State and Federal Health Care Reform Activity

Presented by

Janet Stokes TrautweinExecutive Vice President and CEO

National Association of Health Underwriters

November 7, 2006—Election Day

• Control of Congress remains unclear

• Democrats need 15 seats in the House and 6 in the Senate to gain control

• Lobbying reform scandals, support for the administration, and the handling of the Iraq War are major factors in this year’s election

• How will the elections affect health care reforms?

November 7, 2006 –At the State Level

• 85% of state legislative seats up for re-election

• 36 Gubernatorial races (including OH, IL, and TN)

• Current state legislative majorities– Republican controlled - 20– Democrats controlled - 19– Divided - 11

What is Congress Doing?

• Congress adjourned on September 29 and members returned to their districts until after the election

• Pension reform legislation passed just prior to August recess (H.R. 4)– Did not include FSA rollover

• HSA legislation (H.R. 6134) marked-up by Ways and Means Committee

• Lame duck session post-election

High-Risk Pool Funding Extension

• Passed Congress in February 2006 • Extends funding to states for existing high-risk

pools and appropriates funding for states to start up high-risk pools

• Increased the authorization level to $75 million annually through 2010

• HOWEVER…the funding reauthorization was too late to make it into the appropriations bills

• NAHU working to work out technical issues to have the funding for HRPs included for 2006

Health Savings Accounts

• Over 3.2 million covered under HSAs since HSAs were first made available in 2004 (AHIP study)

• NAHU advocates for HSAs to be portable and more accessible

• Increase tax incentives for employees and employers to put money into their HSAs

• Mark-Up of the Health, Opportunity Patient Empowerment Act of 2006 (H.R. 6134) held on Sept. 26

H.R. 6134

• Allows rollovers from FSAs and HRAs into HSAs for a limited time

• Removes deductible as a limit on HSA contributions and increases contribution level

• Requires earlier indexing of cost of living adjustments• Allows full deductible contribution for months preceding

month that taxpayer is an eligible individual• Modifies employer comparable contributions

requirements• Allows one-time rollover from IRAs to HSAs

S. 1955, the “Enzi bill”

• Health Insurance Marketplace Modernization Affordability Act of 2005

• Alternative to traditional AHP legislation • Bill aimed to create a level-playing field within the small

group market.• Allows only fully-insured AHPs and only if the plans adhere

to state regulation and some level of mandated benefits (SBHPs)

• Failed vote of cloture, so it died before it could be brought to the floor for a vote

• Look for a version of the Enzi bill to reintroduced in the 110th Congress

Executive Action on Transparency

• On August 22, 2006, President Bush Signed An Executive Order To Help Increase The Transparency Of America's Health Care System - Empowering Americans To Find Better Value And Better Care.

• This Executive Order Directs Federal Agencies That Administer Or Sponsor Federal Health Insurance Programs To: – Share with beneficiaries information about prices paid to health care

providers for procedures. – Share with beneficiaries information on the quality of services

provided by doctors, hospitals, and other health care providers. – Use improved health IT systems to facilitate the rapid exchange of

health information. – Develop and identify approaches that facilitate high quality and

efficient care.

Health IT

• Senate and House passed different health IT bills – now in conference

• Conferees not named but staff level discussions continue during recess

• Expectations are that agreement will be reached during lame duck session

Key Issues to Resolve in Conference

• Funding – Senate bill provides grant funding for entities to employ health IT, house version does not

• Safe harbors – House version provides safe harbors to hospitals who provide their business partners technology but doesn’t require interoperability which could lead to closed systems

• House version includes coding update to ICD-10 codes (219,000 codes) with implementation date set for 2010. Industry has requested additional 18-24 months to comply.

• Of these key issues, safe harbors may be the most difficult.

Why is Health IT Important?

• Reduces repeated testing

• Reduces number of physician visits

• Will reduce medical errors

• Less hassle for patients – won’t need to repeat family history over and over and potentially miss something important. New history information can be easily added.

State Trends in Health Reform

• Massachusetts-style legislation• Pay or play legislation• Employer Mandates• City/County programs• Single Payer• Wal-Mart legislation• High-Risk Pools• Medicaid Expansion• Long-Term Care Partnership Implementation• Individual Mandate Legislation

Massachusetts Starts the Trend

• MA stood to lose $385 M in federal Medicaid funding

• Implements an individual mandate to purchase health insurance “if affordable” by Jan. 1, 2007

• All employers with 11+ employees must offer a Section 125 plan or be assessed a $295 annual penalty per employee

• Establishes the Commonwealth Health Insurance Connector, which will offer individual plans (non-group market)

Other Provisions of the “Massachusetts Legislation”

• MassHealth (Medicaid) Expansion to children of guardians who earn up to 300% FPL

• Uncompensated Care Pool safety net• Yet to be Determined…

– What is considered “affordable coverage?”– Co-pays and deductibles?– How many plans will be available?– How an agent will be compensated for plan sold through the

Connector?– How much will policies cost? (Target=$200/mo)– Who provides independent advice when someone purchasing without

an agent has a question or problem?

*The Devil is in the Details…

Vermont Follows Suit

• Catamount Health– High-deductible private insurance– Subsidies available up to 300% FPL

• Chronic Care Initiative (thru Medicaid)• If 96% are not insured by 2010, then the

legislature will consider an individual mandate• Financed though sliding scale premiums,

employer assessment ($365/FTE), tobacco tax, and matching federal grant money

“Fair-Share” Legislation

• Pay or Play legislation• Big push of AFL-CIO—introduced in 35 states• Passed in Maryland only—became known as the

“Wal-Mart Bill”• Required employers with more than 10,000

employees to contribute 8% of their payroll towards health benefits or pay into a state health care fund

• MD court recently overturned the decision because it violated ERISA

Medicaid Waivers

• Applying for a Medicaid Waiver was simplified in the DRA

• Kentucky and West Virginia were the first to file Medicaid Waivers under the new standards

• KyHealth Choices will be a managed care system with four choices for beneficiary groups

• Cost-sharing and co-payments will be included, however, there is an OOP maximum of $450 annually

Tennessee Reforms TennCare

• Access TN – HRP• Cover Kids—creates SCHIP program in TN• Cover TN

– Voluntary partnership among the state, individual and “willing” employer

– Available guaranteed-issue to previously uninsured with household income up to 250% FPL

– Plans are portable and cover “basic services”

– Plans are estimated at $150 per month and vary based on age, tobacco use and obesity

City of Chicago

• Targeted at non-union “big box” stores• Companies with more than 90,000 square feet must

provide a living wage of $10 per hour for each employee

• Also requires $3 per hour toward employee benefits• Target has already pulled 2 planned stores and Wal-

Mart has put plans on hold in the Chicago area• Mayor Daley vetoed the legislation—his first in his

17 year tenure

San Francisco

• Pay or Play System• All employers with 20+ employees must contribute to

employee health benefits or pay into a state fund– 20-99 employees=$1.06 per hr/per employee– 100 or more=$1.60 per hr/per employee

• Will treat only city residents, including illegal aliens• Cost estimate $200 million annually• Co-pays and premiums are income-based and established

on a sliding scale

Looking Ahead to 2007

• NAHU is preparing for single payer proposals for next year

• The rising cost of health care is causing officials at the federal, state, and local level to look at possible solutions

• The Fall elections look to be favorable for government-directed health care fans

• Many states will propose “Massachusetts-style” proposals next year

Janet Stokes TrautweinExecutive Vice President and CEO

National Association of Health Underwriters

jtrautwein@nahu.org703-276-3806