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May 31, 2011

Washington Health Policy Week in Review Archive a4b13efb-fcac-4367-86c8-95a9685065a4

Newsletter Article


Indiana, Washington, and Rhode Island Lead the Way on Exchanges

By Jane Norman, CQ HealthBeat Associate Editor

May 23, 2011 — Indiana and Washington were among three states the federal government rewarded with money for being in the forefront of setting up health insurance exchanges. This, even though both are among 26 states trying to kill the law in court.

The Department of Health and Human Services announced a significant step forward in the development of the exchanges—grant awards totaling nearly $35 million to Indiana, Washington and Rhode Island, which is not challenging the health law. Indiana will receive $6.8 million, Rhode Island $5.2 million and Washington $22.9 million.

A health care aide to Indiana Gov. Mitch Daniels cautioned that even though they're taking the federal grant, state officials still are not certain whether they will have a state exchange, a federal exchange—or any exchange at all if the health care overhaul measure is declared unconstitutional.

Despite this uncertainty, the governor signed an executive order in January establishing an Indiana health benefit exchange. "We still have a lot of questions," said Seema Verma, the health reform lead in the governor's office.

Exchanges are health benefit marketplaces for individuals and small businesses. The health care law (PL 111-148, PL 111-152) requires them to be up and running by 2014. States that want their own exchanges must get them approved by the Health and Human Services Department (HHS) by Jan. 1, 2013, or the federal government will step in. Some conservatives who dislike the law still argue that states should design their own exchanges so they can make sure they reflect their own histories and politics.

The three states will receive "exchange establishment grants," which means HHS thinks they've made some progress toward planning their exchanges and now are at the point where they are can get additional federal funding. This is the first of six rounds of exchange establishment grants.

The three states' progress is in contrast to many other states that are still wrestling with how to set up their exchanges, or are divided by fights over governance or other issues. In some, Republican objections to implementation of any portion of the health care law have slowed action in legislatures.

Daniels, who had been thought a potential presidential candidate but announced over the weekend that he won't run, issued an executive order in January launching the process of establishing an Indiana health benefit exchange.

Under the order, it is to be structured as a nonprofit corporation set up by the Indiana Family and Social Services Administration and the Indiana Department of Insurance.

Make no mistake—Daniels is opposed to the law. He notes in the order that there are serious operational and constitutional challenges pending, and no information on how a federal exchange would operate.

And he says in the order, "Indiana currently believes a state-created exchange protects Hoosiers from undue federal regulation."

In addition, he said, "the stringent timelines make it prudent for any state to conditionally analyze, plan and prepare for a state-based exchange."

Verma said that in its application for the grant, Indiana made it clear that "we are not 100 percent committed" to the exchange.

"I think, at this point, we want to keep all our options open," she said, noting that federal rules for exchanges have not yet been proposed.

Legal and health information technology issues also must be explored so officials know what an exchange might look like if Indiana decides it wants one, she said.

Earlier, HHS awarded grants of up to $1 million each for planning to 49 states and the District of Columbia—Louisiana declined a grant and has since become the first state to publicly announce it would not be setting up its own exchange.

Also, six states and a multistate consortium received more than $241 million in "early innovator" grants to develop model information technology systems to be used by exchanges.

Daniels' January order says that "it is crucial that the health benefit exchange maintain the existing free market and assure choices to Indiana citizens."

It also says that if "after due analysis" the state thinks it's appropriate to proceed with an exchange, and the federal government thinks the state is making sufficient progress, a board of directors will be selected to manage operations of the exchange.

The board will include representatives of state agencies and the Indiana General Assembly, the order says, without mentioning who else might be included. Standing committees will be appointed that represent "appropriate stakeholder representations, including, but not limited to, consumers, providers and actuaries," the order says.

HHS officials said earlier this month that state governors can issue orders creating exchanges and it doesn't necessarily take legislative action.
Washington Gov. Christine Gregoire signed a health exchange bill on May 11. In Rhode Island, measures to create an exchange are pending in the legislature.

Mandatory funding for the exchanges has been a target as well for House Republicans who want to repeal sections of the health care law. The House earlier this month voted 238–183 to pass a measure (HR 1213) to de-fund exchanges. The bill is expected to have little future in the Democratic Senate, and the Obama administration has issued a veto threat.

