Health Law and Policy Update
Headlines of the week
Colorado Anthem customers will share $20 million settlement
About 90,000 customers of the Anthem Blue Cross and Blue Shield health plan will share a $20 million premium credit following an investigation of the company's rate hikes. The Colorado Division of Insurance launched a "market conduct examination and rate inquiry" after receiving complaints about Anthem's increases in premiums that took effect Jan. 1, 2009, and Jan. 1 this year. Some of the premium increases were as much as 30 percent, according to news reports.
Current customers will receive the credits as a reduction in premiums, while people no longer insured by Anthem will get checks. The settlement affects only individual policy holders. Credits must be distributed by March 31, 2011, with the majority distributed before the end of 2010. Eligible individuals are those who had policies from Jan. 1 to Sept. 30, 2010.
According to the Division of Insurance, Anthem had 236,745 individual policies in 2009. The settlement will affect about 40 percent of the company's individual-market customers. In a news release, Anthem said the settlement did not indicate an admission of wrongdoing. The company said it "believes the credit is in the best interest of its members." Anthem's rate hikes have attracted scrutiny in other states including California, where the company sought a 39 percent premium increase for individual policies earlier this year. California authorities identified errors in Anthem's rate application, and the company withdrew the document. California's Department of Insurance on Aug. 26 approved rate increases averaging 14 percent.
The Colorado Division of Insurance was recently awarded a one-year, $1 million grant under the Affordable Care Act that will be used to enhance rate review capacity. Colorado will be eligible for additional awards in future years. The settlement highlights the importance to health insurance consumers of the rate review authority of the Division of Insurance.
New Census data underscores the importance of Medicaid
More than one in five children, or roughly 265,000 Colorado kids, relied on Medicaid for health insurance coverage during 2008-09, according to U.S. Census Bureau data released Thursday. That is an increase of 5.9 percent over the 2006-07 period. The total number of people covered by Medicaid increased by 97,000 over the same two-year period.
The number of Coloradans insured through their employers continued to decline, consistent with a multi-year trend. For more information about new census numbers on poverty, health insurance and income see a fact sheet and news release by the Colorado Fiscal Policy Institute.
Insurers meet with state authorities to discuss abandonment of child-only policies
Colorado's individual-market health insurers are scheduled to meet with Insurance Commissioner Marcy Morrison today to discuss the number of companies dropping child-only individual policies as a way of dodging requirements in the Affordable Care Act.
Morrison told the Denver Business Journal she wants to understand more about why the companies are dropping child-only policies. Aetna Life Insurance Co., Assurant Health, sold in Colorado as Time Insurance Co.; Cigna Corp. and Humana Insurance Co. have said they will stop offering child-only policies on Oct. 1. The Denver Business Journal reports today Anthem Blue Cross and Blue Shield of Colorado will also stop offering child-only plans. Morrison wouldn't comment to the Business Journal on whether the state has any authority to compel the companies to offer those policies.
The health plans' move is an attempt to avoid compliance with the Affordable Care Act's rule that insurance companies cannot deny coverage to children with pre-existing conditions scheduled to take effect for any new plans issues after Sept. 23.
Johanns Amendment fails
On a 52-46 vote, the U.S. Senate rejected an attempt by Sen. Mike Johanns, R-Neb, to repeal a provision of the Affordable Care Act that required businesses to file 1099s on payments to corporations and vendors of goods and property in excess of $600. The business community has complained the requirement, scheduled to take effect in 2012, will be unduly burdensome and have been asking for relief.
Businesses have long been required to file 1099s on payments made to vendors for services received, but not on payments made to corporations and vendors of goods and property. The 1099 requirement helps the IRS track business income and encourages businesses to report income accurately. Both the Government Accountability Office (GAO) and the IRS had determined the reporting requirement on services alone is not sufficient to prevent a substantial number of vendors from underreporting income. According to an analysis of the Johanns Amendment released by the Center on Budget Policy Priorities, the GAO, IRS and Treasury Department under Presidents Bush and Obama all recommended strengthening that provision of the tax code.
Repeal of the provision would have cost $17.1 billion over 10 years. To make up for the loss in revenue, the Johanns Amendment would have stripped $11 billion in funding for health prevention provided through the Affordable Care Act. It would also have weakened the individual mandate by exempting a larger group of people with low incomes from the requirement to have health insurance by lowering the threshold for not purchasing health insurance from 8 percent of income to 5 percent. Savings from the change would have resulted from the reduction in the number of people applying for subsidies through health insurance exchanges. The Center on Budget reports the Congressional Budget Office (CBO) had previously projected moving the income threshold would reduce the number of insured by about 2 million (relative to what would occur with an 8 percent threshold) and increase premiums for coverage offered through the new health insurance exchanges by as much as 4 percent.
Sen. Bill Nelson, D-Fla., offered an alternative to the Johanns Amendment which was also rejected.
CBO confirms Affordable Care Act savings projections
The Congressional Budget Office (CBO) confirmed original estimated savings projected to result from passage of the Affordable Care Act (ACA) in an Aug. 24 letter to Sen. Mike Crapo, R-Ind. Specifically, CBO estimates the ACA's health revenue provisions will result in $124 billion in net savings from 2010 to 2019 and reduce the deficit by $28 billion in 2020. If provisions of the ACA were repealed, the deficit would increase by $455 billion from 2010 to 2019.
Advancing the debate
Creating health insurance exchanges
States have big decisions to make and significant opportunities as they begin to work toward establishing health insurance exchanges. In Colorado, the governor's office in conjunction with the Colorado Coalition for the Medically Underserved and the Colorado Consumer Health Initiative have hosted four meetings to date to gather public input on the creation of Colorado's exchange. The fifth meeting (and final in the metro area) will be held Sept. 29. Check the website for location information, meeting minutes and agendas.
The Health Advocates Alliance (HAA) presented agreed upon principles for the Colorado exchange at this week's meeting. HAA is a diverse coalition of consumers, providers, and health care advocates committed to health care for all that is affordable, sustainable, timely, safe, equitable, effective, efficient and patient-centric.
For more about exchanges see a video from a one-day national conference hosted by the Department of Health and Human Services on implementation of the exchanges for stakeholders.
What you can do
Health Care Director
Health Care Attorney
Released Sept. 17, 2010