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Weekly Health Policy Update: Details Released on ACA Uninsured Penalties

Weekly Health Care Wrap-Up 

Slow Week in Washington as Election Recess Approaches

It was another slow week in Washington, DC with Congress counting down the days until the Election recess.  The Senate is expected to vote on the House-passed Continuing Resolution (CR) late tonight (Friday), wrapping up the one item keeping Congress in town.  Congress is currently expected to return to Washington, DC the week following the November 6 election.

Energy and Commerce Approves “Broker Bill”

The House Committee on Energy and Commerce on Thursday voted 26-14 to approve H.R. 1206, the “Access to Professional Health Insurance Advisors Act of 2011,” otherwise known as the “broker bill.”  The bill, which has been a top priority for insurance brokers since the passage of the Affordable Care Act (ACA), would remove the classification of brokers as an “administrative cost,” for the purposes of minimum loss ratio calculations.  In addition, the bill requires the Secretary of Health and Human Services (HHS), when a state requests an adjustment of a medical loss ratio, to defer to the state’s findings and determinations as to whether enforcing the required medical loss ratio (MLR) may destabilize the individual or small group markets. The bill has yet to be considered by the full House of Representatives. While companion legislation exists in the Senate, it is likely to have a more difficult road to passage in the Democrat-controlled upper chamber.

In general, supporters of the ACA have opposed the legislation, saying it would weaken one of the law’s most prominent consumer protection provisions.  According to a report released by the Consumers Union, this year’s MLR rebates would have been cut in half had the legislation been in place.

CBO Releases Updated ACA Penalty Estimates

The Congressional Budget Office released a revised version of their April 2010 report detailing the penalties for being uninsured under Affordable Care Act (ACA).  The report estimates that 6 million people will face a penalty for being uninsured in 2016 and that the penalties on that group will total about $7 billion in 2016 and $8 billion in subsequent years.   These figures represent increases from the 2010 CBO report, with two million more people expected to pay an additional $3 billion per year.


From the States

For full coverage of state exchange activities, check out this week’s State of the States: Health Insurance Exchange Developments here.

Indiana.  A new report by Milliman reviews the impact of the ACA on Indiana’s Medicaid program and budget, comparing the costs with and without an expansion of the program.  The report concludes that the expansion would cost approximately $2 billion between 2014 and 2020.  Without the expansion, Milliman estimates that the state will see Medicaid spending increase about $611 million as a result of  the individual mandate.  Read more here.

Oklahoma.  Oklahoma Attorney General Scott Pruitt revised his lawsuit against the ACA this week to challenge the IRS rule that allows individuals purchasing insurance through the Federally Facilitated Exchange (FFE) to receive tax credit subsidies. The ruling by the IRS to allow the tax credits to be accessed through the FFE has also been the subject of several hearings in the House of Representatives. Find more on the hearings here and here.

Health Insurance Exchanges: State of the States update

With just a little over 55 days until the November 16 deadline for states to declare their exchange plans to HHS, there was varied progress in the states this week and an interesting report at the federal level on the number of Americans who could end up paying penalties for not buying health insurance. Let’s start this week in Washington, DC.

This week, the Congressional Budget Office (CBO) released a report showing that 6 million Americans, up from a previous estimate of 4 million, could end up paying penalties for not having insurance by 2016. While the optional Medicaid expansion figured into the new calculations, the CBO wrote that the rise was primarily a result of its view that a higher unemployment rate and lower wages will persist.

In Kentucky, Governor Steve Beshear (D) moved the state’s planning progress forward, while state lawmakers voiced their opposition. Earlier this week, Governor Beshear appointed 19 members to the Health Benefit Exchange Board. The list of appointees includes representatives from the state’s major hospitals, insurers and patient advocate groups. Yet, some Republican lawmakers remain opposed to the creation of an exchange. At a meeting of the interim Joint Health and Welfare Committee on Wednesday, state Senator David Givens (R) introduced a motion stating that Governor Beshear had overstepped his authority by creating the Kentucky Health Benefit Exchange. Lawmakers on both sides of the aisle went back and forth over the motion, but in the end, Democrats walked out of the meeting. The remaining legislators approved the motion.

Responding to concerns that his administration has not been open with the exchange planning process, Governor Mark Dayton (D) wrote a letter to state legislative leaders informing them that Minnesota is continuing to plan for a state-based exchange. He assured them, however, that the state will not make a final decision on the exchange issue until after the November elections. Also in his letter, Governor Dayton wrote that Minnesota can apply for conditional approval from HHS to operate a state-based exchange and make “important policy decisions early in the 2013 Legislative Session.” Governor Dayton also moved the exchange planning team from the Department of Commerce to the Minnesota Management and Budget agency so that exchange planning would not interfere with the Department of Commerce’s role as the state’s insurance regulator.

