April 2: Health Care Reform News
Top stories
Obama, in Maine, Needles Republicans Over Calls to Repeal Health Care Overhaul
The New York Times
April 1, 2010
President Obama continued on Thursday what might be called his Go-for-It Tour, traveling to this Northeastern state — represented by two moderate Republican senators who balked at his health care overhaul — to dare the opposition party to run against it this fall.
MA: Health Care Hikes Rejected
The Boston Globe
April 2, 2010
The Massachusetts Division of Insurance has denied 235 of 274 increases proposed by health insurers for plans covering individuals and small businesses. The rulings, following a review process set in motion by emergency regulations Gov. Deval Patrick filed in February, mark the first time the state has used its authority to turn down health premium increases.
Insurer Fights Maine Regulator on Premium (subscription required; full text below)
The Wall Street Journal
April 2, 2010
A state court will soon rule on a decision by a Maine regulator who last year turned down a health insurer's request for a premium increase sufficient to let it earn a profit, citing tough economic times.
Insurance
Insurance Protection For Adult Children Won't Come Fast Enough For Some Parents
Kaiser Health News
April 2, 2010
The health care reform law’s young adult coverage provision, along with a few other consumer-friendly changes, has been showcased by the president and legislative leaders as an example of the immediate benefits of health reform. But instead of giving the new law a public relations boost, it’s creating consternation among some parents, who are sharing their concerns online about when the provision kicks in and whether their family will qualify.
State news
Health Industry Invests in State Elections
USA Today
April 1, 2010
The next battles over President Obama's sweeping revamp of the nation's healthcare system will be waged in the states, where healthcare interests are heavily invested, USA Today reports. Six of the 15 attorneys general who have challenged the new law count healthcare interests among the top five industries giving to their most recent campaigns, according to the non-partisan National Institute on Money in State Politics.
NH: Unions Developing Trusts for Retiree Medical Costs
The Concord Monitor
April 2, 2010
Unions representing the state's teachers and firefighters are creating a new way to let public employees save for their medical costs in retirement. If the plans go forward, New Hampshire could be the first state to have a statewide system of retiree medical trusts.
Jackson Health System's Consulting Tab Could Skyrocket
The Miami Herald
April 2, 2010
After paying Deloitte consultants $97 million over six years to reduce losses and improve revenue, the financially desperate Jackson Health System in Miami has now hired consultants to reduce losses and improve revenue. PricewaterhouseCoopers has 20 staffers in Miami on a one-month, $50,000 contract, but Miami-Dade Mayor Carlos Alvarez expects PwC to propose a lengthy extension that could cost many millions more to help turn around the public health system.
AZ: Brewer Authorized to Sue Feds
The Yuma Sun
April 1, 2010
Gov. Jan Brewer signed legislation Thursday giving her the power to sue the federal government over the new health care legislation.
Medicare/Medicaid
CMS' Failure to Act on RAC Findings Has Resulted in $231 Million Loss, GAO Finds
Fierce Healthcare
April 1, 2010
CMS could have collected an additional $231 million in Medicare overpayments during the three-year Recovery Audit Contractor demonstration, had it taken steps to actually correct the "vulnerabilities" the program uncovered. But five years after the demonstration's launch, CMS has yet to implement corrective measures, let alone appoint someone to oversee the process, according to a new analysis by the Government Accountability Office.
Denver Business Journal
April 2, 2010
A federal agency has approved Colorado’s plan to charge a per-patient fee to hospitals in order to expand Medicaid and Child Health Plan Plus eligibility and insure more state residents.
Health Care Law
Obama's Still Stumping for Healthcare
The Los Angeles Times
April 1, 2010
President Obama took to the road this week, telling an audience in Maine that the passage of the healthcare overhaul showed his administration's commitment to small businesses and the struggling middle class. With polls showing that healthcare remains a divisive issue in this midterm election year, Obama argued that the overhaul was part of a package of changes needed to help the middle class work its way out of a devastating recession.
