Weekly Legislative Update

Healthcare and Health Insurance Policy

Hospital and Managed Care Fees

The governor's original FY 2011 budget proposed a 1.6 percent fee on hospitals and managed care providers in Georgia to be directed to the state's Medicaid program. The budget projected $345 million in new revenue from these fees and directed them to 1) increase reimbursement rates paid to hospitals and Care Management Organizations (CMO) serving Medicaid and PeachCare; 2) provide funding to cover increased costs as a result of enrollment growth in FY 2011; and 3) replace one-time funding used in FY 2010 that is no longer available in FY 2011.

For more information about the governor's Medicaid budget proposal, including a further discussion of the provider fee proposal, read the Institute's analysis from 2009 and read Senior Healthcare Analyst Timothy Sweeney's testimony before a House subcommittee examining the proposal.

On March 11th, the governor released a revised budget proposal for FY 2011 that does not include the provider fees discussed above. Instead, the governor proposes to eliminate sales tax exemptions currently enjoyed by many hospitals that generates $130 million in new revenues for FY 2011 and makes several adjustments to the Medicaid and PeachCare budgets.

The proposed budget reduces Medicaid and PeachCare spending by $144.3 million by cutting reimbursement rates paid to Medicaid and PeachCare providers by 10.25 percent (excluding nursing homes, home and community based providers, and community mental health services). In addition, the budget eliminates $70.9 million in reimbursement rate increases included in the governor's original FY 2011 proposal that would have been funded with revenue from the originally proposed provider fee.

The new proposal also generates $2.2 million in savings in the PeachCare program by increasing monthly premiums by $5 per month for those currently paying premiums (families with incomes over 150 percent of the federal poverty threshold, or about $27,500 for a family of three). In addition, the governor's proposal assumes $23.6 million in savings by eliminating certain contracts and other efficiencies in DCH.

Finally, the new proposal generates general fund savings by recognizing $84 million in savings as a result of additional federal Medicaid funds available from the Recovery Act and by redirecting $47.1 million in Tobacco Settlement funding originally allocated to the OneGeorgia Account instead to fund the Medicaid program.

Health Insurance Regulation

Senate Bill 407 would allow insurance companies licensed and regulated in other states to sell health insurance policies in Georgia. Under these proposals, out-of-state insurers are exempted from state laws governing required benefits and consumer protections that apply to health insurers licensed in Georgia. This bill was favorably reported out of the Senate Committee on Insurance and Labor on March 9th.

SB 330 would eliminate the ability of insurance companies licensed in Georgia to impose lifetime or annual caps on benefits for patients. In addition, the bill would limit the ability of insurers to rescind existing policies or deny services in the case of misstatements or omissions on insurance applications.

Finally, the bill would allow dependent children to remain on their parent's health insurance policy through the age of 25, even if the dependent is not a full-time student. (It is likely that the protections added by this bill would not be required of out-of-state policies sold in Georgia under the provisions of SB 407.) This bill was favorably reported out of the Senate Committee on Insurance and Labor on March 9th.

SB 331 would allow small employers with 2 - 50 employees to pool with other small employers to purchase group health insurance policies, and would require all health insurers in Georgia to offer plans -- often called Association Health Plans -- designed for these arrangements. This bill is currently assigned to the Senate Committee on Insurance and Labor.

SB 443 creates a legislative oversight committee to review and evaluate the care management organizations that currently operate a portion of Georgia's Medicaid program. This bill was favorably reported out of the Senate Committee on Health and Human Services on March 10th.

House Bill 1184 differs from SB 407; however, it also seeks to allow insurance products licensed and regulated in other states to be sold in Georgia. This bill represents the governor's proposal and is currently in the Life and Health Subcommittee of the House Committee on Insurance. The bill received an initial subcommittee hearing on March 11th, however no action was taken. It is scheduled for another subcommittee hearing on March 17th.

Bills Related to National Health Reform

There are several bills and resolutions that seek to assert that Georgia could exempt itself from provisions in national health insurance reform proposals that legislators find objectionable. In particular, SB 317 would make it a state law that Georgians could not be compelled to "participate in any health care system," and that the purchase or sale of health insurance products and/or direct healthcare services could not be prohibited.

In addition, SR 794, SR 795, and HR 1086 seek to accomplish the same or similar goals through the constitutional amendment process, and as a result will require two-thirds majority in both the House and Senate to reach the ballot.

Although these bills are aimed at provisions in the national health insurance reform proposals in Congress that assess penalties for individuals who do not obtain health insurance (with exceptions related to affordability) through the federal income tax system, it is unclear as to whether these bills would enable Georgians to escape these federal rules if they are enacted.

All of these Senate bills have been favorably reported from the Senate Committee on Insurance and Labor, and HR 1086 has been referred to the House Committee on Health & Human Services.