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.