In New Jersey, a group of small-business owners met in the state’s capital to encourage the passage of health insurance exchange legislation. Over 200 business owners signed a letter to Governor Chris Christie (R) asking him to move forward with creating an exchange as soon as possible. In previous statements, Governor Christie has said he will wait until after the November elections before deciding how his state will address the exchange issue.

On the IT end, Nebraska is moving forward with its IT procurement even though the state has not decided if it will create a state-based exchange. In its recently released RFP, Nebraska is seeking a contractor to develop the IT infrastructure for the individual and SHOP exchanges. Responses are due by October 15 with the state aiming to announce its selection by November 16, the same day states are scheduled to submit their Blueprints to HHS. The release of the RFP comes as Governor Dave Heineman (R) spent the last two weeks crossing the state seeking opinions on how to address the ACA’s exchange provisions. In an op-ed penned this week, Governor Heineman laid out the state’s options for creating an exchange and invited letters and comments from the general public to guide his decision process.

Nebraska isn’t the only state making news in the IT world. Rhode Island’s Health Benefit Exchange Board met on Tuesday and spent part of the meeting discussing the selection of a vendor for the Exchange’s IT system. This could mean that we see an announcement in the coming weeks.

Moving west, in just two weeks, the Oregon Health Insurance Exchange is expected to ask health insurers to submit applications to sell plans on the Exchange. According to Rocky King, Executive Director at Oregon Health Insurance Exchange, the applications “will give us an idea about how many carriers are interested in participating.” The request comes as Oregon weighs public comment on its proposed essential health benefits plan.

Finally, on the private exchange front, there is additional information on how the Aon Hewitt private exchange will be structured for large employers. Aon Hewitt is planning on rolling out a private exchange for employers with over 1,000 employees in fall of 2012. According to reports, employees will be able to choose from at least fifteen products from three insurance carriers. Due to the competitive price quotes Aon has been receiving from insurers, Ken Sperling of Aon Hewitt believes that even large employers that typically self-insure will be intrigued by their private exchange. According to Sperling, “Essentially what an employer can do then is transfer its medical risk to an insurance company at no cost, and eliminate all of the volatility that drives employers nuts.” But Aon Hewitt won’t be the only private exchange focused on large employers for long. Towers Watson and Mercer are also believed to be rolling out private exchanges in the near future.

Weekly Health Policy Update: Details Released on ACA Uninsured Penalties

Cybersecurity heating up again

In a Senate Homeland Security Government Affairs Committee hearing yesterday, DHS Secretary Napolitano confirmed that an administration executive order covering  power plants, electric grid and other critical infrastructure is “close to completion.”

On Wednesday, Senator Jay Rockefeller sent a letter to the Fortune 500, which included Google Inc., Apple Inc., AT&T Inc., IBM Corp. and Exxon Mobil Corp., in order to hear directly from the companies about their views on cybersecurity “without the filter of beltway lobbyists.”

While cyber legislation is unlikely to pass in a lame duck session of Congress after the election, companies need to pay careful attention to additional regulation in an executive order and how they respond to Sen. Rockefeller’s letter.

Cybersecurity heating up again

State Attorneys General: 2012 Election Preview

MLA’s National State Attorneys General Practice is pleased to share the following thoughts and predictions about what to expect across the country in the upcoming November State Attorney General elections.

Last year, we saw statewide elections of Attorneys General (AGs) in three states. Kentucky and Mississippi reelected Democratic AGs last year. In Louisiana, the incumbent AG switched parties and was reelected – without a Democratic challenger – under the Republican banner.  AGs are popularly elected in 43 U.S. states and are appointed by the governor in five states (Alaska, Hawaii, New Hampshire, New Jersey, and Wyoming). In Maine, the AG is selected by secret ballot of the legislature and in Tennessee, he or she is selected by the state Supreme Court.  In the District of Columbia, the Mayor appoints the AG.

The current national landscape is that Republicans hold the Office of Attorney General in 26 states (24 elected and two appointed by the Governor). Democrats hold the Office of Attorney General in 23 states. In Tennessee, the Attorney General is not elected, but is appointed by the State Supreme Court.

