Editor’s Note: See “Comments” section below as well as this post.
CRE has been on record since the passage of the new healthcare legislation that Section 1003 of the statute is the most onerous and trumps all others in importance. To this end, CRE has developed this Interactive Public Docket dedicated solely to this topic.
Our concern is very straightforward. The new act gives HHS, utilizing its financial leverage through grants to the states, the de facto authority to convert the health insurance industry into a regulated utility. The HHS authority is ever present in that it can review and comment on premium increases before they go into affect–thereby using studies it promulgates, however accurate, as an action forcing event on state regulators. If such a circumstance occurs, insurance companies will begin to drop lines and policies because their profit margin is less than 4%. Once insurance companies begin to drop policies there will be a public outcry for a singe payer system.
Unfortunately for the consumer some in the insurance industry have concluded that the aforementioned scenario is inevitable and have withdrawn from the action. Smothering regulation by the federal government need not be the controlling case; a combination of laser challenges using the Data [Information] Quality Act coupled with obtaining public support for these corrective actions through the use of an Interactive Public Docket could result in HHS limiting the scope of its regulatory reach.
Consider the events of this week. “Under a law signed by Gov. David A. Paterson…..the New York State Insurance Department will have the authority to review rate applications and their underlying calculations and may approve, modify or reject them….Since 2000, the state has implemented file-and-use.”
HHS is really running the show because, as CRE predicted, the agency is funding the state regulatory efforts:
“New York will apply for new federal grants for rate review programs, Paterson spokesman Morgan Hook said. The U.S. Department of Health and Human Services said the first round of grants is available; each state, and the District of Columbia, is now eligible for a $1 million grant to work on its process for reviewing and giving approval to premium requests. It is the initial portion of an eventual $250 million grant program to strengthen state review processes (BestWire, June 8, 2010).”
…. the decision to fundamentally shift public policy and dramatically increase regulation on health plans is actually above Patrick’s pay grade. It’s an integral part of national health reform that U.S. Department of Health and Human Services Secretary Kathleen Sebelius has, of late, made a priority. While Massachusetts, per usual, may be first, we won’t be the last. (Boston Business Journal)
Participate in CRE’s effort to allow Americans to continue to have a range of choice in healthcare plans, please read this Interactive Public Docket on the new HHS Insurance Office.
Smoke and mirrors no solution to rising health costs
By John Rodgers and Colleen C. DiPirro
Published: June 13, 2010, 12:30 am
On June 7, the New York State Legislature passed a bill that grants the superintendent of insurance authority to render a final approval on a plan’s proposed premium rate.
Gov. David A. Paterson claims this provision will achieve $70 million in savings in 2010-11 by controlling inappropriate health insurance premium increases and reducing the number of uninsured individuals who would migrate to public health insurance programs. As experience has proven, prior approval does not control health care costs. It simply disregards the reality of costs and leads to artificial pricing of health insurance.
It’s easy to point to premium increases as the reason for rising costs because premiums are the most visible reflection of health care costs. The fact is, premium rates are based on the costs of claims that plans receive from hospitals, doctors, pharmacists and other health providers for services that patients receive. At Independent Health, about 90 cents of every premium dollar is paid out in claims for health care services its members receive. Requiring prior approval for premiums is akin to capping the price of gas without recognizing the rising costs of oil.
Addressing increasing costs, therefore, requires a collective effort, where each one of us—including health plans, employers, providers, government and individuals—has a role to play. This effort requires employers to engage and reward employees who make changes toward healthier lifestyles. It means payers changing the reimbursement system to reward physicians and hospitals for quality outcomes, not for volume of services provided.
It involves active participation by community organizations in initiatives such as the P2 Collaborative of Western New York. It depends on unprecedented collaboration among key stakeholders and the sharing of clinical information, and the adoption of health information technology and electronic medical records through organizations such as HEALTHeLINK.
