A weekly compilation from Aetna of health care-related developments in Washington, D.C. and state legislatures across the country State budget problems are so dire and rising health care costs so worrisome that some states are considering what may have been unthinkable just a year or two ago — opting out of the federal Medicaid program.

The New York Times reported last week that Texas (see below) and a handful of other states are considering doing exactly that, especially given that federal health care reform will expand (as of 2014) the number of residents who are eligible for the state-administered health care program.

In South Carolina, state officials there are considering not paying Medicaid claims as of March 2011 unless they can secure permission to run at a deficit. Some state leaders concede dropping Medicaid could have a devastating effect on their local economies, making such a course unlikely. The fact that it’s on the table, however, speaks volumes about the growing problem of runaway health care costs, and the need to develop systematic solutions in the way that the Patient Protection and Affordable Care Act (PPACA) addressed access issues.

TEXAS: Several Republican lawmakers are proposing an unprecedented solution to the state’s estimated $25 billion budget shortfall: dropping out of the federal Medicaid program. The Heritage Foundation, a conservative think tank, estimates Texas could save $60 billion between 2013 and 2019 by opting out of Medicaid and the Children’s Health Insurance Program, dropping coverage for acute care but continuing to fund long-term care services. With 3.6 million children, people with disabilities and impoverished Texans enrolled in Medicaid and CHIP, the Texas Health and Human Services Commission will release its own study on the effect of ending the state’s participation in the federal match program. Some lawmakers say not being able to reduce benefits or change eligibility to cut costs is “bankrupting our state.” State Rep. John Zerwas, an anesthesiologist who authored the bill commissioning the Medicaid study, said early indications are that dropping out of the program would have a tremendous ripple effect monetarily, and he worries about who would carry the burden of care without Medicaid’s “financial mechanism.” Currently, the Texas program costs $40 billion per biennium, with the federal government footing 60 percent of the bill. As a result of federal health care reform, millions of additional Texans will become eligible for Medicaid. Lawmakers want to examine whether Medicaid enrollees could be served more cost efficiently with better outcomes in a state-run program.

Week of November 15, 2010

3 Years and Counting – Whatever Happened to………………..7 More Indictments?

Indicted contractors not new to Valley scandals

June 05, 2007 8:18 PM

Carlyn Ray Mitchell

McALLEN — The two contractors indicted in connection with an allegedly elaborate bribery scheme involving a handful of PSJA school district officials have been implicated over the past decade in a long string of questionable contract negotiations throughout the Rio Grande Valley.

Well-known Harlingen-based insurance agent Arnulfo “Arnie” Olivarez, 57, and George Hernandez, a 50-year-old private contractor who owns an area roofing company, were both accused in a May 22 federal indictment — made public Tuesday — of allegedly bribing school board members with vacations, concert tickets and prostitutes.

The U.S. District Attorney for the Southern District of Texas says the bribes were in exchange for lucrative contracts to provide the district’s employee health insurance coverage, as well as to build new schools and other district buildings.

The federal indictment also lists seven unnamed contractors who may or may not be indicted in the future in connection with the alleged briberies.

Olivarez operates Insurance Associates of the Valley, the business address of which is listed as 521 S. 77 Sunshine Strip in Harlingen. A call to that office on Tuesday seeking comment from an attorney was not returned.

In 2006, Olivarez, a Rancho Viejo resident, ran for and lost the Texas House District 38 seat in Brownsville, the same seat state Rep. Eddie Lucio III now holds.

Last month, Hernandez was re-elected to his second term on the Donna school board, on which he serves as board president.

While the indictment states that in that role, Hernandez took an oath to “preserve, protect and defend the Constitution and laws of the United States and of the State of Texas,” the actions for which he was arrested are not connected to his position on Donna’s school board.

A woman who answered Hernandez’s home phone number Tuesday said, “We don’t have any comments right now,” and hung up.

The charges

The indictment states that between 1998 and 2001, Olivarez served as an insurance agent-of-record for the district, recommending to the board which health and life insurance bids to accept.

Then in August 2002, and again in 2003, the board awarded its health insurance contract to a provider and benefits administrator Olivarez represented.

The scope of those contracts and which insurance company received them wasn’t clear Tuesday. But insurance agents can earn thousands of dollars in commission from such contracts.

Olivarez is accused of giving PSJA school board member Raul Navarro $4,000 to pay for a band at a December 2003 reception for a Navarro family member.

The indictment against Olivarez alleges that in 2004 he provided Navarro with a Fourth-of-July weekend trip to South Padre Island.

