Health Insurance Exchange & Reform Updates

Congress returns from a two-week recess Monday, and the federal budget is again expected to quickly become the focus of attention. Just prior to recess, the House passed a budget resolution that proposes to cut the deficit with significant changes to Medicare and Medicare. The latter would essentially be transformed into a voucher program, and some members of the House have gotten an earful from constituents about the proposal during the break. President Obama has come up with his own deficit-reduction proposal, but critics say it does not go far enough. Congress can also look forward to a heated debate over raising the debt ceiling. Some are hoping the so-called “gang of six” will provide a bipartisan answer to deficit reduction, but overcoming the deep political divide within Congress remains a steep uphill climb.


With Congress on recess last week, there is no Federal report for this week.


ARIZONA: Governor Jan Brewer has vetoed a bill that would have authorized cross-border sales of Arizona health insurance in the state. In the weeks since the bill passed out of the legislature, her office was bombarded by both opponents and proponents of the bill, including state Senator Nancy Barto, the bill sponsor and chairman of the Banking and Insurance Committee, whose op-ed on the legislation ran in the Arizona Republic last week. While acknowledging the need for a competitive and vigorous insurance market in Arizona, the governor cited two reasons for the veto: First, a concern that the Department of Insurance would have limited jurisdiction over foreign carriers, potentially putting the state’s citizens at risk; and second, discomfort over the fact that foreign insurers would be able to sell policies free of the mandated benefits legislators had determined should be afforded to consumers.

CALIFORNIA: The Assembly’s Health Committee voted 12-7, along party lines, to approve Assembly Member Mike Feuer’s bill that would allow state officials to reject California health insurance rate hikes deemed “excessive” in the individual, small or large group business segments. The measure would allow state regulators to deny, approve or modify proposed increases in health insurance premiums, deductibles or copayments. In addition, the bill would allow any consumer to intervene in a regulator’s decision by filing a civil lawsuit.  Intervener fees would be paid by the insurer submitting the rate increase proposal. The bill secured the 12 votes it needed to move out of the health committee and will be debated by the full Assembly before the end of June. Similar legislation passed the Assembly last year but was defeated in the Senate. Hospitals, physician groups and business organizations have joined health insurers in opposing the bill.

COLORADO:  After a rocky start, the Colorado health insurance exchange bill passed the Senate by a vote along party lines. It is now in the Republican-controlled House where it has yet to be placed on the hearing calendar. House co-sponsor Amy Stephens is expected to seek non-substantive amendments aimed at reframing the legislative declaration portion of the bill. Rep. Stephens has publically stated her support of an exchange mechanism in the absence of a federal requirement. The goal of the amendments is to provide her with some political cover in the face of expected opposition by fellow Republicans, and the Tea Party in particular, who are opposed to any federal health reform implementation. Also, after circulating late-in-the-session drafts of legislation to bring state law into conformity with the ACA concerning preventive care and adverse determinations and appeals, the Division of Insurance has decided not to file the bills.

CONNECTICUT: Under a legislative agreement with Governor Dannel Malloy announced last week, the Connecticut health insurance SustiNet bill is going to be amended from a broad public option to a more limited version of the Connecticut Healthcare Partnership pooling bill. The compromise removes two pieces of the SustiNet proposal: opening the state employee pool to small businesses and individuals, and offering state-run insurance to the public (the public option). The compromise bill would allow municipalities and nonprofits to enter the state employee plan but not small business or individuals. It also would create a new SustiNet board that would serve in an advisory capacity to the governor on health reform efforts in the state. SustiNet supporters last week held a rally to try to revive their original bill. But the governor is unlikely to agree to a public option, given its very significant costs to the state. When the SustiNet concept was created, federal health reform had not yet passed.  Now that it has, the governor is looking toward ACA as a way to increase access to health care affordably.

MAINE: The Republican Chairs of the Insurance Committee have introduced sweeping health care reform legislation designed to increase consumer options by attracting more carriers to the state and allowing more flexibility in products. The bill would expand rating bands in the small group and individual markets, repeal the geographic access provision that requires plans to contract with virtually every provider in the state, repeal the rule mandating certain standardized benefit plans, return to a file-and-use rate review process, allow captive insurers in Maine, allow cross-border selling in Maine, and create an Individual market reinsurance mechanism to be known as the “Maine Guaranteed Access Plan.” The new reinsurance fund would levy an assessment on all covered lives to fund a portion of the premiums for high-cost claimants. The new assessment would be capped at $4 per covered life. The bill was voted “Ought to Pass” out of the Insurance Committee along party lines.

MONTANA:  Both legislative chambers passed a joint resolution that calls for an interim study on establishing a health insurance exchange. Citing the wide ranging potential implications of not creating an exchange, the resolution requests a legislative council to direct an interim joint committee to consider the feasibility of creating an exchange or participating in a regional exchange. Issues for study include: options being considered in other states; variations on exchange functions; the scope of services to be offered by the exchange; potential for an exchange to facilitate cross-border sales; impact of including an application for a Medicaid waiver to allow premium assistance inside the exchange; whether the exchange should define levels of contributions and plan criteria; feasibility of premium aggregation; and interactions with producers and effect on compensation.  The interim committee would also be charged with studying potential cost savings and the provisions that would be needed to neutralize the cost of state employees participating in the exchange. Following the study,    recommendations will be made to the legislature regarding whether the state should proceed with establishing its own exchange or joining a multi-state exchange.  Stakeholders, including health insurer representatives, will be included in the deliberations.