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Commonwealth Fund: Young Adults Defer Health Care Due to Costs

By Dena Bunis, CQ HealthBeat Managing Editor

May 26, 2011 — More than 600,000 young adults have become insured since the health overhaul law allowed them to stay on their parents' insurance plans until age 26. But a new Commonwealth Fund study also found that many of those ages 19 to 29 are going without care because of cost.

The study found that in 2010, 45 percent of young adults did not fill a prescription or go to the doctor when sick or skipped a test, treatment or follow-up visit because of the cost. That's up from 32 percent in 2001.

The Commonwealth Fund used data from its 2010 Biennial Health Insurance Survey to prepare the report. It also found that 40 percent of young adults had problems paying medical bills, had been contacted by a collection agency over unpaid bills, had to change their way of life to pay medical bills or were paying off a health care debt over time.

The provision in the health law that allows parents could to keep children on policies longer was one of the most popular and is often cited by overhaul supporters as something the Republicans would take away under their proposed repeal of the law.

The provision has made a difference, according to a May 5 Gallup Poll that showed uninsured rates among 18-to-29-year-olds fell in the early part of this year.

But the provisions for families will not solve the entire problem of insured young adults. Commonwealth reports that nearly half of these uninsured—7.2 million—are in families with incomes about one third above the federal poverty level and another 4.9 million have incomes between one-third and four times the poverty line. Those families are less likely to have insurance, particularly policies that include dependents.

But under the health overhaul, the study points out, young adults in those economic groups will either qualify for the Medicaid expansion or for federal subsidies to help them pay for insurance.

Another aspect of the law will provide better insurance for college students, the report points out. Beginning in 2012, college health plans will have to follow most of the same rules that private health plans do, such as the elimination of lifetime coverage limits and rescissions and the phasing out of annual limits. Commonwealth estimates that 1.6 million young adults enrolled in college and university plans will have better coverage once that change takes effect.

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Don't Mess with Medicaid, Most Americans Say

By John Reichard, CQ HealthBeat Editor

May 25, 2011 — Health policy insiders view Medicare as having more political support than Medicaid. But a new poll says the latter has many backers among the American people.

Sixty percent of Americans want to keep Medicaid as is and only 13 percent favor major cuts in the program as part of congressional efforts to reduce deficit spending, according to a poll released by the Kaiser Family Foundation.

Many Americans have a personal connection to Medicaid, reported the survey of 1,203 adults, conducted May 12 through May 17. The poll has a margin of error of plus or minus 3 percentage points.

About half of Americans said a friend or family member received assistance from Medicaid at some point and 49 percent said Medicaid is very or somewhat important to their own family.

"If you watch the debate about the deficit and entitlements, you would think that almost everyone has a problem with the Medicaid program and wants to change it, or cut it—or both," said Kaiser President Drew Altman in a news release accompanying the survey results. "The big surprise in this month's tracking poll is that one group who does not want to cut Medicaid is the American people."

Added Altman: "With about 69 million people expected to be covered by Medicaid this year, it is no longer the welfare-linked program it once was. Medicaid may not be the lower-hanging fruit that many who want to reduce federal entitlement spending have assumed it is."

Expansion of Medicaid under the health overhaul law (PL 111-148, PL 111-152) is viewed as unwise by many of its critics. Medicaid also has the reputation of delivering substandard care. But the survey found that 81 percent of adults said that if they were uninsured, needed health care, and qualified for Medicaid, they would enroll in the program, the survey said.

Raising taxes and cutting defense spending could ease the pressure for Medicare and Medicaid cuts but analysts nonetheless depict the two entitlement programs as financially unsustainable in their current form. Clearly, political leaders have far to go in educating the public about the nation's balance sheet and how it can be fixed.

The new survey found that 35 percent of those polled favor converting Medicaid into a block grant program so that states get a fixed sum of money and each state decides who to cover and which services to pay for.

That figure rises to 44 percent if respondents are told a block grant would "help reduce the federal budget deficit and give states greater flexibility to tailor their Medicaid programs to match their residents' needs and their own state budgets," the foundation said.

But support for the block grant dropped from 35 percent to 25 percent if respondents were told that critics of the approach say it would "increase the number of uninsured, increase financial pressure on states and health care providers, and cause more low-income people to go without health care and long-term services, particularly during tough economic times," the foundation added.

The survey found little change in public opinion about the health law. Forty-two percent had a favorable opinion of the law and 44 percent had an unfavorable opinion. But by almost a two-to-one margin the public disapproves of cutting off funding for implementing the law, the survey found.

