Affordable Care Act: State Action Newsletter
April 8, 2011
Universal and Unified Health System in Vermont
On March 24, the Vermont House passed H 202 to move the state toward a universal and unified health system. The House voted 92 to 49 for the bill, which is supported by Governor Peter Shumlin, who made single-payer health care a centerpiece of his gubernatorial campaign last year. The bill is now in the hands of the Senate Health and Welfare Committee. Senate President Pro Tempore John Campbell promised that the Senate will deliver a bill before the General Assembly adjourns in May.
The legislation proposes establishing a unified health system over several years where all Vermonters would be eligible for a state-financed health insurance program called Green Mountain Care. The bill also would establish a health insurance exchange as required by the federal Affordable Care Act (ACA). The exchange will be used as the basis in creating the unified system. The proposal would require the state to apply for a waiver of the ACA in order to establish its plan.
Proponents of the measure say that it will help to control health care costs at the same time that it ensures access to appropriate health care for all Vermonters. A team led by Harvard Economist William Hsiao made recommendations in a recent research report on how Vermont could save hundreds of millions of dollars with a single-payer system.
Opponents argue that the system would create too much uncertainty, particularly for businesses in the state, and that there is no solid plan for financing it. Both the House Health Care Committee and the Senate Health and Welfare Committee held a series of public hearings on the bill to give citizens an opportunity to comment.
NCSL "States Implement Health Reform" Briefs
Read a Summary of the ACA and other two-page briefs on Health Benefit Exchanges, Consumer Assistance Programs, Pre-existing Condition Insurance, Right to Health Insurance Appeals Process, Accreditation to Approve Health Plans and Providers, Oral Health, and Premium Rate Review.
Minnesota's Managed Care Contracts
Minnesota’s governor reached an agreement with four major health plans that have managed care contracts in the state—BlueCross BlueShield, HealthPartners, Medica and UCare. The plans agreed to voluntarily place a one-time cap of one percent of revenues on 2011 earnings and to return any amount greater than one percent to the state in 2012. Financial results for 2011 will not be known until financials are completed at year-end. Collective profits for these managed care contracts increased from 2.6 percent in 2009 to 3.8 percent in 2010.
This announcement comes on the heels of reforms that made managed care contracts subject to an amended competitive bidding process starting in 2012. The governor’s office stated, “while previously announced managed care reforms will ensure the state is a ‘smarter purchaser’ in the future, this one-time cap on profits in the current contracts provides more immediate relief.” BlueCross BlueShield “…is making this commitment in order to help the state address its budget challenges, and to ensure that members in these programs continue to receive the coverage they depend on for addressing their health care needs.” In addition, UCare has already announced it will provide a one-time, $30 million contribution to the state in 2011.
Inside This Issue
Legislative Update: 2011 Enacted Bills
So far, at least 26 bills in 16 different states have been signed into law during the 2011 legislative sessions related to federal health reform. States are determining how to approach the to-do list outlined in the federal law. Enacted legislation deals primarily with reforming insurance, addressing health insurance exchanges, challenging the federal law and presenting alternatives. In the coming months state efforts to expand reviews of health insurance premium rates and add consumer education and external appeals processes, consistent with an July 1, 2011 HHS benchmark are expected. In some cases, enacted legislation addresses what the state will include in the essential health benefits offered in health exchanges. Although most states haven’t yet established an exchange (79 bills in 31 states are currently pending to establish one), some have begun addressing what will be included in the coverage offered by the exchange.
Colorado enacted HB 1144, for example, to require individual and group insurance policies issued or renewed on or after Jan. 1, 2012, and regulated by the state insurance commissioner, to cover the cost of all evaluations requested by a primary health care provider for children under age 18 who are suspected of having fetal alcohol spectrum disorders (FASD). The act specifics that if it is not one of the “essential health benefits” as determined by the federal government, the new requirement will need to be further examined by the Colorado Interagency Health Reform Implementing Board. The board will make recommendations to the General Assembly about whether the state should cover the costs of this service for health insurance exchange enrollees. Under the ACA, only essential benefits outlined by the feds will qualify for the subsidy assistance; if a state chooses to expand what’s included in the essential benefits, it will have to cover the costs.
