Health Insurance Reforms: News of State and Market Actions
Updated: May 2013
With numerous changes in health insurance regulation taking effect in 2010-2012, there is a surge of state and private-sector activity as the traditional regulators create new structures and the commercial market adjusts or recalculates health insurance products and pricing.
The following are a selection of informative articles describing the developments, including examples of current discussions from media, state and nongovernmental sources. Some materials are grouped by topics, listed on the right.
NCSL also has prepared a growing number of reports, bill tracking features and newsletter-format descriptions of state and federal activities. Also visit online descriptions of NCSL sessions at the 2012 annual Legislative Summit and Fall Forum meetings.
Disclaimers: 1) NCSL takes no position for or against state laws and policies. 2) Reprinted material and links to third-party websites are for information only and do not reflect NCSL policy or editorial decisions.
Quote of Interest
“The insurance companies want the exchanges to be weak. They don’t want the exchanges to negotiate with plans, to establish a competitive bidding process, to standardize the benefit package. They want to be able to sell whatever policies that meet the minimum standards of the statute and to charge whatever they want.”
— Jay Angoff, former director of the recently created Office of Consumer Information and Insurance Oversight (CCIIO/CMS/HHS); now a Washington-based attorney focused on health insurance. Quoted May 20, 2013
Posting of Proposed Premiums May Push Competition
AIS Health News - (c) May 17, 2013
If Oregon’s recent decision to publish proposed rates is any indication, public insurance exchanges could force health plan operators to be more competitive — or at least spend more time cross-checking their math. Proposed prices for Bronze-level individual coverage ranged from $169 to $422, prompting at least one carrier to seek permission to go back to the drawing board. You can compare options at www.oregonhealthrates.org.
Ironically, Family Care Health Plans — a company that sells Medicaid and Medicare plans —proposed the highest rate for a commercial product it intends to sell on the exchange. The company’s leadership is now considering revising the proposal to be more competitive, a spokesperson told me. Providence Health Plan, which proposed a monthly rate of $290 for individual coverage, has formally requested adjustments.
In a telephone interview, a spokesperson from Oregon’s Dept. of Consumer and Business Services explained that carriers will be allowed to resubmit bids as long as they can demonstrate a change is justified. Any additional information provided by the carrier won’t supersede or replace information contained in the filing, and the division will not accept revised filing exhibits, such as rate tables or actuarial memoranda, reflecting changes other than corrections of errors, she told me. Final rate decisions will be made by the state on June 30.
Read full article
Racing to Inform Millions Unaware of New Health Coverage
(c) New York Times, by ROBERT PEAR -April 23, 2013
President Obama and the Democrats passed the 2010 health care law to make medical insurance available to more than 30 million people who do not have it. But with recent studies showing that as many as three-fourths of those people are unaware of their new options, health care providers are joining community organizers and insurance companies in an ambitious effort to spread the word in the six months remaining before the health plans become available.
Here in Michigan, a small army of doctors and nurses, hospital employees, insurance agents and advocates for low-income people is mobilizing for the next phase of this revolution in domestic social policy: finding people who are eligible for health insurance and getting them enrolled. It will not be an easy task.
The simmering political debate over Mr. Obama’s health care law — which includes an expansion of Medicaid, the government program for low-income people, and the creation of “exchanges” to market subsidized private insurance — makes the work of these foot solders more difficult, but also more important.
Michigan is, in many ways, a microcosm of what is going on around the country as people race toward the start of “open enrollment” on Oct. 1. “Confusion, total confusion,” said Jan M. Hudson, a consumer advocate, describing state efforts to help more than a million Michigan residents get insurance under the law. Ms. Hudson, a founder of Michigan Consumers for Healthcare, a coalition of consumer groups, led a recent conference of more than 200 experts and advocates who banded together here on the campus of Michigan State University to try to identify and enroll everyone in the state who might be eligible for coverage.
Amy L. Allen, the director of health care reform at the Michigan Department of Community Health, said that delays and resistance by the State Legislature meant that more of the work must be done by community groups and the private sector. The Republican-controlled Legislature declined to set up a state insurance exchange, and Gov. Rick Snyder, a Republican, has met opposition within his own party to his proposal to expand Medicaid. Nevertheless, in Michigan, as in many states, advocates for poor people, blacks, Hispanics and people with disabilities are joining health care providers and insurers in a campaign to find the uninsured wherever they live, work, play or pray.
