• Judiciary committee votes to constrict health insurers' antitrust exemption
• New cost estimates for House health reform dip below $900 billion

• Minnesotans could buy health insurance across state lines, under governor's new health initiative

• Small business employees 50 percent more likely to lose health care coverage
• Quality improvement in health care stagnates: NCQA

Judiciary committee votes to constrict health insurers' antitrust exemption

On October 21, the House Judiciary Committee reported out H.R. 3596, the Health Insurance Industry Antitrust Enforcement Act of 2009, by a vote of 20-9. The bill would scale back the 64-year-old insurance company exemption from antitrust laws known as the McCarran-Ferguson Act.

According to committee chairman Rep. John Conyers, Jr. (Mich.), "The House Judiciary Committee agreed to bring antitrust enforcement to the two most abusive practices of the health insurance industry—price fixing and market allocation. Although state regulation of this industry is crucial—and is preserved in this bill—it has proved insufficient to prevent these particularly abusive practices. No one on this committee believes that price-fixing or carving up markets is a good thing, and the wide, bipartisan support for this bill's passage reflects this. This measure fixes a mistake sitting on the federal statutes for over 60 years, making an important contribution to the health reform efforts underway in both houses of Congress."

Sec. 3 of H.R. 3596 states that nothing in the McCarran-Ferguson Act shall "permit health insurance issuers or issuers of medical malpractice insurance to engage in any form of price fixing, bid rigging, or market allocations in connection with the conduct of the business of providing health insurance coverage or coverage for medical malpractice claims or actions."

New cost estimates for House health reform dip below $900 billion

On October 21, the Congressional Budget Office (CBO) released a preliminary cost estimate of a version of H.R. 3200, America's Affordable Health Choices Act of 2009, which includes what is being called a "robust public option."

The CBO estimate puts the cost of the House bill, which would tie reimbursement in a public option to Medicare rates plus 5%, at about $870 billion; reportedly, the bill also would reduce the federal deficit in the first ten years.

Earlier in October, the CBO released an estimate of the effects of tort reform proposals on health care reform.

According to the CBO, "Typical legislative proposals for tort reform have included caps on awards for noneconomic and punitive damages, rules allowing the introduction at trials of evidence about insurance payments and related sources of income, statutes of limitations on suits, and replacement of joint-and-several liability with a fair-share rule."

The CBO estimates that implementing a typical package of tort reform proposals nationwide would reduce total U.S. health care spending by about 0.5% (about $11 billion in 2009). That figure is the sum of a direct reduction in spending of 0.2%from lower medical liability premiums and an additional indirect reduction of 0.3% from slightly less utilization of health care services.

Enacting a typical set of tort reform proposals would reduce federal budget deficits by approximately $54 billion over the next ten years; that figure includes savings of about $41 billion from Medicare, Medicaid, the Children's Health Insurance Program, and the Federal Employees Health Benefits program, as well as an increase in tax revenues of approximately $13 billion from a reduction in private health care costs that would lead to higher taxable wages.

For more information, visit http://www.cbo.gov.

Minnesotans could buy health insurance across state lines, under governor's new health initiative

Minnesotans would be first in the nation to be able to purchase health insurance across state lines under an initiative proposed by Governor Tim Pawlenty. Pawlenty outlined a package of health care reform initiatives to be considered during the 2010 legislative session. In addition to enhancing competition in the health care insurance marketplace, he proposed applying successful cost-containment strategies to the state's publicly subsidized health care programs.

Governor Pawlenty proposed three health care reform initiatives:

1. Allow Minnesotans to purchase health insurance from other states. Minnesotans are currently prohibited from buying health insurance products from other states. Minnesotan citizens and businesses would benefit from more choice in the marketplace and additional competition. Three health care plans in Minnesota dominate the marketplace, with a combined market share of more than 80 percent of fully insured Minnesotans.

Governor Pawlenty proposes changing Minnesota law to allow consumers to purchase health insurance plans sold in other states. The following requirements would have to be met in order for the product to be sold in Minnesota:

• The state insurance regulator where the company is domiciled must be accredited by the National Association of Insurance Commissioners;
• The insurance company must have a certificate of authority in Minnesota;
• The insurance regulator in the state of domicile must review and approve policy forms;
• The insurance company must agree to abide by Minnesota's claims practices and other consumer protection laws; and
• The insurance company would be subject to standard Minnesota fees and taxes.

The Minnesota Commissioner of Commerce will determine the top 20 states that are most effective in terms of regulating health insurance policies and have the best health outcomes for their residents. Only policies approved in those states and meeting Minnesota's new criteria could be sold to Minnesotans.

