Monday, November 23, 2009

American Health Insurance Plans

AHIP Overview of Senate Health Reform Bill
AHIP Staff
November 23, 2009

The "Patient Protection and Affordable Care Act" - the health reform bill announced by Senate leaders this week - contains nine titles addressing: (1) market reforms and coverage expansions; (2) the role of public programs; (3) the quality and efficiency of health care; (4) chronic disease prevention and public health improvements; (5) the health care workforce; (6) transparency and program integrity; (7) access to innovative medical therapies; (8) the CLASS Act; and (9) revenue provisions.

Below is an overview of the Senate bill, discussing a sample of the hundreds of provisions contained within the 2,074 pages of this very large bill.

Immediate Reforms: The following reforms would take effect within the first year after the bill's enactment:

a ban on lifetime limits and unreasonable annual limits;

a prohibition on rescissions except in cases of fraud;

an option for unmarried individuals through age 25 to remain on their parent's coverage as dependents;

a benefit mandate for preventive services;

reporting requirements on medical loss ratios and administrative costs;

rebates to be paid by plans with non-claims costs exceeding 20 percent in the group market and 25 percent in the individual market (or a lower percentage established by the state);

a premium justification process established by the HHS Secretary in conjunction with the states, including discretionary authority to exclude plans from the health insurance exchanges for unjustified premium increases in the 2010-2014 period;

a $5 billion temporary high-risk health insurance pool program to provide coverage to uninsured individuals with preexisting conditions;

a $5 billion temporary reinsurance program for employer-based plans providing coverage for early retirees; and

an internet portal to provide consumer information on coverage options.

Insurance Market Reforms: Beginning in 2014, plans would be required to offer coverage on a guaranteed issue basis and would be prohibited from excluding coverage for preexisting conditions. Plans would be allowed to vary premiums based only on age (3:1), tobacco use (1.5:1), family composition, and geographic differences.

Individual Coverage Requirement: Beginning in 2014, an individual coverage requirement would take effect, with exemptions allowed in cases of hardship and if the premium exceeds 8 percent of a person's income. Penalties for failing to obtain coverage would be set at $95 in 2014, $350 in 2015, and $750 in 2016 (with this amount updated for inflation in subsequent years).

Government-Run Plan: Beginning in 2014, a Community Health Insurance Option would be established with an option for states to prohibit the offering of this government-run plan in their state. The HHS Secretary would be directed to negotiate provider reimbursement rates that are not higher than the rates paid by private plans participating in the exchanges. Premiums must be sufficient to cover expected costs. A Start-Up Fund would be established to cover the costs associated with initial operations of the government-run plan and to cover claims during the first 90 days, subject to a requirement that these funds must be repaid within nine years. Providers would not be required to participate in the government-run plan and could not be penalized for non-participation.

Health Care Cooperatives: Federal funding would be authorized for a CO-OP Program to foster the creation of nonprofit, member-run health insurance companies that would offer coverage in the individual and small group markets in one or more states. Federal loans would be provided to assist with start-up costs and federal grants would be provided to meet state solvency standards.

Exchanges: Federal funding would be provided to assist the states in establishing American Health Benefit Exchanges no later than January 2014. The exchanges would facilitate the purchase of qualified health plans, provide for the establishment of a Small Business Health Options Program, implement procedures for the certification of qualified health plans, maintain an Internet website to provide standardized comparative information on qualified health plans, and carry out other responsibilities specified in the legislation.

Excise Tax on High-Value Health Plans: Beginning in 2013, an excise tax would be imposed on employer-sponsored coverage for any health insurance plan with a premium exceeding $8,500 for single coverage and $23,000 for family coverage. Higher thresholds would be established for retirees and for plans covering workers in high-risk professions. The thresholds would be adjusted annually based on the CPI plus one percentage point. The tax would be set at 40% and would apply to the amount of the premium exceeding these thresholds. This provision is estimated to generate $149.1 billion in new revenue over ten years.

Health Insurance Premium Tax: A $6.7 billion annual premium tax would be imposed on the health insurance sector, allocated by market share, beginning in 2010. Self-insured coverage and governmental entities would be exempt from the tax, but fees paid to third party administrators would be assessed under this provision. Other taxes would be imposed on the pharmaceutical sector ($22.2 billion) and medical device manufacturers ($19.3 billion).

Interstate Sale of Insurance: Beginning in 2016, states would be permitted to form "compacts" to allow for the purchase of non-group health insurance across state lines. The HHS Secretary, working in consultation with the NAIC, would issue regulations for the creation of such compacts.