It means strong partnerships between government and the private sector and recognition by elected officials of the impact of legislation, such as mandates, on costs. It also requires each one of us taking greater responsibility for our own health.
As with the rest of the nation, Independent Health and the Amherst Chamber of Commerce agree that health insurance must be made more affordable, especially to individuals and small businesses. But prior approval of health insurance premiums is not a healthy, sustainable solution. To control costs, we must focus on efforts to improve the quality and efficiency of care. If we improve the quality of care, lower cost trends will follow. Conversely, if we simply focus on lowering costs, quality will suffer.
John Rodgers is the chief marketing officer for Independent Health. Colleen C. DiPirro is president and CEO for the Amherst Chamber of Commerce.
New law gives N.Y. regulators power to approve health rate hikes
From: IFAWebnews.com
In what federal officials called “a bold move,” New York Gov. David A. Paterson has signed a series of health insurance reforms into law.
On June 9, Paterson signed Governor’s Program Bill No. 278, reinstating the authority of the New York State Insurance Department to review and approve health insurance premium increases prior to the rates taking effect. For the last decade, the state has operated under a “file and use” law, seen as limiting regulators’ ability to disapprove insurer premium increases.
In a statement, Paterson said that deregulation of health insurance premiums “is a failed experiment leading to unjustified premium increases and more people losing their health insurance coverage.
“Health care is a right, not a privilege, and requires sound, balanced regulation to make sure insurance premiums are fair and justified,” he said. “I am pleased to sign into law my program bill, which will help make coverage more affordable and allow more small businesses and individuals to keep their coverage.”
Under the new law, set to take effect Oct. 1, health insurers and HMOs must apply to the NYSID to implement rate increases, with regulators reviewing the justification of the proposed rates and the ability to approve, modify or disapprove the rate regulation.
Policyholders and the public will also be allowed to weigh in on the proposed rate hike.
The new legislation also immediately requires both groups of providers to spend more premium dollars on medical claims, by setting new requirements on medical loss ratios – the percentage of money spend on actual medical care. The new law moves the medical loss ratio from 75% to 82% for small businesses and from 80% to 82% for individuals, in what the governor’s office said is a move to ensure a greater percentage of premiums are returned to consumers in the form of benefits.
Link to federal reform
“Not only will stronger oversight of rate increases benefit New York’s individuals and small businesses, but prior approval will also provide us with the tools necessary to make sure federal health care reform is implemented in a fair and efficient manner,” Paterson said.
New federal reform sets the medical loss ratio at 85% for the large group market and 80% for the small group and individual markets, beginning next year through the Patient Protection and Affordable Care Act.
U.S. Health and Human Services Secretary Kathleen Sebelius applauded New York “on its bold move” to hold insurers accountable, “and prevent the kind of unreasonable rate increases that have made health insurance unaffordable for many American families.
“This is the kind of action that, together with the Affordable Care Act, is shifting power back to consumers,” she said in a statement.
Calling the signing of the law, “the culmination of years of battling for more affordable quality health care, James J. Wrynn, the state’s insurance superintendent, also applauded Paterson’s action.
“Prior approval will work in tandem with President Obama’s health care reform to make sure insurers’ premium rates are transparent and their reporting is correct,” he said. “Prior approval will also ensure that insurers comply with the requirements of the health insurance exchanges that will be developed under federal reform.”
IFAWebnews.com
Insurer rate caps are here to stay
This week, the state Division of Insurance came to an agreement with Neighborhood Health Plan over small-business rate increases that the DOI rejected in April. Appeals launched by other insurers, including Tufts Health Plan, Harvard Pilgrim Health Care, Tufts Health Plan and Blue Cross Blue Shield of Massachusetts, are still ongoing. Those insurers, save for Neighborhood Health Plan, are also continuing their legal action against the state to reinstate the rate increases.
But no matter what happens in these specific cases, one thing seems clear: The government is going to set rates for health insurers from now on.
