency and accountability; ensuring consistent interpretations of federal law; evaluating potential system costs and savings; and building on the strengths of the existing regulators.  Most of Aetna's business is regulated by the CDI while most of the large CA-based health insurers and HMOs are regulated by the DMHC.

ILLINOIS: Governor Pat Quinn has announced that Department of Insurance Chief Deputy Director Jack Messmore will serve as the agency's Acting Director.  Messmore steps into the role following the departure of Michael McRaith, who will become the first director of the U.S.  Federal Insurance Office. Messmore has been with the agency for 25 years and previously served as Deputy Director, Assistant Deputy Director and Examiner-in-Charge.

MISSOURI: Senate President Pro Tem Rob Mayer has appointed an interim committee to study whether the state should follow federal guidelines and enact a health insurance exchange as mandated by the ACA. The exchange would be a quasi-governmental body through which individuals and small business could compare and buy health insurance plans. A bill creating the "Show-Me Health Insurance Exchange" cleared the House this year, with unanimous support, but died in the state Senate. Republican state Sen. Jane Cunningham denounced the legislation as a violation of Missouri law and a repeal of the will of the voters. Missourians voted in 2010 to prohibit government from forcing individuals and businesses to purchase health insurance, as required under the federal health reform law. The Senate Interim Committee on Health Insurance Exchanges will research Missouri's options regarding the establishment of a health insurance exchange. Mayer named state Sen. Scott Rupp, as chairman of the committee. Other senators named to the committee include Cunningham, Jack Goodman, Brad Lager, Rob Schaaf, Kiki Curls, and Joe Keaveny. The committee's meetings will be held in locations across the state, including St. Louis, Kansas City and Jefferson City. Dates for the meetings have yet to be announced.

NEW JERSEY:  With one week remaining before summer recess, the General Assembly passed legislation last week that Governor Chris Christie has been requesting for months to reform health and pension benefits for public employees. Thousands of union employees have filled the halls of the State House and the streets outside the building during the past week in protest but were unsuccessful in stopping the bill's progress. The reform measure will impact the state's more than 500,000 government workers and retirees. The legislation will increase public employee contributions for health insurance and pensions, create additional plan options for the State Health Benefits Plan (SHBP), suspend cost-of-living increases to retirees, raise retirement ages, and temporarily curtail unions' contract bargaining rights. To obtain the necessary Democratic votes in the Assembly, a provision that would have prohibited SHBP members from seeking medical care at out-of-state facilities was removed. The legislation requires a final concurrence vote by the Senate before moving to the governor's desk. Governor Christie indicated he will sign the bill upon final passage.

NEW YORK: The legislative session concluded late last week, four days late, without a vote in the Senate on the insurance exchange bill. The Senate declined to take up the bill despite a message of necessity from the governor, but it is not necessarily a dead issue. It is likely that an additional session will be scheduled days before the end of the year, possibly before the end of the summer. Last week, state leaders struck a compromise on a health exchange that would serve as a marketplace for individuals and small-business employees to access insurance. The Assembly approved a compromise bill that combines aspects of a state Senate proposal (a "bare bones" bill) and Gov.Cuomo 's proposal (a more extensive bill). The new bill would have put off major policy decisions, including whether the exchange would actively purchase and negotiate benefits for consumers and whether public health programs, such as Medicaid, would be part of the exchange.

In other action, the Senate passed legislation that would allow physicians to bargain collectively. The Assembly, however, did not take action, making the bill unlikely to move forward this year. A diverse coalition formed around the issue, with consumer advocates, hospitals, employers and health plans all opposed to what ultimately amounts to price-fixing. Only the State Medical Society supported the bill. The bill passed by a divided vote in the Senate, but was not taken up in the Assembly. A number of other bills passed both houses, including an amendment to the recently passed autism mandate. Under the amendment, coverage for applied behavioral analysis therapy would be limited to $45,000 per year, and the effective date of the act would be delayed one year. Also passing was legislation requiring parity coverage of orally administered chemotherapy treatments (with an Rx coverage rider) and parity for non-mail-order fertility medications.  It is likely that Governor Cuomo will sign both the autism mandate and its amendment, the oral chemotherapy bill and the exchange legislation, if and when it passes the Senate. The Senate and House also passed legislation conforming New York law to many of the ACA's market reforms, including annual and lifetime dollar limit restrictions and new requirements for external appeals. The governor is expected to sign the legislation.

OHIO:  State Republicans said last week that a group collecting signatures needed to put a constitutional amendment challenging federal health care reform on the November ballot has reached the threshold required to qualify for the ballot. Initially, the initiative was that of the Tea Party, but the Ohio Republican party decided to help get the issue on the ballot and, to this end, a joint resolution was introduced and passed in the State Senate. The initiatives are aimed at getting Republicans out to vote in November.

TEXAS: House Republicans have broken through an impasse that threatened to delay - with the special session ending Wednesday - a key health care bill. The bill, which includes $468 million in expected savings to Medicaid and other programs, got hung up on the House floor last week as House Republicans argued over language that would ban state funding for hospital districts that use tax money to pay for elective abortions. Included in 20 floor amendments added by the House, the ban was tweaked in conference committee to exempt hospitals that perform abortions when a fetus has a fatal and "irreversible abnormality." In the end, a planned vote was delayed to allow time for continued negotiations. Those talks produced an agreement to rewrite the bill to more clearly define life-threatening conditions. A revised conference committee report was distributed Friday, and the full House will try to get the bill passed before the end of the special session.