Employers
Will New Health Care Law Really Help Small Businesses?
ABC News
April 1, 2010
President Obama today touted the small business tax credit in the health care law, even as company owners remain uncertain about what the sweeping changes really mean for them.
AT&T Will Take $1B Non-Cash Charge for Health Care
AP/The Las Vegas Sun
April 2, 2010
AT&T Inc. will take a $1 billion non-cash accounting charge in the first quarter because of the health care overhaul and may cut benefits it offers to current and retired workers. 3M Co. said it will also take a charge of $85 million to $90 million.
Exelon, Verizon Latest to Record Health Care Charge
Dow Jones/Chicago Breaking Business News
April 2, 2010
Verizon Communications Inc. said Thursday it expects to record a one-time noncash charge of $970 million in the first quarter, to account for the anticipated impact of the recently enacted U.S. health-care overhaul.
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Insurer Fights Maine Regulator on Premium
The Wall Street Journal
April 2, 2010
As insurers wrestle with the changes coming from the federal health overhaul in Washington, they also face challenges at the state level from regulators seeking to head off big premium hikes. A court case in Maine underscores the tensions, with a health insurer battling a decision that zeroed out its profit to keep consumers' rates down.
A state court will soon rule on a decision by a Maine regulator who last year turned down the insurer's request for a premium increase sufficient to let it earn a profit, citing tough economic times. The regulator approved a smaller increase that was expected to leave the insurer losing money on individual policies.
The company called the decision unfair, resulting in a court case that poses a central question: What is a reasonable profit amid rising health-care costs?
The dispute involves Anthem Blue Cross and Blue Shield, a unit of WellPoint Inc., and state insurance superintendent Mila Kofman, a 39-year-old regulator who came to Maine two years ago after working in the federal government and as a university professor in Washington, D.C. A state court in Portland heard the case last week. and is expected to rule soon.
Insurance overseers in other states say they are watching the Maine case closely. "It does get at the heart of a regulator's ability to regulate rates," says Sandy Praeger, Kansas's insurance commissioner and chair of the National Association of Insurance Commissioners' health-insurance and managed-care committee. "What happens in one state certainly has a ripple effect."
Insurance is regulated by the states, and at least 29 give their insurance overseers direct power over health premiums. That role may take on new significance with the national health overhaul, which will create state-based "exchanges" where consumers can buy policies. The new federal law calls on the Department of Health and Human Services to "review" premiums that represent "unreasonable increases." But the final regulatory say will likely continue to fall to state agencies.
Health insurers, too, have a lot at stake. America's Health Insurance Plans, the industry lobbying group, says it is tracking the Maine case, and the Blue Cross and Blue Shield Association is aware of it. Double-digit rate increases, including a bid by a WellPoint unit in California to raise rates by as much as 39% this year, have drawn national fire. On Thursday morning, the Massachusetts Division of Insurance rejected 235 of 274 rate increases for small businesses filed by health insurers in the state, saying in a statement that the increases were "excessive."
But insurers have charged that new federal requirements to take all applicants, sick or healthy, mean they may need to continue pushing through such increases to remain profitable in future years.
WellPoint's Chief Executive, Angela Braly—in testimony in February before a congressional committee investigating its California rate increase—said Maine is an example of what would happen if the health overhaul is done wrong. The reforms in the legislation lack enough teeth to require healthy people to buy insurance, she contended.
Maine is known as a pioneer in attacking the problem of the uninsured. President Barack Obama was here Thursday to drum up support for his new health law. Since 1993, Maine has required sellers of individual health-insurance policies to accept all applicants—foreshadowing a key provision of the national overhaul that will fully take effect in 2014.
The state's coverage rules have been a help to Shelly Mountain, a 48-year-old stay-at-home mother in the town of Mapleton, whose family pays $446 a month for high-deductible insurance coverage from Anthem Blue Cross & Blue Shield. Ms. Mountain says her husband, who owns a logging truck, has diabetes and high blood pressure, and their 15-year-old son has a seizure disorder.