Benefit Options: Four benefit categories would be created with the following actuarial values: Bronze (60%), Silver (70%), Gold (80%), and Platinum (90%). A separate catastrophic plan (i.e., the "young invincibles" policy) would be available for young adults under age 30 and for those who are exempt from the personal coverage requirement due to hardship or coverage not being affordable.

Medicaid Eligibility Expansion: Beginning in 2014, Medicaid eligibility levels would be expanded to 133 percent of the federal poverty level. The costs associated with this expansion would be covered by a 100 percent federal match rate in the first three years.

CLASS Program: A national voluntary long-term care insurance program, funded by premiums, would be established to provide cash benefits to meet the needs of individuals who have functional limitations. Under this program, premium collection would begin in 2011 and benefits would begin in 2016 under a five-year vesting requirement.

Medicare Advantage: Payment reforms would reduce Medicare Advantage funding by an estimated $120 billion over ten years, beginning in 2011. Special Needs Plans would be extended through 2013 and Cost Plans would be extended through 2012.

House Approves Medicare Physician Payment Bill
On November 19, by a vote of 243 to 183, the House approved H.R. 3961, the "Medicare Physician Payment Reform Act." This bill proposes to permanently overhaul the Medicare payment formula that, in the absence of congressional action, will result in negative updates to Medicare physician reimbursement rates next year and for the foreseeable future.

H.R. 3961 would prevent a 21 percent reduction in Medicare physician payment rates from taking effect next year and instead provide an update in 2010 based on the Medicare Economic Index. Additionally, to achieve a long-term "fix," the bill recalibrates the Sustainable Growth Rate (SGR) formula, which is used to calculate Medicare physician payment rates, by establishing 2009 physician expenditures as the new baseline for computing whether total physician payments exceed the expenditure targets in the SGR formula. The CBO score (PDF) for this bill estimates that it would cost approximately $210 billion over ten years.

The Obama Administration released a statement (PDF) this week expressing strong support for H.R. 3961 and describing the bill as "an important step forward in comprehensively reforming the way Medicare pays physicians to provide the very best care to the Nation's Medicare beneficiaries."

CMS Chief Actuary Issues Analysis of House-Passed Health Reform Bill
Richard Foster, the Chief Actuary of the Centers for Medicare & Medicaid Services (CMS), recently released an analysis (PDF) of H.R. 3962, the "Affordable Health Care for America Act," as approved by the House on November 7.

The analysis by the CMS Chief Actuary focuses largely on the bill's impact on federal expenditures and does not examine all of the revenue provisions. Key findings include the following:

Proposals aimed at reducing the growth rate of health care spending would achieve only $2 billion in non-Medicare budget savings over ten years. These savings are attributed to comparative effectiveness research. The analysis states that other proposals aimed at containing costs would have "a negligible financial impact over the next 10 years."

The coverage provisions would cost $935 billion over ten years. This includes $512 billion attributable to the proposed Medicaid expansion, $592 billion for premium assistance, and $11 billion for small business tax credits - partially offset by $180 billion that would be collected from penalties on individuals that do not obtain coverage and employers that do not offer coverage.

The Medicare provisions would achieve net savings of $571 billion over ten years. The bulk of these savings would come from Medicare Advantage payment reforms ($201 billion) and from reductions to the Medicare Part A and B provider payment updates ($282 billion).

While discussing the bill's impact on coverage, the analysis indicates that by 2019, the number of uninsured would be reduced from 57 million, as projected under current law, to an estimated 23 million. The expected increase in coverage is attributed to 21 million new enrollees in Medicaid, 10 million persons purchasing individual coverage through the newly created exchange, and an additional 2.5 million persons receiving employer-sponsored coverage.

Chairmen Waxman and Rangel Request GAO Report on Prescription Drug Pricing
On November 17, House Energy and Commerce Committee Chairman Henry Waxman (D-CA) and House Ways and Means Committee Chairman Charlie Rangel (D-NY) addressed a letter (PDF) to the Government Accountability Office (GAO), requesting an analysis of recent trends in prescription drug pricing.

The Waxman-Rangel letter expressed concerns that the pharmaceutical industry "may be artificially raising prices for certain pharmaceutical products in expectation of new reforms that could otherwise reduce prescription drug prices or price growth by encouraging patients and the government to be more efficient purchasers." To address these concerns, the chairmen asked the GAO to prepare on an expedited basis a report that analyzes recent trends in prescription drug pricing and, additionally, take steps to monitor the pricing practices of pharmaceutical manufacturers on an ongoing basis and periodically report to Congress on these issues.