“Getting all these people enrolled will not necessarily be an easy task, but it’s a great opportunity,” said Anita M. Fete, who was one of the speakers at the conference and is the director of state assistance at Enroll America, a national nonprofit group set up to maximize enrollment. The Census Bureau estimates that 1.2 million people in Michigan are uninsured. Most will qualify for subsidized private insurance, or for Medicaid if the state chooses to expand the program.
Nationally, the Congressional Budget Office predicts that 14 million uninsured people will get coverage next year. But that goal is ambitious. Studies for Enroll America and the Kaiser Family Foundation indicate that three-fourths of uninsured adults are unaware that they will have new insurance options. Among the people expected to sign up for coverage in the new online markets known as insurance exchanges, one in four speak a language other than English at home, and three out of four have a high school diploma or less. Citing those statistics, Christine P. Barber, a senior policy analyst at Community Catalyst, a consumer organization, said: “There is no time for turf battles. We need to come together to make this work.”
In California, the health insurance exchange faces an even more daunting task. It is trying to reach five million people who speak 13 different languages and are spread across 163,000 square miles. Nearly half of those in the state who are eligible for insurance subsidies are Hispanic.
The fact that so many people are unaware of their new options has the potential to undermine the entire purpose of the health care law. Congress provided hundreds of billions of dollars for expanded coverage, but it did not fully account for the difficulty or expense of getting people to sign up. Also, Democrats did not anticipate the effects of continued Republican hostility to the law.
Read the full article online (may require a password)
Nearly 2 million more will pay tax under federal health law
The Washington Post 9/20/2012
Nearly 6 million Americans — significantly more than first estimated— will face a tax penalty under President Barack Obama’s health overhaul for not getting insurance, congressional analysts said Wednesday. Most would be in the middle class .
> Read the article: Nearly 2 million more will pay tax under federal health law
Summary: A Report Card on Health Care Reform
N.Y. Times Editorial Board Opinion; Published March 23, 2013 (c)
Republican leaders in Congress regularly denounce the 2010 Affordable Care Act and vow to block money to carry it out or even to repeal it. Those political attacks ignore the considerable benefits delivered to millions of people since the law’s enactment three years ago Saturday. The main elements of the law do not kick in until Jan. 1, 2014, when many millions of uninsured people will gain coverage. Yet it has already thrown a lifeline to people at high risk of losing insurance or being uninsured, including young adults and people with chronic health problems, and it has made a start toward reforming the costly, dysfunctional American health care system.
EXPANDING COVERAGE Starting in 2010, all insurers and employers that offer dependent coverage were required to offer coverage to dependent children up to age 26. An estimated 6.6 million people ages 19 through 25 have been able to stay on or join their parents’ plans as result, with more than 3 million previously uninsured young adults getting health insurance. The law requires private health insurers to provide free preventive care, without co-pays or deductibles. Some 71 million Americans have received at least one free preventive service, like a mammogram or a flu shot, and an additional 34 million older Americans got free preventive services in 2012 under Medicare.
Private insurers are now required to cover children with pre-existing conditions, which means that an estimated 17 million such children have been protected against being uninsured.
And more than 107,000 adults have enrolled in a federally run insurance plan for people with pre-existing conditions. The law also bars insurers from canceling policies on sick people; previously, 10,000 people a year had their policies rescinded.
The law appropriated $11 billion over five years to build and operate community health centers, a major factor in increasing the annual number of patients served to 21 million, a rise of 3 million from previous levels. Some $5 billion has been put into a reinsurance program that has encouraged employers to retain coverage for retirees and their families; 19 million people benefited with reduced premiums or cost-sharing.
SAVING CONSUMERS MONEY Private insurers are required by the law to spend at least 80 to 85 percent of their premium revenues on medical claims or quality improvements, or they must pay a rebate to consumers. In 2012, insurers had to pay $1.1 billion in rebates, an average of $151 per family. Although Republicans contend the law will drive up insurance premiums, thus far it seems to have reduced them. Any insurer that wants to increase its premiums by 10 percent or more for people who buy their own policies must justify the increase to state or federal officials. As a result, the proportion of rate filings that sought increases of 10 percent or more fell from 75 percent in 2010 to 34 percent in 2012, and it is expected to be even lower this year. The average premium increase in 2012 was 30 percent lower than in 2010.