Kentucky passed HB 255 to exclude from state income taxes all health insurance premiums for family policies that allow parents to add coverage for an adult child, up to age 27 (federal law allows this up to age 26), who is not their tax dependent. The change aligns the state law with the eligibility and tax deductible coverage specified in the ACA. To view enacted and pending legislation, please visit NCSL’s new Health Reform Legislative Tracking Database.
More States Request Medical Loss Ratio Waivers
As reported in March, Maine was the first state to obtain a waiver from the ACA requirement of a minimum 80 percent medical loss ratio (MLR) for carriers in the individual market. (The ratio is the percentage of premiums that must be spent on medical care and quality improvements.) In addition to Maine, the federal government now is considering similar requests from Florida, Georgia, Iowa, Kentucky, Louisiana, Nevada, New Hampshire , North Dakota and South Carolina.
Update: Nevada was granted a waiver in May, to 75 percent for 2011. New Hampshire was granted a waiver for 72 percent in 2011 and 75 percent in 2012, raising to 8- percent in 2013.[revised 7/12/2011]
The state requests vary. North Dakota has requested a phased-in MLR approach, increasing its pre-reform requirement of 55 percent to 65 percent immediately, then to 70 percent in 2012, and to 75 percent in 2013. The state's survey research sent to the Department of Health and Human Services demonstrates wide market variations: Six insurers offered individual policies in 2009-10; the largest insurer reported a net loss, while another company—at 60 percent MLR—could owe $500,000 in rebates to consumers by 2012.
Florida is the most populated of the requesting states and has a relatively competitive individual market, with at least 21 participating insurers. The state seeks a three-year roll-back, proposing an adjusted MLR standard of 65 percent for insurers and 70 percent for HMOs between 2011 and 2013. Their application states the federal standard "may destabilize the individual health" market, because insurers may leave the market or stop issuing new policies.
A March 2011 financial industry analysis of Florida insurers provided a tool that other states might examine, estimating that granting the waiver "would also deprive consumers of an estimated $60 million in rebates" based on 2009 data.
NCSL has more information on state and federal MLR actions online.
GAO Releases New Report
In the last edition, it was reported that at least 120 bills were pending in 38 states to oppose elements of the ACA. Most of these measures contest the mandate requiring most Americans to purchase health insurance by 2014. On Feb. 25, the U.S. Government Accountability Office (GAO) released a report on alternatives to the individual mandate. This report, “Private Health Insurance Coverage: Expert Views on Approaches to Encourage Voluntary Enrollment,” contains information from national experts on strategies for Congress to consider to encourage voluntary enrollment in private health insurance coverage. The approaches included in the report are:
- Modify open enrollment periods and impose late enrollment penalties.
- Expand employers’ roles in facilitating employees’ health insurance enrollment.
- Conduct a public education and outreach campaign.
- Provide opportunities for personalized assistance with health coverage enrollment.
- Impose a tax to cover the costs of uncompensated care.
- Allow greater variation in premium rates based on enrollee age.
- Use health insurance agents and brokers differently.
- Require or encourage credit rating agencies to use health insurance status as a factor in determining credit ratings.
Child-Only Policies Become a “Thing of the Past” in Some States
Many large insurance companies—Aetna, Blue Cross Blue Shield, United Healthcare and WellPoint to name a few—have stopped offering child-only health insurance policies because of a provision in the ACA. By prohibiting pre-existing condition limitations for children under age 19, the ACA requires insurers to offer coverage to all children regardless of their health. Insurers argue that because of this provision, only sick children will seek coverage leading to soaring costs for insurance companies. Although “child-only” plans make up a small percentage of the market, they can be critical to certain families (e.g., when employers don’t offer dependent coverage or when children are raised by grandparents who are covered by Medicare.)
Some states have passed legislation, created regulations or enforced existing state laws to require insurers that participate in the individual market to offer coverage to children under age 19, including California, Kentucky, New Hampshire and Washington. Similar bills are pending in at least three states—Arkansas, Colorado and Texas.
Texas Representative Garnet Coleman is sponsoring a bill that would require insurers participating in the individual insurance market to accept applications from children under age 19. “We have to correct the market to make sure children don’t go without coverage,” he said.
Blue Cross Blue Shield of Texas, which dropped child-only coverage last fall, is looking for other solutions. The company is seeking approval from the Texas Department of Insurance to create a child-only policy with benefits and rates “appropriate to the new market requirements.”
See HHS Secretary Kathleen Sebelius’ letter on this issue.