Monday, November 16, 2009

Health Care Reform

The latest on health reform for Humana brokers

What next? All eyes are on the Senate

By the slimmest of margins, the House passed its health care reform bill on Saturday. Of course, the fight over this issue is far from over. In fact, Saturday’s vote was just the first of several big votes on the journey to health reform.

The next step is for the Senate to pass a bill, but despite President Obama’s encouragement last weekend “to take the baton and bring this issue to the finish line,” the Senate is currently stalled. Majority Leader Harry Reid has merged the two different bills passed by the two Senate committees with jurisdiction over health care, but the Congressional Budget Office has not yet attached a cost estimate. That probably won’t be done until the end of the week.

Further, no date has been set for the start of debate. Debate in the Senate is expected to last several weeks. So the question now is whether to attempt to start debate before Thanksgiving, which would mean pausing while everyone goes home for the holiday. Some senators think it would be best to hold off even starting until after the break, but on Tuesday Reid said he would like to start debate next week.

And there’s another problem with trying to anticipate the Senate’s schedule: It takes 60 votes to approve the start of debate, and right now Reid doesn’t have those 60 votes. For example, Sen. Joe Lieberman, a Connecticut Independent who caucuses with the Democrats and whose vote Reid is likely to need, says he won’t vote to start debate until the public plan is removed from the bill.

Then, any bill the Senate passes is likely to be very different from the one the House just passed. For example, the House bill includes more generous subsidies for people to buy health insurance, and it pays for reforms in a different way than the Senate would. So merging the House and Senate bills will be a complicated exercise.

And if any of these negotiations drags too far into 2010 – an election year – some moderate Democrats are likely to lose some of the courage the President has been praising them for this week. Their votes on the final bill that emerges from the Senate-House conference committee could be far from a sure thing.
Saturday in the House: Democrats prevailed – but by a slim margin
Saturday was a long, long day in the House of Representatives, with almost 14 hours of health reform. Much of that time was filled with speeches – there was a constant parade of members to the microphones at the front of the chamber. In general, Democrats and Republicans took turns, arguing their points in the one to three minutes they were allotted. Republicans, focused on the new requirements for business and the bill’s high gross cost – $1.1 trillion for the first 10 years – referred to the House version of reform as a “jobs killing bill” that would increase debt and threaten the economy. Democrats, focused on bringing 36 million uninsured people into the system, described it as “the moral thing to do” and an opportunity to make history.

But away from the House floor, speeches and C-SPAN cameras, the last arm-twisting and vote-tallying was going on. In a Rules Committee meeting that had lasted half the night before, a compromise had been worked out with anti-abortion Democrats who had threatened to vote against the bill. Early Saturday afternoon, the President arrived in the Capitol to address the Democratic caucus. Still, the vote count was close.

Democrats needed 218 votes, and in the end they passed their bill 220-215 – the tightest of margins. One Louisiana Republican voted yes; 39 Democrats voted no.

Afterward, House Democratic leaders were jubilant, noting the historic moment and praising Speaker Nancy Pelosi. In the Rose Garden on Sunday, President Obama praised everyone who had voted for the bill. “For years,” he said, “we’ve been told that this couldn’t be done. After all, neither chamber of Congress has been able to pass a comprehensive health reform bill for generations. But last night, the House proved differently.”

On Fox TV on Sunday, Rep. Mike Pence, R-Ind., expressed his feelings about how this vote would fit into history. “I’ve got to tell you,” he said, “if Democrats keep ignoring the American people, their party is going to be history in about a year.”

Actually, both political parties seemed to come out of the weekend feeling as if they were well positioned for the next round of battle. As CNN’s John King wrote in his “State of the Union” blog, “Democrats saw the victory, as narrow as it was, as a major step forward and a momentum boost they say dramatically increases the odds of getting legislation to President Obama this year. Republicans took the 220-215 margin and the 39 Democrats who voted “No” as proof of jitters in the Democratic ranks, and proof that they will end up on the winning side of the politics of health care.”
Late nights in the Congressional Budget Office
Two new “scores” from the Congressional Budget Office were released last week: one on the cost of the reform bill that was offered by House Republicans, another on the cost of the House’s “doc fix” bill.

According to the CBO, if the Republicans’ alternative bill had passed, it would have cost about $60 billion over the next 10 years and would have resulted in about 3 million more people having insurance. This is in contrast to the House Democrats’ bill, which would have a gross cost of $1.1 trillion and result in 36 million more people having insurance.