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Rockefeller Study Touts Benefits of Medical Loss Ratio Regulation

By Jane Norman, CQ HealthBeat Associate Editor

May 24, 2011 — A provision on medical payouts in the health care overhaul is proving somewhat problematic given that it's prompted a parade of state officials to ask for waivers, arguing that their insurance markets would crumble if the new standards were imposed right away. That has led to intense Republican criticism that the law is unworkable.

But Sen. John D. Rockefeller IV remains one of the fiercest defenders of the section of the law (PL 111-148, PL 111-152) that requires health insurance companies to meet new medical loss ratios (MLRs) as of Jan. 1. And the West Virginia Democrat issued a study emphasizing how much the provision will save consumers.

If the rebate provisions in a new medical payout regulation had been in effect in 2010, enrollees would have been paid more than $2 billion in rebates by health insurance companies, according to the study by the Democratic staff of the Senate Committee on Commerce, Science and Transportation.

The study was based on financial information filed by insurers for the first time with the National Association of Insurance Commissioners (NAIC).

In addition, the study said those rebates would have been reduced by $1.1 billion if agent and broker commissions were excluded from the calculations used to determine medical payouts.
The rule was published late last year. It requires insurers to spend a certain minimal amount of premium dollars on medical care or improvements in quality—80 percent for individual policies and 85 percent for big groups. If the insurance companies do not do so, they must issue rebate checks to consumers the next year.

Broker fees are not included in that 80 or 85 percent, and MLR rules stipulate they must count as administrative expenses. That creates an incentive for insurers to reduce payments to brokers.
The Democrats' study did not take into account changes insurers could make this year to comply with the MLR rule and avoid having to pay rebates to consumers.

The NAIC has been sympathetic to the agents and brokers who wield influence in their home towns, and that influence has also been felt by lawmakers. A bipartisan measure to exclude broker fees from the MLR administrative costs (HR 1206) has 75 cosponsors in the House, including 14 Democrats. But the bill's future is uncertain because of opposition from Senate Democrats such as Rockefeller.

So far, 12 states—Delaware, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nevada, New Hampshire and North Dakota—and Guam have asked for waivers. Three of them—Maine, Nevada and New Hampshire—have won some adjustments to the rules from the Department of Health and Human Services. A handful of other states are considering applying for waivers.

Maine's rebates were estimated at $6.8 million in the study, while New Hampshire's were $8.5 million and Nevada's were $43 million.

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CLASS Proposed Rule in October Will Make Major Changes to Program

By Rebecca Adams, CQ HealthBeat Associate Editor

May 26, 2011 — Federal officials plan to issue a proposed rule in October that will make significant changes to the controversial Community Living Assistance Services and Supports (CLASS) program as envisioned by the health overhaul law, according to Assistant Secretary for Aging Kathy Greenlee.

Greenlee, who spoke with reporters after testifying before the Senate Special Aging Committee about the reauthorization of the Older Americans Act (PL 89-73), said the administration is considering making several changes that had been debated before the health care law (PL 111-148, PL 111-152) was enacted last year.

Health and Human Services Secretary Kathleen A. Sebelius and Greenlee have previously said that they want to revise the long-term care program to make sure it is solvent for the next 75 years. And they plan to do that before Oct. 1, 2012, when the secretary is supposed to outline how the program will work. Sebelius has promised Congress that she will not implement the program unless it is financially sustainable.

Some of the changes they are still weighing, Greenlee said, are whether to increase the minimum earnings requirement for enrollees, index the premiums for inflation, and beef up anti-fraud protections.

The voluntary insurance program is intended to provide a $50 a day cash benefit for the elderly as well as for younger people with disabilities so they could keep living in their own homes. But the program's financial stability has been questioned by actuaries and President Obama's fiscal commission.

The committee's top Republican, Bob Corker of Tennessee, said Democrats as well as Republicans have voiced concerns about the program's sustainability.

Corker said that even though similar concerns about Medicare have recently gotten attention in Congress, the CLASS Act is even more worrisome.

"With the CLASS Act, people believe it's already at that stage, as it's been set up," he said.

Corker also asked for more details about how the implementation of the CLASS Act is being funded. Greenlee said HHS is using authorized funding to implement the 2010 health care law and tracking which personnel are working solely on CLASS Act issues and which are dividing their time with other matters.

"We are adequately handling the accounting that needs to be done," Greenlee testified.