The law also provides for prescription drug discounts to Medicare beneficiaries. More than 6.3 million older or disabled people have already saved more than $6.1 billion on prescription drugs since 2010 and will save even more as a gap in coverage, known as the doughnut hole, is filled in by 2020. And the law ended lifetime dollar limits on services covered by private plans, a matter of great importance to people with very high medical costs. Annual limits on what plans will pay are being phased out.
REINING IN HEALTH CARE COSTS Sharp declines in the annual growth rate in overall health care spending and in Medicare’s cost per beneficiary have eased the pressure on federal budgets and on private insurance premiums. The main factor was presumably the recession, which made people reluctant to spend on health care, but it is possible that the focus on reform has led many providers to act more frugally. The law has reduced unjustified overpayments to private Medicare Advantage plans, which enroll more than a fifth of all beneficiaries, and despite fears to the contrary, Medicare Advantage premiums have fallen by 10 percent and enrollment has risen by 28 percent since the law was passed.
BETTER QUALITY OF CARE One of the most promising aspects of the health reform act is its focus on improving quality. The percentage of Medicare patients requiring readmission to the hospital within 30 days of discharge dropped from an average of 19 percent over the past five years to 17.8 percent in the last half of 2012, an improvement due in large part to penalties imposed by Medicare for poor performance and financial incentives paid by Medicare to providers to encourage better coordination of care after a patient leaves the hospital.
A number of pilot programs in Medicare and Medicaid have been started to reward quality, to encourage doctors and hospitals to coordinate care, and to lower costs. If enough of these experiments pan out, they could transform not only Medicare but the entire health care system.
With 3:1 Age-Band Ratio, Young People May Face ‘Rate Shock,’ Commissioners Warn
Featured in Health Business Daily, Dec. 28, 2012, from Health Plan Week (c)
The maximum 3:1 ratio in age bands for premium setting in the individual and small-group markets beginning in 2014 under the health reform law could lead to “rate shock” among young people who may find the cost of health coverage too expensive. As a result, many of them likely will elect to pay a relatively modest non-coverage penalty instead, adversely impacting risk pools, several state insurance commissioners told CMS Center for Consumer Information and Insurance Oversight (CCIIO) Director Gary Cohen Nov. 30.
“I think it’s a valid concern that younger folks [who face] a weak penalty will stay out of the market until those penalties have increased to a point where it would make sense” to buy coverage, Kansas Insurance Commissioner Sandy Praeger (R) told Cohen at NAIC's meeting. > Read the full article.
Aetna CEO Sees Obama Health Law Doubling Some Premiums (Dec. 2012)
Bloomberg News interview with CEO of Aetna, December 13, 2012
Health insurance premiums may as much as double for some small businesses and individual buyers in the U.S. when the Affordable Care Act’s major provisions start in 2014, Aetna Inc. (AET)’s chief executive officer said.
While subsidies in the law will shield some people, other consumers who make too much for assistance are in for “premium rate shock,” Mark Bertolini, who runs the third-biggest U.S. health-insurance company, told analysts yesterday at a conference in New York. The prospect has spurred discussion of having Congress delay or phase in parts of the law, he said.
“We’ve shared it all with the people in Washington and I think it’s a big concern,” the CEO said. “We’re going to see some markets go up as much as 100 percent.” ...
Premiums are likely to increase 25 percent to 50 percent on average in the small-group and individual markets, he said, citing projections by his Hartford, Connecticut-based company.
The one-time jump in rates also includes increases in costs that would come even without the law, Bertolini said.
“That just seems silly,” said Gary Claxton, a vice president at Kaiser Family Foundation, a Menlo Park, California- based nonprofit that studies health issues. “I can’t imagine anything going on in the small-group market that would change the average premium that much. On the individual market, there’s arguments for things changing, but those magnitudes seem high.”
The Obama administration said last year that “middle-class families” buying insurance through the law’s new online exchanges may save as much as $2,300 a year starting in 2014. Nick Papas, a White House spokesman, declined to comment on Bertolini’s predictions.
