• Cost, coverage, insurance reforms lead agenda for Feb. 25 health reform summit
• Reid strips health provisions from Senate jobs bill

• State health care reform update

• HHS questions Anthem price hikes in California
• Workers may gain in shift from employer-sponsored health insurance to individual coverage in an insurance exchange

Cost, coverage, insurance reforms lead agenda for Feb. 25 health reform summit

In a letter addressed to the four top Congressional leaders, White House Chief of Staff Rahm Emanuel and Health and Human Services Secretary Kathleen Sebelius outlined the format of the scheduled January 25 health care reform meeting requested by President Barack Obama.

The meeting, to be held at Blair House, the Washington, D.C., official state guest house for the President, will begin at 10:00 a.m and will be televised live in its entirety. Almost 50 members of Congress and the Administration are invited.

According to the letter, Mr. Obama will provide opening remarks, followed by remarks by a Republican and a Democratic leader. This will be followed by a discussion, moderated by Mr. Obama, on four topics needed in health reform legislation:

• insurance reforms—“Does it provide adequate protection against abuses by the insurance industry?”
• cost containment—“Does it bring down costs for all Americans as well as for the Federal Government, which spends a huge amount on health care?”
• expanding coverage—“Does it make coverage affordable and available to the tens of millions of working Americans who don't have it right now?” and
• the impact health reform legislation will have on deficit reduction—“Does it help us get on a path of fiscal sustainability?”

The letter also notes that the Democrats will post online the text of “a proposed health insurance reform package” before the meeting which will “put a stop to insurance company abuses, extend coverage to millions of Americans, get control of skyrocketing premiums and out-of-pocket costs, and reduce the deficit.”

Mr. Emanuel and Ms. Sebelius write that “It is the President’s hope that the Republican congressional leadership will also put forward their own comprehensive bill to achieve those goals and make it available online as well.”

Invited to the February 25 meeting are the following:

• Speaker of the House Nancy Pelosi (Cal.), one staff member specializing in health policy, and four additional Democratic Representatives
• Senate Majority Leader Harry Reid (Nev.) , one staff member specializing in health policy, and four additional Democratic Senators
• Republican House Leader John Boehner (Ohio.) , one staff member specializing in health policy, and four additional Republican Representatives
• Republican Senate Leader Mitch McConnell (Ken.) , one staff member specializing in health policy, and four additional Republican Senators

Other Senators invited:

• Richard Durbin, (Ill.), Majority Whip
• Jon Kyl (Ariz.), Republican Whip
• Max Baucus (Mont.), Chairman of the Finance Committee
• Chuck Grassley (Iowa), Ranking Member of the Finance Committee
• Tom Harkin (Iowa), Chairman of the Health, Education, Labor and Pensions Committee
• Mike Enzi (Wyo.), Ranking Member of the Health, Education, Labor and Pensions Committee
• Christopher Dodd (Conn.), Member of the Health, Education, Labor and Pensions Committee

Other Representatives invited:

• Steny Hoyer (Md.), Majority Leader
• James Clyburn (S.C.), Majority Whip
• Eric Cantor (Va.), Republican Whip
• Charles Rangel (N.Y.), Chairman of the Ways and Means Committee
• Dave Camp (R.I.), Ranking Member of the Ways and Means Committee
• Henry Waxman (Cal.), Chairman of the Energy and Commerce Committee
• Joe Barton (Texas), Ranking Member of the Energy and Commerce Committee
• George Miller (Cal.), Chairman of the Education and Labor Committee
• John Kline (Minn.), Ranking Member of the Education and Labor Committee
• John Dingell (Mich.), Chair Emeritus of the Energy and Commerce Committee

In addition to the President, those expected to attend from the Administration include the following:

• Joe Biden, Vice President
• Kathleen Sebelius, Health and Human Services Secretary
• Nancy-Ann DeParle, Director of the Office of Health Reform
• representatives the Office of Management and Budget (to provide technical assistance), the Congressional Budget Office, and the Joint Committee on Taxation

Reid strips health provisions from Senate jobs bill

On the evening of February 11, Senate Majority Leader Harry Reid (Nev.) slashed $70 billion of an $85 billion jobs bill proposed just hours before in the Hiring Incentives to Restore Employment (HIRE) Act, introduced by Senate Finance Committee chairman Max Baucus (Mont.) and ranking minority member Charles Grassley (Iowa). The Senate is in recess this week but is expected to begin consideration of the jobs bill on February 22.

COBRA subsidy extensions, a further delay in Medicare physician payment cutbacks, and pension funding relief all were taken out of the bill Mr. Reid intends to bring to the Senate floor next week. Those provisions, which likely will appear in subsequent legislation, were as follows:

Sec. 611 of the bill would extend the eligibility period for a 65% COBRA subsidy from Feb. 28, 2010, to May 31, 2010. The bill also would allow the subsidy for individuals who lose coverage because of a reduction in hours and later are involuntarily terminated.