Ultimately, Governor Pawlenty would like Minnesota to help establish an Interstate Health Insurance Compact that would allow states to join and share common regulatory standards to facilitate the purchase of health insurance across state lines. The compact would be modeled after the successful Interstate Insurance Product Regulation Compact (IIPRC) that has made the purchase of life insurance easier. Minnesota played a leading role in establishing the IIPRC, which began in 2004 and became operational in 2006. Thirty-three states are members of the IIPRC.

2. Require MinnesotaCare & Medical Assistance to price health care services based on quality and cost. The state employee health care program, Minnesota Advantage, has successfully used a tiered provider system to rein in costs. State employees in Minnesota can choose any clinic available to them in a private market system. However, individuals who use more costly and less efficient clinics are required to pay more out-of-pocket. Not surprisingly, informed health care consumers wisely vote with their feet and wallets. This has resulted in no increase in health care amounts paid by employees during three of the last five years and significantly reduced program costs for the state.

3. Develop a modern MinnesotaCare product. MinnesotaCare is a state-subsidized health insurance program for Minnesotans at or below 275 percent of the federal poverty guideline.

Money left over on the card would remain with the enrollee to be used in the following year.

Source: Minnesota Governor's Press Release, October 2009.

Small business employees 50 percent more likely to lose health care coverage

Employees of small businesses are 50 percent more likely to lose coverage as workers at large businesses, according to a recent report released jointly from the Department of Health and Human Services (HHS) and the Small Business Administration. In addition, the report, Insurance at Risk: Small Business Employees Risk Losing Coverage, found that half of workers in small firms that do not offer health benefits remain uninsured.

"More Americans who work for a small business have lost their health insurance coverage, and those who still have coverage have seen their costs go up," said HHS Secretary Kathleen Sebelius. "Health insurance reform will drive costs down and make it easier for small business owners to give their employees the quality coverage they need."

The survey also found the following:

• Fewer small businesses are providing coverage to their employees. In 2000, 57% of firms employing less than ten workers provided coverage. In 2009, only 46% of these firms provided coverage.
• Nearly one-quarter of the uninsured—11 million people—are employees of firms with less than 25 workers, even though they only make up approximately one-tenth of the non-elderly population.
• Almost three-fourths of small businesses that did not offer benefits cited high premiums as the reason, and on average, small businesses pay up to 18% more than large firms for the same health coverage.

For more information on the HHS and SBA report, visit http://www.healthreform.gov/reports/smallbusiness/index.html.

Quality improvement in health care stagnates: NCQA

The 2009 State of Health Care Quality Report from the National Committee for Quality Assurance (NCQA)reveals that after 10 years of quality improvement, "the quality of care in America appears to have reached a plateau." The report noted that "With a few key exceptions, quality measures in the three major sectors of our system—commercial insurance, Medicare, and Medicaid—were flat."

Richard Sorian, vice president of public policy with NCQA, attributed the slowing performance of health plans to the economy and the pay-for-service model. "In many cases employers and health plans have taken their eye off quality to focus on cost-cutting," Mr. Sorian said, adding that the health industry's pay-for-service model does not create an incentive to improve the quality of care.

Improving health care quality would have significant benefits beyond the health care system itself, according to NCQA. The organization estimates that were all health plans able to perform at the level of the top 10% of plans, the U.S. would avoid up to 115,000 thousand deaths and save at least $12 billion in medical costs and lost productivity every year.

NCQA's report examines quality data submitted by 979 health plans across the country that collectively cover 116 million Americans. The 13th annual report noted several key areas of care have seen little progress in several years, including these:

• Only 46.4% of people taking anti-depressant drugs are monitored by their physicians;
• 34.1% of children prescribed medications for attention deficit hyperactivity disorder (ADHD) are seeing a doctor for follow-up care;
• Half of patients previously hospitalized for mental illness see a physician for a follow-up visit;
• 45.3% of people are receiving colon cancer screening at the appropriate age; and
• Only 42.6% of patients with alcohol or drug dependency are entering into treatment.

In addition, for the third year in a row, NCQA found that the performance of health plans serving Medicare and Medicaid patients failed to appreciably improve on key quality measures. Among Medicare Advantage plans, only 5 of 36 measures (14%) showed a statistically significant improvement; in Medicaid, 18 of 50 measures (36%) showed a statistically significant gain, and most of these improvements were small.

Regarding health reform, the NCQA report recommends the following elements be included in any health reform legislation:

• Create insurance exchanges and require participating plans to maintain accreditation that assesses clinical quality
• Reform payment and delivery systems to reward quality performance and spur care coordination.
• Focus on quality improvement in Medicare and Medicaid.

For more information, visit http://www.ncqa.org/sohc.