Employment-Based Health Benefits: Trends in Access and Coverage, 1997-2010 (EBRI, published April 2012)
Most Americans get their health coverage through their jobs, but new research from EBRI shows that fewer workers have access to this benefit.
Among the key reasons, according to the EBRI report:
Fewer employers are offering heath coverage to their workers. Between 1997 and 2010, the percentage of workers offered health benefits from their employers moved from 70.1 percent to 67.5 percent.
A growing percentage of workers are part-time and typically do not qualify for their employers’ health benefits. Two-thirds of workers not eligible for their employers’ health plans reported that they worked part time in 2010, up from one-half in 1997.
When health coverage is offered, workers increasingly are turning it down because they say it’s too expensive. Between 1997 and 2010, the percentage of workers who declined coverage because of cost increased from 23.2 percent to 29.1 percent. By contrast, fewer workers are declining coverage because they get it from somewhere else.
Overall in 2010, 46.7 percent of wage and salary workers ages 18–64 reported that they worked for employers that did not offer health benefits. Another 14.7 percent worked for employers that provided health benefits but were not eligible for those benefits
Read the full report from EBRI: (c) Press release
Missouri Legislature Allows Private Insurance to Exclude Birth Control and Abortion
In Missouri, it’s now legal for any "employer, health plan provider, health plan sponsor, health care provider, or any other person or entity" to refuse to cover the birth control, abortion or sterilization. Last week, the Missouri legislature voted to override Gov. Jay Nixon’s veto of the bill. Seven House Democrats voted to override the veto. The measure now heads to court.
- September 2012
Unveiling Enroll UX 2014 Design: Welcome to Coverage
A new standard for public and private health insurance enrollment (June 8, 2012 - CHCF)
Most Americans apply for health coverage the same way they did 30 years ago: completing a paper form and waiting to be notified of their eligibility by mail.
This is a significant drain on government resources, families, and businesses. The federal Affordable Care Act (ACA) requires states to develop self-service online enrollment processes that are as easy to use as the most popular commercial websites. And, with some 40 million more Americans becoming eligible for coverage in 2014, experts say the current system will buckle under the load if the enrollment process is not brought into the 21st century.
For the past year, a coalition of 11 states, the federal government, eight charitable foundations, and a leading Silicon Valley design firm have collaborated to meet this challenge.
The solution, Enroll UX 2014 (www.UX2014.org), is being released today at a meeting of federal and state officials in San Francisco, and will be made available at no cost to every state and the federal government.
Enroll UX 2014 provides a road map for every state and the federal government to create a state-of-the-art, online process for application, eligibility determination, enrollment, and health plan selection. It can be customized by states to be the public face of the insurance exchanges required by the federal health reform law. Read full release
"We live in a digital society. Access to health coverage should be as straightforward as other transactions people are accustomed to, whether it's online banking or travel arrangements," said Mark D. Smith, MD, MBA, president and CEO of CHCF.
Impact of PPACA on Employment-Based Health Coverage of Adult Children to Age 26 (Excerpted from EBRI)
By Paul Fronstin, Employee Benefit Research Institute (c)
The Patient Protection and Affordable Care Act (PPACA) of 2010, requires that group health plans and insurers make dependent coverage available for children until they attain the age of 26, regardless of tax or student status, or dependent status as it relates to financial support. Group plans and insurers also may not limit dependent coverage based on whether the child is married, although the law does not extend the mandate for access to coverage to the married child’s spouse and/or children. Group health plans that were “grandfathered” under the law are not required to offer coverage to adult children if they currently have their own employment-based coverage or if they are eligible for such coverage.
Findings from the National Health Interview Survey (NHIS)
The NHIS shows that the percentage of the population ages 18‒64 with private health insurance increased slightly, from 64.1 percent to 64.2 percent between 2010 and the first half of 2011. There was also a decline in the percentage uninsured, falling from 22.3 percent to 21.3 percent. The uninsured declined because the percentage with public coverage (mostly Medicaid) increased from 15 percent to 15.7 percent. Among those ages 19‒25, the percentage with private insurance increased from 51 percent to 55.8 percent, and the percentage uninsured fell from 33.9 percent during 2010 to 28.8 percent during the first half of 2011.