What the Republicans’ approach would do, however, is reduce the average premium cost for those who do have insurance. The CBO says that in 2016, small group insurance premiums would cost 7 to 10 percent less than they would under current law, and individual insurance prices would cost 5 to 8 percent less. Prices in the large group market would be zero to 3 percent lower, but some people – including older, sicker people – could see higher premiums.

Minority Leader John Boehner has said the GOP favors a step-by-step approach to reform, and that their first step is to reduce health care costs. Expanding access would come later.

The CBO also released cost estimates on the “doc fix” – the AMA’s top priority, which is to repeal the law that automatically reduces Medicare payments to physicians when budget targets aren’t met. The CBO says the cost over 10 years would be $210 billion. House leaders have removed the doc fix from the big health reform legislation and turned it into a separate bill to keep the cost of reform lower.

The Senate voted down a similar bill in October because the legislation didn’t include a plan to pay for the fix.
About those AMA and AARP endorsements of the House bill
The AARP endorsed the House’s health reform bill on Thursday. President Obama responded, “They're endorsing this bill because they know it will strengthen Medicare, not jeopardize it. They know it will protect the benefits our seniors receive, not cut them. So I want everybody to remember that the next time you hear the same tired arguments to the contrary from the insurance companies and their lobbyists. And remember this endorsement the next time you see a bunch of misleading ads on television.”

The AMA also announced its “support” for the bill, although the organization stopped short of endorsing it. As the AMA president told reporters, "The way we use words, an endorsement of a bill means you completely accept it 100 percent and you leave the table," he said. "Support of a bill, in our way of viewing it, is that we agree with many of those components in it, but we still need to work to make it better. And that's where we are."

Meanwhile, several state medical societies broke with the AMA last week on the issue of health reform. For example, the Illinois State Medical Society distributed “An Open Letter to Patients” through the media. “Illinois physicians have grown frustrated as we watch the best opportunity for health reform in decades potentially slip away,” stated the group’s president. “Bad policy proposals and political partisanship must not be allowed to destroy this rare opportunity to guarantee access to health care for our patients.”

The Ohio State Medical Association also announced its opposition to the House Bill. The group's president said the association "supports many of the goals of this bill. However, the total proposal lacks many of the critical elements necessary for successfully reforming America’s health care delivery system and strengthening the physician-patient relationship.”

Twenty surgical organizations, led by the American College of Surgeons and including neurologists, urologists and oncologists, also broke with the AMA over its support of the House plan.

Tuesday, November 10, 2009

House Passes Health Reform

The following is from NAIFA GovWatch.

Action Taken: On November 7, the House of Representatives voted 220 -215 to pass its version of health reform (H.R. 3962). Thirty-nine Democrats voted against and one Republican, Cao of Louisiana, voted in favor of the bill. To see how Members of Congress voted, view the roll call vote here. To see how Members in your state voted, simply click on the “State-by-State” tab.
NAIFA Position: NAIFA President Thomas D. Currey, CLU, ChFC, LUTCF issued the following statement immediately after the vote on Saturday night.

"H.R. 3962 contains many provisions that NAIFA has long supported including affordability credits, wellness and prevention provisions, guaranteed issue and consumer access to professional agent services.

However, there are a number of health reform issues that need further consideration before the bill will meet NAIFA's reform goals, and we are disappointed that the House passed the bill without fully vetting these concerns. In addition to controversial health provisions, we are particularly troubled with the use of health care reform legislation to expand the FTC’s authority over all lines of insurance and to limit the McCarran-Ferguson protection of pro-competitive activities in the medical malpractice and health insurance markets. Excessive authority is unwarranted, and would have negative impact, particularly on property-casualty and life insurers and their consumers.

NAIFA is dismayed by the sweeping changes to the regulation of all lines of insurance in the context of a health reform bill.

We continue to believe that the health care reform challenge can be met by bringing millions of uninsured Americans into the system and reducing the high cost of health care for everyone. We look forward to working with the Senate and the Reconciliation Conferees to address our concerns."
Next Steps: While all eyes will turn to the Senate, don't expect the Senate plan to follow the House on health care overhaul. The House bill will be deemed unacceptable to many in the Senate.

The details of the merged Senate bills will be released after the Congressional Budget Office (CBO) releases its analysis of the merged bills. The Senate bill is expected to be more to our liking in achieving affordable coverage for all Americans. All indicators are that it, too, will have specific authorization for agents to participate in the reformed health system. Currently, it contemplates including a government plan with a state opt-out, but indicators are that that provision will drop out during Senate floor debate.