This November, we are closely watching statewide AG elections in 9 states: Indiana, Missouri, Montana, Oregon, Pennsylvania, Utah, Vermont, Washington, and West Virginia.  In North Carolina, Democratic Attorney General Roy Cooper is running unopposed. Democrats are currently in office in five of the other nine states. And with the exception of Montana, Pennsylvania, Utah, and Washington, there are incumbents on the ballot.

The races in Missouri, Montana, Pennsylvania, and Washington are expected to be exciting. We will continue to post entries as the elections approach. And stay tuned for our post-election commentary and what it could mean for businesses.

State Attorneys General: 2012 Election Preview

Campaign Finance Update: Disclosure by Ad-Running Political Groups Continues to be Hotly Debated

As the 2012 election season heats up, outside advocacy groups are experiencing considerable influence over federal, state, and local elections. Some say that the collective influence of advocacy by Super PACs and other tax-exempt entities in favor of and against candidates is equal to, or exceeds, that of the candidates and the parties themselves.

In this context, timely news was made yesterday when a federal appeals court reversed a previous decision in an action brought by Congressman Chris Van Hollen (D-MD) against the Federal Election Commission to reaffirm that certain types of tax-exempt organizations are not required to disclose their donors unless their contribution was specifically earmarked for campaigning purposes. This is a significant development for individuals, corporations, and other groups contemplating increased political and issue advocacy this fall.

With the court’s reversal this week, it remains to be seen whether or not this will be the last word. As was recently discussed in a San Diego news piece I was pleased to be a part of, the impact of these groups on elections is significant and extends beyond federal races.

We will continue to follow this topic closely.

Campaign Finance Update: Disclosure by Ad-Running Political Groups Continues to be Hotly Debated

Weekly Health Policy Update: White House Released Sequestration Report

Weekly Health Care Wrap-Up

White House Releases Sequestration Report

Today (Friday), the White House released its sequestration report detailing the cuts that will go into effect should sequestration take place. More detailed analysis will be included in next week’s Wrap-Up. Until then, the report can be found here.

House Passes CR, Washington Looks Toward Lame Duck

On Thursday, the House approved a Continuing Resolution (CR) that will keep the government funded for six months through March 27, 2013. The terms of the CR were largely agreed to over the summer to pave the way for swift passage and early Congressional recess in light of the 2012 elections. The CR does not address the impending “fiscal cliff,” which includes a host of expiring tax cuts and sequestration, among other provisions. The Senate is expected to vote on the measure sometime next week.

With election outcomes still very difficult to predict, it remains unclear what action Congress will take, if any, to avoid the fiscal cliff in the Lame Duck session. Some speculation suggests that Congress might make a “down payment” on deficit reduction in exchange for short-term band-aids; however, the balance of power in Washington following the election is likely to play a critical role in any action.

CMS Clarifies Essential Health Benefits Deadline

In response to a PoliticoPro article, the Centers for Medicare and Medicaid Services (CMS) wrote the publication this week to clarify that, “HHS has not established a deadline by which states have to submit their Essential Health Benefits Benchmark to HHS. Consistent with the bulletin on intended guidance issued in December 2011 and to ensure plans have ample time to design benefit offerings, we have encouraged states to submit their selected Essential Health Benefits Benchmark by October 1.”

Much to the chagrin of many states examining the issue, HHS has yet to issue final regulations regarding Essential Health Benefits and is unlikely to do so until after the November election. Essential Health Benefits will apply to all non-grandfathered plans in the individual and small group markets both inside and outside the exchange as well as Medicaid benchmark and benchmark-equivalent plans. The December 16 Bulletin referenced above can be found here.

CMS Looking at DSH Regs in Light of SCOTUS

On a Thursday call with providers, CMS Medicaid Director Cindy Mann indicated the agency is at work developing guidance related to the Disproportionate Share Hospital (DSH) payment cuts included as part of the Affordable Care Act (ACA). The already controversial DSH cuts became more complicated when the Supreme Court ruled the Medicaid expansion is optional for states. Under the ACA, the formula for DSH reductions takes into account the percentage of uninsured in a particular state – i.e. states with higher rates of uninsured would get more DSH funds. Hospitals, however, argue they cannot afford DSH cuts if the Medicaid expansion does not occur. Reflecting the multi-dimensional situation, Mann said on the call, “We certainly want to consider all aspects of what may be happening out in the world of uncompensated care as we move forward with proposing rules around the allocation of the [DSH] resources.”

From the States

For full coverage of state exchange activities, check out this week’s State of the States: Health Insurance Exchange Developments here.

