Aetna – Weekly Update

The White House on Monday released President Obama’s newest health care reform proposal, which the President intends to use as the starting point for discussions at a bipartisan health care reform summit scheduled for Thursday. The White House says the proposal bridges the gap between the Senate and House bills and includes new provisions meant to “crack down on waste, fraud and abuse.” Among the provisions in the President’s plan: increasing the threshold for the excise tax on health plans from $23,000 to $27,500 for a family plan, and implementing the same threshold for all plans in 2018; closing the Medicare prescription drug “donut hole;” and creating a new Health Insurance Rate Authority. Close on the heels of the White House website posting, House Republican Leader John Boehner (R-OH) issued a statement that said: “The President has crippled the credibility of this week’s summit by proposing the same massive government takeover of health care based on a partisan bill the American people have already rejected. The best way to protect families and small businesses in this time of economic uncertainty is to start over with a step-by-step approach to health care reform focused on lowering costs, and that’s exactly what Republicans are fighting for.”


With Congress in recess last week, there is no federal report this week.


CALIFORNIA: The federal government has announced $101 million in grants aimed at boosting the use of health information technology in California and training more workers for health care careers. The grants will provide $38.8 million to the California Health and Human Services Agency to develop a health information exchange; $31 million to a variety of organizations statewide for the Cal-REC effort aimed at helping primary care providers adopt electronic health records; and $31.4 million to California community colleges and not-for-profit organizations to train people for health care careers. The Assembly Health committee will hold an informational hearing on February 23 to discuss premium rate increases. Anthem Blue Cross has been asked to testify at the hearing. The chair of the committee, Assembly Member Dave Jones, is expected to introduce legislation to require prior approval before health insurance premiums, co-payments, coinsurance obligations and deductibles can be increased. Similar legislation has been introduced in the past and failed to make it out of the legislature. Jones is running for State insurance Commissioner.

COLORADO: A bill has been introduced that would prohibit insurers from subrogating against liable third parties to recoup medical expenses. Initiated by the Colorado Trial Lawyers Association and supported by the governor, this proposal is anti-consumer and flies in the face of calls for more affordable insurance premiums. The proponents are focusing on the need to make the injured party “whole” by retaining as much of any applicable damage settlement or award without addressing the option of reducing attorney fees. Aetna is working with the National Association of Subrogation Professionals, business groups and other insurers to highlight the adverse impact the bill would have. Also introduced was a bill that would require the Department of Health Care Policy and Financing to create an advisory committee to make recommendations regarding the creation of an all-payer health claims database, and to appoint an executive director to establish the database if sufficient grants, gifts, and donations are received by 2012 to pay for its creation and maintenance. The database will be made available to the public, state agencies, and private entities. Aetna will provide comments based upon its experiences in other states.

CONNECTICUT: In the early rounds of Senate Insurance Committee voting, legislation that would prohibit co-pays for preventive care was defeated. However, the Chair, Sen. Joe Crisco is appealing to his fellow members to change their votes and keep the bill alive as a work in progress. In addition, “prior approval” legislation put forth by the Attorney General and the Health Care Advocate was introduced as expected after the recent media coverage of individual rate increase requests in Connecticut. The bill would require a public hearing prior to any rate approval for individual health insurance policies. It also would authorize the Healthcare Advocate (HCA) or the Attorney General (AG) or both to be a party to the hearing and allow the AG and HCA to charge the payers for any attorneys, actuaries, accountants or other experts the AG and HCA retain in relation to the hearing, at a cost of up to $200,000. The bill would also require plans to give the Commissioner of Insurance 180 days’ written notice of any proposed rate changes, with the hearing to be held no later than 120 days prior to the effective date of the change. A final determination must be issued by the Commissioner no later than 30 days after the hearing. The Commissioner may only approve an individual product rate that is “reasonable.” The bill defines “reasonable” to mean a rate that provides “a fair rate of return to the filer,” taking into account the previous 5 years’ average net income and rate of return not only for the filer, but for the industry as a whole. The bill as currently drafted is the most onerous prior approval proposal to be proposed in the Northeast states. The industry is working to defeat the bill.

GEORGIA: A hearing was held last week regarding the Governor’s proposal for a tax on health plans and hospitals in the state. Many interested parties testified, including the Georgia Association of Health Plans, in opposition to the tax. No vote was taken, and Aetna expects another hearing in two weeks. The legislature has taken a two-week recess to address the budget.

MINNESOTA: The Minnesota legislature convened for the second year of its 2009-10 biennial session on February 4. During the interim, lawmakers focused on ways to reduce the state’s anticipated $1.2 billion budget deficit and how to address cuts in General Assistance Medical Care (GAMC). Based on that work, a bonding bill to establish $1 billion in general obligation bonds and a bill related to jobs and economic development have already been introduced, as have bills related to the GAMC. As usual, several bills to mandate coverage have been introduced including autism, prosthetics, oral chemotherapy drugs on par with intravenous chemotherapy drugs, and routine patient care during clinical trials. Other bills of note include a mandatory extension of COBRA benefits, a bill allowing cross border sale of insurance and expansion of Medicaid programs. We will continue to monitor these bills and other legislative activity until the session adjourns May 16, 2010.

MICHIGAN: This week, Governor Jennifer Granholm introduced an executive order, her first executive directive, to take steps to open the state’s health insurance system to other public employees. Governor Granholm told the Office of the State Employer and the Department of Management and Budget to identify and remove any barriers to other public workers becoming part of the state’s health insurance system that could help reduce employee costs for both the state and local governments. Opening the state’s health care system was part of Ms. Granholm’s proposals to reform retirement and employee costs that she announced last month. School districts, as well as counties, cities, villages and townships, would be able to enroll their workers in the state plan, she said. All of the various state health care systems, including its PPO and health maintenance organizations, would be open to enrollment from public employees.

NEW MEXICO: New Mexico adjourned its 30-day legislative session on February 18, 2010. Two key bills headed to Governor Bill Richardson are SB 148, eliminating the use of gender as a rating factor in individual policies, and HB 12, establishing a minimum benefit ratio of 85 percent for group policies and 75 percent for individual policies less the 4 percent premium tax; resulting in 81 percent and 71 percent, respectively. The latter bills were part of the administration’s health reform package. The governor withdrew a third bill which would have required guarantee issue in the individual market. He has until March 10 to sign the bills.

TEXAS: Gov. Rick Perry, Lt. Gov. David Dewhurst and House Speaker Joe Straus have asked state agencies to identify possible budget savings that could be applied during the current two-year budget cycle. The move is in anticipation of a multi-billion-dollar budget shortfall expected when lawmakers meet in 2011 to craft the next two-year budget. Health and Human Services Executive Commissioner Thomas Suehs released options and held a hearing last week, saying he “absolutely” is concerned about the potential effect of possible cuts at health and human services agencies. However, the directive for each agency to cut budgets by 5 percent is forcing him to consider the possibility of a provider rate reduction. They total $303.5 million in state funds but would cost Texas another $238 million in federal matching funds. Doctors and advocates for lower-income Texans said cutting reimbursement rates would discourage care providers from taking new Medicaid patients. The cuts would be at least 1 percent and rise to 2 percent for some. After receiving each agency’s proposed cuts, State elected leaders will consider whether the options should be finally implemented. Aetna will continue to follow and have input on this issue as it develops.

Editor’s Note: We get daily emails from numerous insurance companies and other entities giving us continued updates on the insurance industry. This valuable information helps us keep informed and we appreciate the daily emails very much.

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