In many states, her son and husband wouldn't have been able to buy individual health-insurance coverage, because insurers have typically disqualified people with pre-existing conditions. Under Maine law, insurers can't do that, nor can they charge the sick more than the well.
Anthem says these requirements, along with the state's high medical costs, have helped push up expenses, with 1% of individual policyholders in Maine driving 50% of claims costs. As premiums then rise, it says, they give healthy people incentives to forgo insurance in Maine, which has had no requirement that everyone be insured. "As those younger, healthier folks choose not to participate in the risk pool, the average costs per individual start to rise significantly," said Dan Corcoran, the president of Anthem's Maine operation.
Ms. Kofman, the insurance superintendent, rejects that analysis, saying that states without a broad coverage rule also have had substantial claims increases. "It's about medical costs and how effective or not effective companies have been in tackling the cost of medical care," Ms. Kofman said in an interview. At the federal level, defenders of the health bill have said that its requirement for most people to buy insurance, including healthy ones, has adequate penalties to make it work.
Anthem, which took over the nonprofit Blue Cross and Blue Shield of Maine in 2000, recorded consistent profits from the individual business for several years after the takeover, fueled by rate increases. Pretax margins one year were close to 14%. But by 2008, the year Ms. Kofman became state insurance superintendent, the individual insurance market was showing signs of strain. Anthem lost money on individual policies in 2005 and 2006, although it swung back to a profit the next two years.
Early last year, Anthem sought premium increases averaging 18.5% in the Maine individual market. That included its typical 3% "margin for profit and risk"—the term "risk" referring to the chance that claims would prove costlier than expected. This increase was designed to provide about a $2.5 million pretax profit. In Maine, any insurer seeking to raise rates first files a proposal. The state attorney general typically responds with its own analysis. The insurance superintendent gets an analysis from her own staff, hears public comment, then rules.
State Attorney General Janet Mills, in a move that people in her office call unprecedented, suggested that Anthem be allowed no profit margin because of the "extreme financial hardship" of subscribers in the tough economy. Her office said in a filing that Anthem could forgo profit for a year on its individual policies because its overall business in Maine was healthy, with a sizable surplus. Individual policies are a small part of its Maine operation, which has nearly $1 billion in annual revenue.
"How much profit is enough in these economic times?" Attorney General Mills said in an interview. Ms. Kofman's office got hundreds of letters from Maine residents about the rate hike request, many complaining they couldn't afford the proposed premiums.
Last May, Ms. Kofman announced her decision: She wasn't allowing the company any profit margin, citing the tough economy and the company's financial health. The increase she permitted—10.9%, compared to the 18.5% Anthem sought—was supposed to cover projected higher costs. She also denied two other rate tweaks, and her combined decision projected Anthem would lose money on individual health insurance.
In June, Anthem filed its court challenge to the rejected profit margin. "We felt the superintendent was acting outside her statutory authority," Anthem's Mr. Corcoran said. As for subsidizing the individual market with revenue from other lines, that would put Anthem at a competitive disadvantage in those other lines, he said.
The 10.9% increase Ms. Kofman allowed took effect in July. Anthem said that its overall business in Maine produced 2009 pretax profits of about $33 million, but it lost about $2.4 million on individual health insurance in the state. Ms. Kofman declined to discuss the Anthem case before the court.
Last Wednesday, a state judge in Portland heard Anthem's appeal. Earlier, consumer groups staged a march to protest Anthem's rate hike.According to participants, Anthem's lawyer said Ms. Kofman's decision would likely put the company's individual line of business in the red.
The state attorney general's office argued that Ms. Kofman had acted within her authority in balancing the interests of the insurer and policyholders. A decision from the court is expected soon. In the meantime, Anthem has filed another rate-increase request on individual policies for 2010, asking for a 22.9% boost. Ms. Mills, the attorney general, plans to recommend that Ms. Kofman again allow Anthem no profit margin.
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