The Senate process will also differ from the House floor vote which allowed limited amendment opportunities. Once the CBO score is released, the Senate debate is expected to last several weeks. Debate will include many amendments and we expect to have a number of our concerns addressed there, including strengthening the balance between penalty and purchase of insurance.

The Senate floor debate will not begin until after Thanksgiving. If the Senate does pass a bill, it will be different enough from the House bill that a lengthy and contentious conference is probable.
Our current strategy is to support health reform that includes a meaningful, fairly compensated role for agents, no tax on workers based on their employer-provided health insurance, meaningful coverage requirements and no public plan. NAIFA will work to improve our issues in the Senate bill as the initiative moves toward final passage.
What You Can Do:
• Meet with Your Senators over Veteran’s Day Recess.
• Urge your friends and colleagues to have their voices heard.
• Engage the Media Members and their constituents pay close attention to their local media. Make the voice of agent heard by sharing your comments with the media.
• Visit HealthChat to read articles, view videos and learn what others are doing. (Note: Please make sure you are logged into the NAIFA website in order to access HealthChat.)

Friday, November 6, 2009

Health Care Reform

Check our blog often for info on the healthcare debate! The following is an excerpt from NAHU's Newswire Newsletter from the Nov. 6th edition.

Obama touts AARP, AMA backing for House healthcare bill.
In what media reports termed a surprise appearance, President Obama visited the White House briefing room to tout the endorsements of AARP and the American Medical Association of the House Democrats' healthcare bill. The visit was noted on each of the networks last night, albeit in stories that were largely devoted to the raucous conservative protests at the Capitol. ABC World News (11/5, story 6, 2:45, Karl) reported, "President Obama touted two big endorsements of the healthcare bill, from the AARP and the American Medical Association." President Obama said, "I urge Congress to listen to AARP, listen to the AMA, and pass this reform for hundreds of millions of Americans."
The CBS Evening News (11/5, story 4, 2:15, Reid) reported, "The White House is worried enough about the vote that the President made an unannounced appearance today to tout endorsements of the bill by the senior's lobby, AARP, and by the AMA, the nation's largest organization of doctors." NBC Nightly News (11/5, story 8, 2:25, O'Donnell) reported, "AARP, the lobby group for Americans over 50, signed on and showed off boxes of supportive petitions."
The Washington Times (11/6, Ward) reports that Obama "urged Congress to heed new endorsements of the House healthcare bill by the AARP and the American Medical Association and pass the bill on Saturday, in a rare appearance at the White House briefing." The New York Times (11/6, A18, Hulse, Herszenhorn) reports Obama "noted that the endorsements covered viewpoints from two distinct sides of the debate: elderly Americans fearful that a healthcare overhaul could cut into Medicare, and the nation's doctors and medical professionals." Obama said, "We are closer to passing this reform than ever before. And now that the doctors and medical professionals of America are standing with us, now that the organizations charged with looking out for the interests of seniors are standing with us, we are even closer."
The Chicago Tribune (11/6, Levey) reports that AARP Executive Vice President Nancy LeaMond "said the group saw the House Democratic bill as the most promising proposal." The AARP's backing "counters mounting opposition among employer groups who are stepping up their advertising campaign against the House Democratic bill." The Wall Street Journal (11/6, A8, Bendavid, Adamy, subscription required) also covers the story, noting that the AMA endorsement was not without qualifications.
The Los Angeles Times (11/6, Muskal) points out that "Obama especially lauded AARP, saying the organization's nonpartisan support was important to reassure seniors worried about losing Medicare benefits if the health plan is signed. Critics contend that as part of the healthcare overhaul package, Medicare would be cut, but proponents say the decrease is just a cost savings and would not affect benefits."
The Christian Science Monitor (11/6), The Hill (11/6, Young), Roll Call (11/6, Koffler, subscription required), the AP (11/6), USA Today (11/6, Kiely), Politico (11/6, Brown), CNN (11/6), Bloomberg News (11/6, Rowley, Dodge) CongressDaily (11/6, Edney, subscription required), and the Financial Times (11/6, Fifield, subscription required) also cover the story.


From all of us at The Insurance Center we wish everyone Happy Holidays. We will be closed at 12:30 on Veteran's Day on Nov. 11 and closed Nov. 26 & 27 for Thanksgiving. In December we will be closed on Dec. 24, 25, and 31 for Christmas and New Year's. Season's Greetings!