NEVADA: A bill that would create the Silver State Nevada Health Insurance Exchange has been referred to the Commerce, Labor and Energy Committee but is not yet scheduled for its first hearing. Concurrently, Commissioner Brett Barratt continues to host stakeholder informational meetings across the state. The vast majority of the attendees at the five meetings held to date have been brokers. On another ACA issue, the state was advised that its application for a one-year medical loss ratio (MLR) waiver has been deemed “complete” by HHS. In other business, the Speaker’s rate review bill has passed in the House and is now in the Senate. In its current form, the bill would require prior approval of rates and forms with a 30-day deemer; transparency with completed filings published on the DOI website and all of a carrier’s policies, certificates of coverage and medical loss ratio data published on its own website; public hearings at the request of consumers or insurers; and the establishment of a Consumer Advocate position to represent the public.

NEW YORK: Senate Insurance Chair Jim Seward and Senate Health Chair Kemp Hannon held a roundtable discussion on insurance exchanges last week. About 10 representatives of stakeholder organizations invited to participate and generally urged caution and called for maintaining consumer choice, not creating a new regulatory bureaucracy, including all state mandates, and not incurring additional regulatory burdens and duplications of authority.  The Senate is expected to introduce a fairly lean exchange bill, with the goal of creating a governance framework for 2011. This could take the form of a public benefit corporation or a quasi-public authority, but not a new agency or nonprofit corporation.

NORTH DAKOTA:  The legislature has passed an insurance exchange bill that is expected to be signed by Governor Jack Dalrymple.  This would be the first exchange bill to be passed by a Republican legislature and signed by a Republican governor. The purpose of the bill is to establish a framework for developing more specific policy positions and eventually an implementation plan for the exchange in North Dakota.

OKLAHOMA: A Senate bill that would create an Oklahoma health insurance exchange was filed last week shortly after Oklahoma’s Governor, Speaker of the House and President of the Senate announced an agreement to move forward on the issue. The bill would create the Health Insurance Private Enterprise Network, which would fulfill the stated purposes and functions of a federal exchange under ACA. The bill is short on details but would create a seven-member Board of Directors, including three   gubernatorial appointees (one representing carriers, one representing employers, and one representing providers). The board would also include a consumer representative (appointed by the Speaker of the House, an agent/broker (appointed by the Senate Pro Tem), the Insurance Commissioner (who also serves as Chair), and the Secretary of HHS. The Board will also appoint an executive director. The bill would require as-yet unspecified “public and private funding”, not to include the $54 million early innovator grant from the federal government. The stated goals of the Network are to promote/encourage portability of coverage; promote a competitive, market-based system that includes an aggregate premium system/defined-contribution insurance alternative; encourage carriers and providers to work together to provide quality, cost effective care; and establish a fair and impartial producer referral network for individuals and small employers. The Network would not have regulatory authority, discriminate against any qualified plan, or replace the outside market. Proponents of the bill will attempt passage before the legislature adjourns May 27.

TEXAS:  The Senate unanimously approved Sen. Jane Nelson’s bill to find extensive cost savings in Texas health insurance Medicaid program, the primary health care provider for children, the disabled and the very poor. The measure would expand Medicaid managed care into South Texas, where it has long been carved out. The move is expected to save the state $290 million over the biennium. Pulling prescription drug sales into the managed care program, the changes would require most Medicaid patients to use medicines on a state preferred drug list at a projected savings of $51 million a biennium. And, it would ensure people with disabilities receiving attendant care services at home are using a Medicaid contractor, saving an estimated $28 million a biennium. The measure also directs the comptroller to continue to collect a $5 per-person fee on patrons of strip clubs — a proposal that’s been tied up in court — until a final legal judgment has been reached. The projected cost savings have already been worked into the budget proposal Senate lawmakers are trying to bring to a vote.

VERMONT: The Senate voted 21-9 to approve an amended version of the single-payer legislation that previously passed the House on March 24. The bill will now go to a conference committee. As passed by the House, the bill would establish an exchange by 2014 that would eventually become the foundation for a single-payer system. The single-payer system, Green Mountain Care, would begin in 2017, the year when the ACA allows states to request waivers to opt out of certain requirements as long as an alternative approach would achieve the same coverage goals. The bill would permit earlier implementation of the system, upon receipt of federal approval. Other provisions include new rate review requirements. For rate increases that cumulatively would be 5 percent or greater during the plan year, health insurers would be required to submit a summary that includes a brief justification of requested rate increases, additional information for rate increases of over 10 percent, and any other information required by the insurance commissioner. Senate amendments, however, include a series of requirements that would have to be met before the Green Mountain System can be established, including a demonstration that the system would slow the growth of medical costs. Governor Peter Shumlin has indicated that he will sign either form of the legislation.

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