Greenlee recommended that Congress update the Older Americans Act by including evidence-based interventions for helping to improve the health of chronically ill people, moving the Senior Community Service Employment Program from the Department of Labor to the Administration on Aging, and providing permanent legal authority for the anti-fraud program known as the Senior Medicare Patrol Program, which encourages seniors to report suspected fraud.

Former first lady Rosalynn Carter also appeared at the hearing.

Carter asked Congress to make four major changes to Older Americans Act:

  • To create a National Quality Caregiving Task Force to oversee an initiative to support family members and other caregivers of older Americans. The task force might be led by the departments of Health and Human Services and Veterans Affairs.
  • To help create and fund state programs to assess and monitor the health of people who care for older people.
  • To ensure that services for caregivers that have been proven in studies to work are provided.
  • To continue funding for the National Family Caregiving Support program, which provides services to people who are caring for relatives or other aging people.

Carter's recommendations were part of a broader report, "Averting the Caregiving Crisis: Why We Must Act Now," by the Rosalynn Carter Institute for Caring, a program at Georgia Southwestern University that fosters partnerships that support home and community-based services.

Over the next four years, the number of Americans who are age 60 and older will increase by 15 percent, to 65.7 million, Greenlee said.

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Vermont Lays Out a Path to Single-Payer, But It's a Long Journey

By Jane Norman, CQ HealthBeat Associate Editor

May 26, 2011 — Last Thursday was a day of celebration for advocates of single-payer health care when Vermont Gov. Peter Shumlin signed into law a measure that's intended to pave the way for government-run health care in the Green Mountain State.

But it's a case of delayed gratification. Numerous questions and uncertainties surround implementation, the costs have not been determined, and the law is unlikely to go into effect until sometime six years or more down the road.

In remarks at the Statehouse in Montpelier, Shumlin, a Democrat, acknowledged that Vermont has a way to go before its proposed system can achieve the cost efficiencies and quality dreamed of by those who advocate a single-payer health care system.

"I realize that people have legitimate questions about how a single-payer will be financed and operated, and we will answer those questions before the legislature takes the next step," Shumlin said. "We'll be getting input from all Vermonters moving forward, which is essential to the success of this effort."

He said that 47,000 state residents are uninsured and another 150,000 have inadequate coverage. The objective is to provide them and the rest of the state's residents with better health care.
While single-payer advocates were happy with the bill signing and its significance, they said the details of implementation are problematic.

The leaders of Physicians for a National Health Program, a prominent single-payer group, praised the Vermont measure and said it's providing inspiration for the rest of the country. But Garrett Adams, president of the organization, said in a statement that "the actual provisions of the law fall considerably short of the single-payer reform needed to realize those goals."

One problem is that multiple private insurers would still be allowed to operate in Vermont, denying residents the savings they would see under a true single-payer plan, he said.

Meanwhile, the liberal Web site Firedoglake mounted a petition effort asking the federal Department of Health and Human Services to grant the waivers the state would need from Medicaid, the Children's Health Insurance Program, Medicare, worker's compensation laws and more.

The three-part Vermont measure, which its House approved earlier this month, will establish a paid Green Mountain Care Board whose five members—all state employees—will be appointed and in place by October, according to Shumlin's office. It's supposed to work with providers to reduce their reliance on fee-for-service payments. The board will also have approval over insurance rate requests and eventually will review hospital budgets.

In addition, the bill authorizes the creation of a health exchange, which is required for the state to set up under the federal health care law by 2014 or the federal government would step in. "The intent of the general assembly is to establish the Vermont health benefit exchange in a manner such that it may become the foundation for Green Mountain Care," the bill says.

Green Mountain Care is the third element: the single-payer system that would begin in 2017, the earliest date at which current federal health care law (PL 111-148, PL 111-152) allows states to ask for waivers from the overhaul measure to set up their own systems. The Vermont congressional delegation is pushing to move that date to up 2014.

Vermont's system would not go into effect until its legislature approves a budget and means of financing for it, yet to be determined though new taxes are thought to be likely. A benefits package would have to be approved by the Care Board.

Supporters of the federal health care law saw Vermont's move as proof that the law has plenty of flexibility to allow states to make their own decisions about how to run their health care systems. "We hope that other states across the country take inspiration from Vermont to implement their own unique pathways to improving health coverage, costs, and quality of care," said Ron Pollack, head of the advocacy group Families USA.

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