Maine: The First Circuit US Court of Appeals denied Maine’s petition for CMS to act more expeditiously in approving the state’s proposed Medicaid cuts. Maine requested an expedited review of its $20 million plan to trim Medicaid in an August 1 application, but CMS denied the request.

Oregon. According to testimony by Bruce Goldberg, Director of the Oregon Health Authority, thirteen Coordinated Care Organizations (CCOs) have emerged in Oregon since the state’s landmark Medicaid waiver was approved by CMS earlier this year. Three additional CCOs are awaiting approval. In total, this brings the number of enrollees in CCOs to 650,000. To date, the state has encountered some setbacks when dealing with access to primary care in rural areas as well as the potential role for dentists, chiropractors and other specialties in the CCOs. Additional information can be found here.

Health Insurance Exchanges: State of the States update

With the conventions behind us and November’s HHS Blueprint deadline rapidly approaching, exchange planning is drawing additional attention at the state and federal levels. In the past few weeks, some states have redoubled their exchange policy planning efforts, while others have remained on the sidelines. Let’s focus on some of the more notable developments.

At the end of last week, Governor Matt Mead (R-WY) announced that his state would not be notifying HHS by November 16 of its plans for establishing an exchange. Governor Mead said that Wyoming could not decide on its exchange plan because the state lacked crucial information needed make a decision. During his press conference, the Governor was quick to point to a list of questions sent to HHS in mid-July to which there has yet to be a response.

In a federal Congressional hearing this week before the Oversight Subcommittee of the Committee on Ways and Means, HHS was also criticized for not answering a letter from Pennsylvania’s Insurance Commissioner Michael Consedine. In particular, Consedine said the states “lack clear direction,” from HHS on a number of key issues, including essential health benefits. Witness testimony can be found here.

Moving to the states, Idaho and Nebraska continued to seek stakeholder opinions on their exchange options, while West Virginia hired another round of consultants.

In Idaho, Department of Insurance Director Bill Deal updated state lawmakers on the progress of the Health Insurance Exchange Working Group. During the hearing, Deal told lawmakers that Idaho currently has some of the lowest insurance premiums in the country and some of the fewest coverage requirements on insurers. When asked how much control Idaho would have over its insurance market in a state-based exchange versus any of the federal options, Deal’s answer hinted that Idaho’s insurance market could change.  According to Deal, “If we go to a federally facilitated exchange, we pretty much lose the authority to regulate the health insurance industry in Idaho.” Finally, when asked by Senator Goedde if Idaho could have a privately run exchange or a public-private version, Deal replied that “The hybrids probably aren’t going to meet muster.” Idaho’s Health Insurance Exchange Working Group will continue to meet and is expected to receive a cost-analysis study from an external consultant in October.

Meanwhile in Nebraska, the state concluded a series of public hearings to gauge public and stakeholder views on its exchange options. While Governor Dave Heineman (R) seemed cautious about moving forward with a state-based exchange through most of the meetings, other stakeholders supported the creation of a state-based exchange. Both Nebraska’s insurance agents and major insurance companies voiced their support for the creation of a state-based exchange, primarily because it would allow the state to retain some control over its insurance market. However, Governor Heineman was not as easily convinced. At a hearing last week, he expressed doubt that the state would really retain that much control over its exchange saying, “We can’t make one single decision without getting approval from the federal government.”  While Governor Heineman debates whether to create a state-based exchange, Nebraska’s exchange planning continues. According to Bruce R. Ramge, Nebraska’s director of insurance, the state has created a draft RFP for its exchange IT system.

And in West Virginia, the state announced $861,000 in contracts for consultants to help it determine which exchange model it should pursue and whether to expand Medicaid. The West Virginia Offices of the Insurance Commissioner has hired MIT professor Jonathan Gruber to evaluate the state’s health insurance system. Other awardees include CCRC Actuaries and computer database consultant Mike Madalena.

Finally, in New Jersey, a panel of three state legislators discussed health insurance exchange legislation (S-2135) with a forum of health care administrators. While discussing the bill, they mentioned that overall the bill was very close to the legislation vetoed by Governor Chris Christie (R-NJ) in May of this year. However, legislators stressed that S-2135 should be viewed as a starting point, and not the final product. The discussion centered around potential regulatory schemes for health insurance plans and the legislation’s conflict-of-interest provisions. In the end, do not expect to see S-2135 on Governor Christie’s desk anytime soon. According to Senator Conaway, “The finish line is not likely to come until after the election.”

Weekly Health Policy Update: White House Released Sequestration Report