Sec. 612 would delay until Oct. 1, 2010, the 21.2% physician payment reduction scheduled to take effect on March 1, 2010. Secs. 701 through 703 would provide temporary, targeted funding relief for single-employer and multiemployer pension plans that suffered significant losses in asset value due to the steep market slide in 2008. Included is the opportunity for plan sponsors to elect one of two amortization schedules and a look-back provision for benefit accrual restrictions

A draft of the HIRE act is available at http://finance.senate.gov/press/Bpress/2010press/prb021110a.pdf.

State health care reform update

A summary of health care reform efforts in some states.

California. The state senate has approved the creation of a government-run health care system for the state, ignoring a veto threat from Gov. Arnold Schwarzenegger. The plan would cost an anticipated $200 billion per year. Also, the California Department of Managed Health Care has released rules that limit HMO wait times. The rules require that patients be treated by HMO primary care doctors within ten business days of requesting an appointment and by specialists within 15 days. In addition, patients seeking urgent care that does not require prior authorization must be seen within 48 hours. California is the first state to set time standards for HMOs, which serve approximately 21 million state residents. For more information, visit http://www.healthhelp.ca.gov/.

Connecticut. Insurance regulators in the state have given three of the top five insurers approval to raise rates for 2010 by double-digit percentages. Anthem Blue Cross and Blue Shield, Health Net of Connecticut, and ConnectiCare asked for group health plan rate increases of 15.78%, 19.09%, and 14.5%, respectively, for 2010. According to the health insurers and the Connecticut Insurance Department, the increased premiums will keep premiums in line with medical costs. For more information, visit http://www.ct.gov/cid/site/default.asp.

Florida. To avoid a legislative mandate on the issue, major health insurers in the state have agreed to pay for care for members diagnosed with cancer who participate in clinical trials. The “Clinical Trials Compact” ensures that cancer patients will receive continued benefits while being treated with experimental drugs and other therapies. Participating insurers are: Blue Cross and Blue Shield of Florida, Humana, Aetna, Cigna, UnitedHealthcare, Vista Healthplans, and AvMed Health Plans. In recent months, there had been a move toward legislation to eventually cover all phases of cancer clinical trials, but the health insurers wanted to avoid a legislative mandate. Florida is the fifth state to use a compact for cancer trials, after Georgia, Michigan, Nebraska, and New Jersey. For more information, visit http://acscan.org/action/fl/updates/693/.

Georgia. Georgia Health Commissioner Rhonda Medows has urged state lawmakers to adopt a tax hike on hospitals and health care plans to help with the state’s Medicaid deficit problem. Beginning on July 1, the state will face a $506 million shortfall in Medicaid funds. The recession has caused enrollment in Medicaid to soar: from June 2009 to 2010 enrollment has increased 7.7% to more than 1 million people. For more information, visit http://health.state.ga.us/.

Illinois. The Illinois Supreme Court has struck down a medical malpractice law enacted in 2005 that limited monetary damages for pain and suffering to $1 million from hospitals and $500,000 from doctors. The court said the law violates the state’s separation-of-powers clause between the branches of government by allowing lawmakers to interfere with a jury’s right to determine damages. According to the American Medical Association, courts in 16 states have upheld these types of laws, while those in 11 states have overturned them. For more information, visit http://www.state.il.us/court/.

Maryland. A bill pending in the state would allow young adults to continue enrollment in their parents’ health care plan until age 30. Current law allows dependent individuals to remain on a parent’s plan until they attain age 25. By expanding this to age 30, graduate students, veterans returning to school, and young adults who have been laid off and are seeking employment would be helped. Similar laws exist in New Jersey, New York, and Pennsylvania. For more information, visit http://www.mdinsurance.state.md.us/sa/jsp/Mia.jsp.

Minnesota. Starting March 1, the state is going to charge counties extra to cover the cost of health care for their neediest residents. Previously, a $400 million General Assistance Medical Care program was available to help provide coverage for the poorest in the state, but the program is ending in an attempt to balance the budget. State legislators have proposed funding the program through surcharges on hospitals and health groups to draw down federal dollars and would levy a 10% match by counties to share the program’s cost. For more information, visit http://www.health.state.mn.us/.

Pennsylvania. Premiums for the state’s adultBasic health insurance plan will double in March from $330 per month to $600 per month. In addition, more than 40,000 participants will face new higher out-of-pocket costs, with higher copayments for doctor and emergency room visits and more expensive coinsurance requirements for services including chemotherapy, dialysis, and outpatient surgery. The Pennsylvania Insurance Department cited higher medical service use and escalating health care costs, combined with limited state funding, as the reason for the coverage changes. For more information, visit http://www.portal.state.pa.us/portal/server.pt/community
/health_insurance/9189/adultbasic_benefit_chanages/646477.