> Read the full article in EBRI Notes Report, January 2012
Brokers See Exchanges as Potential Boon
Reprinted from HEALTH PLAN WEEK [HPW] (c) all rights reserved, May 21, 2012
Blues Plans Dominate Market In Nearly Every State, AMA Says
By Health Plan Week (c) Nov. 9, 2011
Four out of five metro areas lack a competitive commercial health insurance market, according to an analysis released Oct. 25 by the American Medical Association. And markets could become even more concentrated as large insurers gobble up smaller ones to gain scale in order to offset increased costs tied to the reform law (see story, p. 1). Although some critics blame insurer market concentration for premium hikes, others point to provider consolidation as a key driver in coverage costs. The trade group America’s Health Insurance Plans (AHIP) contends that the AMA data are flawed.
According to AMA’s analysis, nonprofit and for-profit Blue Cross and Blue Shield plans dominate the managed care market in all but seven states — Arizona, California, Colorado, Nevada, New Jersey, Utah and Wyoming. And in all but one of those states, a Blues plan is the second largest carrier. Wyoming’s insurance landscape is controlled by Cigna Corp. (45%) and UnitedHealthcare (21%).
The report, which measures market concentration in 47 states and the District of Columbia, determined there is a “significant absence” of competition among health insurers in 83% of those markets. And in about half of those markets, at least one health insurer had a commercial market share of 50%. Montana, North Dakota and Wisconsin were not included in the data.
In Alabama, the state’s second largest carrier, UnitedHealthcare, has just 5% of the market. The state’s Blues plan has 90%. Alabama was cited as the nation’s least competitive state for health insurance. The report concludes that there “have been no observed benefits” of market consolidation and warns that too much market power by an insurer “is detrimental to society.”
Exchanges, CO-OPs May Spark Competition
Some industry observers contend tax credits for low-income individuals and small businesses called for by the reform law will translate to millions of new members, which could lure new competitors to some markets. Moreover, the reform law calls for the development of retail-focused state insurance exchanges as well as Consumer Operated and Oriented Plans (CO-OPs).
In Mississippi, the state Blues plan controls 55% of the overall managed care market, while UnitedHealth has 23%, according to AMA’s data. The state’s insurance department, however, is optimistic that its insurance exchange will help it add a few more players to the mix.
“We hope [the exchange] will be a competitive marketplace and will attract competitors….We can’t be certain of that, but that is the goal,” says Aaron Sisk, the department’s senior staff attorney. “We have such a skewed competitive marketplace right now. We have so little competition…that we can only benefit from more competitors.”
- Read the full article, (c) Health Plan Week
New Report on Delivery System and Payment Reform in States
A new report - How States Can Be Successful In Leading Health Care Delivery System Reform - by AcademyHealth examines the experience of 8 states (Colorado, Kansas, Massachusetts, Minnesota, Ohio, Oregon, Vermont, and Washington) that recently pursued cost containment, quality improvement, and payment reforms. The report offers insight into what can make reform efforts successful at the state level, as well as the types of barriers that can prevent progress.
All of the states participating in the Commonwealth Fund study pursued the same overall objective: to achieve better value in their health care systems (i.e., higher quality health care at a lower cost). Nevertheless, they varied in their approaches and accomplishments. This brief draws some conclusions about those differences, and provides some “lessons learned” for technical assistance providers and others who seek to help make state reform efforts successful. Published December 2011.
Recession Over, But Employment-Based Health Coverage Still Down. Fall 2011
The recession officially ended in December 2009, but the percentage of Americans with employment-based health insurance has not rebounded, according to a recent study by the nonpartisan Employee Benefit Research Institute (EBRI).
Examining data on a month-by-month basis from December 1995 to July 2010 from the Census Bureau’s Survey of Income and Program Participation, EBRI found that 56.1 percent of all wage and salary workers ages 18‒64 had employment-based coverage in their own name in May 2009, and coverage slightly declined through August 2009.
Although there was a small increase in coverage from August to December of 2009, that turnaround did not last. As of April 2010, the percentage of workers with own-name employment-based coverage was back down to 56.2 percent.
