States
CALIFORNIA : Governor Arnold Schwarzenegger and legislative leaders are expected to announce a budget deal aimed at closing the state’s $26 billion budget shortfall. The deal appears to include no new taxes beyond those that were passed in February but will rely on more cuts to health care services and general government expenditures. Reports indicate the state will limit enrollment for Healthy Families – the state’s Children’s Health Insurance Program — but not eliminate the program entirely. Additional cuts to Medi-Cal have been rejected, partially due to mandatory requirements under federal law. The budget plan also is expected to shift more Medi-Cal beneficiaries into systems of care or managed care programs. This proposal has been recommended by the Governor before but rejected by legislators and consumer advocates. The Governor is recommending creating a centralized Internet-based system to manage eligibility for state-funded health care and other public assistance programs. The push to include the consolidated system is likely to require significant start-up costs but ultimately would reduce state spending by $500 million annually.
CONNECTICUT : The House of Representatives has scheduled a veto session for this week to possibly take up some of the bills vetoed by Gov. M. Jodi Rell this year. The Governor has vetoed 19 bills to date and can be overridden by a two-thirds vote in both chambers of the General Assembly. The Senate also is expected to come in today. Aetna supports the Governor’s vetoes of four health care bills: the SustiNet bill, the pooling bill, the mega-mandate bill and the anti-rescission bill. The SustiNet and the Healthcare Partnership bills would have expanded the government bureaucracy but ultimately would do little to improve health care and costs. In the case of SustiNet, full implementation would cost the state about $1 billion a year. In addition, creating an expensive framework for a state government-run health plan without the benefit of the fast-moving federal health care reforms could require the state to dismantle and overhaul any actions taken prematurely. Connecticut members of the Aetna Citizen Action Network mobilized in support of the Governor’s vetoes, contacting 188 legislators with over 1,900 letters and numerous phone calls. The 7-mandate package would raise health care costs by significantly adding to Connecticut’s already long list of mandated health care benefits, and the anti-rescission bill would increase the likelihood of insurance fraud, raising costs for everyone.
KENTUCKY : Democratic Governor Beshear is making a couple of appointments that could be aimed at changing the balance of power in the Republican-controlled State Senate. He announced the appointment of Senator Charlie Borders to the Public Service Commission and is expected to appoint Senator Dan Kelly, the Republican Majority Leader, to an open judgeship. Coupled with the retirement of Senator Gary Tapp, these appointments could potentially shift the Senate from a Republican majority to a slight Democratic majority. The gains on the Democratic side are not necessarily a given, as the open seats would be filled by special election. The Governor is trying to remove roadblocks to the implementation of the administration’s plan to add slots at racetracks.
ILLINOIS : The General Assembly has adjourned after sending Governor Pat Quinn a budget very similar to an earlier version. The Governor was able to gain a higher percentage of funding for social services (from 50 percent to over 80 percent of the 2008 allotment), and he received authority to spend an additional $1 billion at his discretion. The legislature will take 12 unpaid furlough days, which is the equivalent of a 5 percent reduction in pay. Tax issues will be taken up in the fall or in January 2010.
MASSACHUSETTS : A coalition of small business associations, chambers of commerce and the Massachusetts Association of Health Plans (MAHP) have proposed the Affordable Health Plan – a product designed for small businesses and individuals that they project would decrease premiums by up to 22 percent. The proponents admit that this proposal does not address the over utilization of services that is responsible, in part, for ever-increasing medical costs. A Massachusetts state panel is in the process of developing a long-term reform of the health care payment system. However, their recommendations, when final, may take up to five years to implement. The Affordable Health Plan approach is supported by State Senator Richard T. Moore and State Representative Harriett L. Stanley, co-chairs of the Legislature’s Joint Committee on Health Care Financing. The Affordable Health Plan would create a new product with benefits actuarially equivalent to Commonwealth Choice Bronze Level coverage, be available to all small employers (50 or fewer) and individuals, be purchased through or outside the Connector, establish a statutory rate cap on reimbursements to all providers at no more than 110 percent of Medicare for all covered services for this product other than outpatient pharmacy benefits, and establish a minimum medical loss ratio of 85 percent.