Utah. The state has proposed legislation that would establish a state risk adjuster board to ensure consumer health risks are spread evenly among private insurers as they increase access to health insurance for 350,000 uninsured Utah residents. The bill, HB294, also would permit businesses in Utah with more than 50 employees to be part of the Web-based exchange for medical insurance and information. For more information, visit http://le.utah.gov/~2009/htmdoc/hbillhtm/HB0294.htm.

Washington. The state’s domestic partnership law went into effect on Dec. 3, 2009, and has some implications for employers in the state. The law provides that for all purposes, registered domestic partners must be treated the same as married spouses. This means that employment-related benefits must be extended to the registered domestic partner of employees on the same basis as spouses. For more information, visit http://www.sos.wa.gov/corps/domesticpartnerships/Default.aspx.

HHS questions Anthem price hikes in California

HHS Secretary Kathleen Sebelius sent a letter to Anthem Blue Cross and called on the company to publicly justify its decision to raise individual health insurance premiums for its California customers by as much as 39 percent. In her letter, Sebelius notes that the parent company of Anthem Blue Cross, WellPoint Incorporated earned $2.7 billion in the last quarter of 2009.

"As we continue the health insurance reform debate in Washington, this announcement reminds us that too many Americans can be left with unaffordable insurance each time the rates or rules change in the private market," Sebelius added. "It's clear that we need health insurance reform that will give American families the secure, affordable coverage they need."

Sebelius also wrote that Anthem "should make public information on the percent of your individual market premiums that is used for medical care versus the percent that is used for administrative costs." The relationship between premiums collected and claims paid is called a "loss ratio." California insurance commissioner Steve Poizner is reportedly planning to hire an outside actuarial firm to make sure Anthem is spending at least 70 percent of each premium dollar on benefits, as required by state law.

Both the House and Senate-passed health reform measures include provisions that would require group health insurers to keep their loss ratios at 80 percent or higher.

A statement from Anthem responded to Sebelius's letter: "Unfortunately, in the weak economy many people who do not have health conditions are forgoing buying insurance. This leaves fewer people, often with significantly greater medical needs, in the insured pool. We regret the impact this has on our members."

Workers may gain in shift from employer-sponsored health insurance to individual coverage in an insurance exchange

Workers generally would gain from shifting from employer-sponsored health insurance to the individual market through a national health insurance exchange, a major element of most health care reform proposals, according to a recent study published in January by the National Bureau of Economic Research (NBER). The study is entitled Let Them Have Choice: Gains from Shifting Away from Employer-Sponsored Health Insurance and Toward an Individual Exchange (NBER Working Paper 15687), prepared by researchers Leemore Dafny and Mauricio Varela from the Northwestern University Kellogg School of Management’s Department of Management and Strategy and Katherine Ho from the Columbia University Department of Economics.

More than 60% of Americans younger than age 65 buy health insurance through their employers, but often the choices available are limited. Four-fifths of employers that sponsor a health insurance benefit plan offer only one option. The limited choice might prevent individuals and families from selecting the plan that best meets their needs and from “trading off added benefits against associated premium increases,” the researchers noted.

Health care reform bills enacted in both chambers of Congress provide for the establishment of health insurance exchanges through which individuals and small employers would have a range of insurance packages and options. As long as these insurance exchange options were available on the same terms as currently through employers, tax-free and with employer subsidies, workers would do better with the expanded choices available through the individual insurance market exchange.

The median employee would be willing to forgo 27% of his or her employer’s health insurance premium subsidy to be able to use the balance of the employer subsidy to buy a plan of his or her choice, the researchers determined. They also concluded that, even keeping employers’ premium subsidies budget-neutral, the median “welfare” gain from the expanded choice available through an exchange would amount to about 20% of the premium.

The gains for workers because of a shift from employer-based to individual health insurance in an exchange would more than offset any resulting premium increases, the researchers concluded. “For the vast majority of employee groups and alternative model specifications, the gains from choice are likely to outweigh potential premium increases associated with a transition from large group to individual pricing,” they wrote. Workers would choose plans that are priced similarly to the employer-sponsored plans in which they are enrolled, but in different plan types with different carriers.

“In addition to surplus gains from choice, reducing the reliance on employer-sponsored insurance would mitigate the labor market frictions [the job-lock] arising from the lack of insurance portability between jobs and in or out of the labor force,” the researchers concluded. “While there is little political support for explicitly dismantling the employer-based system, reform proposals actively considered during 2009-2010 would all reduce the relative reliance on employer-sponsored insurance.”

The NBER is a Cambridge, Mass.-based private, nonprofit, nonpartisan research organization. For more information, visit http://www.nber.org.