Between December 2007 and December 2009, the percentage of workers with coverage as a dependent increased from 16.6 percent to 17 percent, and reached 17.5 percent in July 2010. It appears that the increase in dependent coverage somewhat offset the decline in coverage that workers received through their own job.
The full report can be found in the October EBRI Notes, "Tracking Health Insurance Coverage by Month: Trends in Employment-Based Coverage Among Workers, and Access to Coverage Among Uninsured Workers, 1995‒2010," available online here.
States to Get Drug Rebates Even Under Managed Care
(c) Health L.eaders Media, July 28, 2011 Cheryl Clark
A provision in the Affordable Care Act changes states' incentives on drug plans and represents billions in potential savings for the states, and better coordination of prescription drug usage for Medicaid patients.
Since 1990, state Medicaid programs have not been able to receive federally allowed prescription drug rebates if they turned over their enrollees' drug benefit plans to Medicaid managed care organizations.
So 14 states carved out those drug benefit plans from their managed care plans, and administered the drug benefits themselves. They got the rebate money, but in many cases coordination of patient care involving prescriptions and, frankly, misuse or inappropriate use of some medications, flourished.
Now, a provision in the Patient Protection and Affordable Care Act that took effect last year is changing the states' incentives. It allows those states to still get those rebates even if they turn over Medicaid drug plan operations to those managed care plans, which some say take a tighter look at prescription appropriateness.
At least three states – New York, Texas, and Ohio – have converted or are in the process of converting, according to the Association for Community Affiliated Plans, which represents 58 nonprofit Safety Net Health Plans in 28 states that cover more than 8 million lives. The result, ACAP officials said in a statement, is billions in potential savings for the states, and better coordination of prescription drug usage for Medicaid patients.
"One of the greatest benefits of managed care is its ability to access and analyze pharmaceutical data to enhance care and control costs," ACAP said in a statement. One way that happens is to curb the inappropriate use of drugs, for example, the inappropriate prescribing of antibiotics for patients with viral colds.
For example, ACAP quoted CareSource, a leading plan in Ohio, which found that the use of the frequently abused pain killer Oxycontin by children and families enrolled in Medicaid increased "by a staggering 325% after the state 'carved out' prescription drug" plan management away from Medicaid health plans.
"Carving out prescription drug benefits effectively erects roadblocks to care integration, displaces financial responsibility and creates confusion among patients who must go to a separate entity to address concerns about their prescriptions," ACAP said in a statement.
A Congressional Budget Office report says the ACA provision will allow the federal government to realize savings of up to $11 billion over the next decade by avoiding inappropriate use of prescription drugs and better management of patient care.
Even though there was a strong incentive for states to keep those drug plans prior to the ACA, 27 states left some or all of the benefits to be managed by the MCOs. And, those states "were able to see savings almost immediately when the expanded rebate provision went into effect in April 2010, ACAP said.
According to a recent study by Health Management Associates, savings for some states that allowed Medicaid MCOs to administer drug benefits amount to nearly $770 million a year, about 6% of their total Medicaid managed care spending."
Now, some states are moving to move drug benefit programs over to managed care companies to run. For example:
In New York, health officials adopted a provision in March that takes effect Oct. 1, and estimates it will save the state $100 million next year.
In Texas, legislators will allow managed care programs to administer Medicaid drug benefits with $51 million in anticipated savings over two years.
In Ohio, the governor's budget for 2012-2013 moved drug benefits to managed care plans effective Oct. 1. The Ohio Association of Health Plans estimates the move will save Ohio approximately $184 million over two years.
Legislatures in as many as 12 other states are likely to consider other moves, ACAP officials says, pointing to a Lewin Group report that found that if 14 states that now manage their own Medicaid drug programs were to move them to managed care organizations, they'd save $11.7 billion over 10 years.
Some hurdles remain in converting those states, ACAP's fact sheet says.
For example, under the new law, rebates from drug manufacturers are paid directly to the states rather than to the managed care organizations.
"Accordingly, many manufacturers have stopped paying health plans private rebates that some plans had previously negotiated on their own," ACAP says. This should result in an increase in the capitated rates for prescription drugs that states pay the plans. Yet one year after the ACA took effect, "many states had not yet adjusted health plans' rates to reflect the shift," the ACAP statement said.