MICHIGAN : Speaker of the House Andy Dillon has unveiled a plan to cut public employee health care costs and estimates it would save the state between $800 and $900 million dollars a year. Speaker Dillon is urging immediate action to help address the state’s projected $1.7 billion deficit for 2010. The plan calls for consolidation of more than 2,000 plans that are scattered across the state to one state plan for public school employees, all units of government, state police, and the legislature — affecting an estimated 400,000 people. Beyond consolidation of health plan delivery and administration, the plan calls for quality and cost reduction measures and for standardization of benefit plan designs. The proposal would impact current employees and retirees. The plan is drawing mixed reactions and a neutral reception from the Speaker’s own Democratic caucus and the Democratic governor. The state’s largest teacher’s union, the Michigan Education Association announced immediate opposition to the plan. Mike Cox, the Michigan Attorney General, issued a press release indicating the proposal deserves serious consideration. The collateral issue of how this would affect the work being done in both chambers on individual market reform and how this proposal may align with pending federal reform are just some of the questions being raised.
NEW JERSEY : The resignation of New Jersey Department of Banking & Insurance Commissioner, Steven Goldman, became effective last week. Governor Corzine is not expected to name an acting commissioner prior to the November election. In the absence of a designated commissioner, Division of Insurance Director Douglas Wheeler will act as commissioner on insurance matters, and Division of Banking Director Terry McEwen will have oversight of banking matters.
OHIO Health Insurance : The state’s budget crisis is nearing resolution as Governor Strickland received a new budget proposal on July 14. Movement in the negotiations was achieved through the Governor’s willingness to place the contentious video lottery terminal issue on the November ballot. The conference committee report includes the following recommendations: extend coverage to dependent children up to age 28; expand the open enrollment program for individuals with a more gradual reduction in the rate cap; require a health insurer to cover a service if the Director determines it is a covered service; require a carrier to conduct an external review automatically upon notification by the Director that determination of coverage involves a medical issue; require electronic payment of electronically submitted provider claims and prohibit providers from refusing to accept electronic payments; submission to the Director of an annual report detailing components of administrative expenses by line of business; require filing of small employer premium rates; and require employers of 10 or more to offer Section 125 plans. The autism mandate that was part of the House version of the budget was removed.
PENNSYLVANIA Health Insurance : Last week the House Appropriations Committee amended and passed, on straight party lines, a bill that sets forth the House Democrats’ spending portion of the budget. As expected, it incorporates revenues based on a 2 percent tax on all managed care products. As the budget impasse continues, Aetna continues to make the case that the administration’s tax is inequitable. In other news, an oral oncology coverage bill was introduced last week. The bill is backed by the American Cancer Society in conjunction with Glaxo SmithKline, which wants enhanced coverage of its oral chemotherapy drug.
WISCONSIN : Governor Jim Doyle has signed the 2009-11 state budget, and it includes various industry-related provisions: An autism mandate with minimum benefit limits of $50,000 per year for intensive services for a minimum of four years and $25,000 per year for non-intensive services; all commercial health insurance policies and all self-insured government health plans must offer coverage for an adult, unmarried child less than 27 years old or a full-time student, regardless of age; a mandate to cover outpatient health care services, preventive care and coverage for drugs or devices approved by the FDA that are prescribed by a health care provider to prevent pregnancy; outpatient consultations, examinations, procedures and medical services that are necessary to prescribe, administer, maintain or remove the contraceptives must also be covered. Small group and individual insurance market reforms include: a mandatory uniform application for individual health insurance; limit the “look back” period for pre-existing condition exclusions to 12 months before the effective date of coverage for individual health insurance policies; a reduction of the pre-existing condition exclusion period from a maximum of two years to a maximum of 12 months; and requirements for insurers to establish an independent review for rescissions and pre-existing condition denial determinations, in addition to adverse determinations or experimental treatment denial determinations.