Much has been made of Gov. Deval Patrick’s political interest in cracking down on insurers, and taking action ostensibly in support of small businesses. But the decision to fundamentally shift public policy and dramatically increase regulation on health plans is actually above Patrick’s pay grade. It’s an integral part of national health reform that U.S. Department of Health and Human Services Secretary Kathleen Sebelius has, of late, made a priority. While Massachusetts, per usual, may be first, we won’t be the last.
In early May, Secretary Sebelius sent a letter to governors and state insurance commissioners urging them to review the authority they have under their state laws to determine whether they have all of the regulatory tools needed to approve health insurance rates before they take effect.
On Monday, Sebelius announced $51 million in grants to states to beef up those regulatory tools, in the service of reining in health care premium increases. This is just the first tranche of a total $250 million set aside for this purpose, that was approved as part of national health reform.
On Thursday, she released the following statement after the governor of New York signed legislation granting the state authority to review and approve health insurance premiums before they take effect.
“I applaud New York on its bold move to hold insurance companies accountable and prevent the kind of unreasonable rate increases that have made health insurance unaffordable for many American families. This is the kind of action that, together with the Affordable Care Act, is shifting power back to consumers.”
The problem is that insurers in Massachusetts, and likely in other states as well, say they cannot absorb these rate caps. Most of the major plans in Massachusetts suffered a raft of losses in 2009, and some say the rejection of the small-business rate increases will throw them into serious financial peril. Blue Cross Blue Shield, for instance, says it is losing $20 million per month due to the DOI’s action.
The goal — to halt the terrifyingly steep premium rate climb for small businesses — is not just admirable, it’s essential to the economic recovery. But if real reform of medical costs does not accompany these rate caps, we might find that Massachusetts residents have less — not more — access to care, because health plans might choose not to compete in small-business markets that lead to such steep losses.
Exhibit 1: Three of the major health plans have already withdrawn from the Massachusetts Health Connector’s Business Express small-business health plan, which was launched in February.
Read more: Insurer rate caps are here to stay – Boston Business Journal
Health Insurance Executives Comment On Federal Overhaul
June 11, 2010 | The Atlanta Journal-Constitution
Craig Schneider; Staff
The federal health care overhaul will open access to care but could increase people’s insurance rates, said some of Georgia’s top health insurance executives during a panel discussion Thursday.
The top officials for seven of the largest health insurers gathered at the downtown office of the state Department of Insurance to discuss the impact of the new federal health care plan, which begins to take effect this year and grows in impact over several years.
Several of the officials praised the intent of the changes to open up health care to millions of uninsured people. But they raised concerns that the overhaul does not address the rising costs of health care. They also worried that the influx of new patients will strain the health system in Georgia, heightening the state’s shortage of doctors and stressing emergency rooms.
John Price, president of the Georgia market for Aetna, said the changes could drive up individual insurance rates, at least in the short term.
Tom Davis, the head of Coventry Healthcare of Georgia, said the combination of a shortage of doctors along with a flood of new patients could cause “a bottleneck to primary care.”
The other represented firms were Blue Cross/Blue Shield of Georgia, CIGNA Healthcare, Humana, Kaiser Permanente and UnitedHealthcare of Georgia.
The executives did not gather on their own, but were drawn by a subpoena by Georgia Insurance Commissioner John Oxendine. He said he wanted to hear them discuss the impacts on the health changes to Georgians. Although Oxendine could draw the top executives together, he could not elicit much in the way of in-depth answers.
Oxendine, a candidate for governor, used the forum to voice his concerns and criticisms of the health care changes. Many of his questions were directed at having the executives address these concerns.
But often during the hearing, the officials wouldn’t bite. Again and again, they responded that they could not speculate on the effects until further research and regulations were completed.
At one point Oxendine asked a question of the group and was greeted with extended silence.
“I’m going to call on someone,” he told the executives.