As for Hernandez, he is accused of serving as a middleman between an unnamed contractor and district officials, distributing a total of $40,000 from the contractor to the district leaders.

Tuesday’s indictment also charges that Hernandez flew with PSJA school board member Rogelio “Roy” Rodriguez, Superintendent Arturo Guajardo and Navarro to Las Vegas in September 2003 for an Oscar De La Hoya boxing match.

It was unclear Tuesday how Hernandez may have benefited from the alleged exchanges.

Not the first time

This isn’t the first time the names of Olivarez and Hernandez, referred to in the indictment as “Contractor Defendants,” have come up in connection with suspicious public contracts in the Valley.

A 2003 lawsuit pending from the state charges Hernandez with violating the competitive bidding process in his previous role as building and grounds supervisor for Hidalgo County.

District Attorney Rene Guerra on Tuesday would only say that Hernandez got the county into a “construction mess” when the new county jail was being built.

In that case, the first architectural firm county commissioners selected in 1998 to build the new jail was Perspectiva, also known as Lopez & Lopez Architects. The firm was owned by the embattled Joe Lopez, a powerful Valley architect tied to many construction projects in the region and already indicted in connection with the larger contracts scandal that has rocked the PSJA school district for the past couple of years. Lopez was not named in Tuesday’s indictments, however.

A look at Olivarez finds his hands in the La Joya school district health insurance contract process — which has been hotly disputed.

Last fall, the district’s school board awarded its employee health insurance contract to AAG despite a claim by Blue Cross Blue Shield, which Olivarez represented, that the AAG bid was $2 million higher than Blue Cross Blue Shield’s bid.

Employers Given More Leeway to Switch Providers Under Obamacare

November 16, 2010

U.S. employers offering health insurance to workers will not lose protected status under the new healthcare law if they decide to switch healthcare plan providers, U.S. administration officials said Monday.

At issue is President Barack Obama’s pledge that people can keep their current healthcare plan if they liked it and administration officials have said the protected status aims to minimize disruption in coverage.

Under the overhaul passed earlier this year, employers must adhere to certain rules to keep special “grandfathered” status that exempts them from imposing other provisions in the law such as an appeals process and mandatory preventive care.

Any plan that made significant changes to their employees’ coverage, such as reducing workers’ benefits, increasing costs or changing health insurance carriers, would lose protection.

But officials at the U.S. Departments of Health and Human Services, Labor and the Treasury said, if an employer chooses another health insurance company to provide coverage, they can keep their protected status.

“The purpose of the grandfather regulation is to help people keep existing health plans that are working for them,” the agencies said in a statement.

“This amendment furthers that goal by allowing employers to offer the same level of coverage through a new issuer and remain grandfathered, as long as the change in issuer does not result in significant cost increases, a reduction in benefits, or other changes described in the original grandfather rule.”

The change comes after complaints that preventing companies from choosing another insurer would restrict “their ability to shop around for the best deal,” one official told reporters in a conference call speaking on background.

Health insurance providers include Aetna Inc., Cigna Corp. and UnitedHealth Group Inc., among others.

The amended rule only affects group health insurance plans, not those sold to individuals. Only a small number of employer plans are expected to be affected, officials said.

(Reporting by Susan Heavey; editing by Andre Grenon)

ING Lays Off 60 – Global Chief Resigns

ING Group has laid off 60 people at its Windsor office as part of a global reorganization in which Thomas J. McInerney, the former Aetna executive who rose to head ING’s global insurance operations, is leaving the company.

The employees being laid off were notified last week but most will be with the company until the end of the year, said Dana Ripley, a spokesman for the U.S. ING insurance unit. The cut is part of a reduction of 600 positions in the United States, including 400 layoffs and the elimination of 200 unfilled positions.

Windsor, the largest location for ING in the United States and headquarters of the U.S. retirement services business, has 1,620 employees and about 200 outside contractors, Ripley said.

ING had 2,500 local employees when the company bought Aetna’s financial services business in 2000. McInerney at the time was head of that unit, and later rose within the ING ranks to his current post as chief operating officer of ING Insurance, based in Amsterdam. He is also a member of the corporate executive board.

McInerney is being replaced by two European executives who will join the management board of the insurance business, ING said.

The changes are part of a breakup of ING, in which the corporation is spinning off its insurance operations with separate public stock offerings in the United States and Europe. ING Banking will continue to trade as the surviving corporation under the current stock, which is issued in Europe.

Catherine Smith will remain as chief executive of U.S. retirement services and the Windsor office will still be the headquarters of that operation, which is part of the insurance business.

Editor’s Note: ING is a major writer of medical stop loss insurance. Aviva may purchase the ING block.