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Health Law and Policy Update

Headlines of the week

Judge dismisses another legal challenge to health reform
In a decision released today, Judge Susan Wigenton of the U.S. District Court for the District of New Jersey, dismissed a legal challenge to the Affordable Care Act. The court dismissed the lawsuit based on a finding that the plaintiffs did not have standing to pursue their claim. The decision marks the fifth legal challenge to the ACA that has been dismissed in federal district courts across the country. Four of the five cases have been appealed.

Advocates discuss governance of Colorado's health insurance exchange
Health advocates continue to consider options for establishing a health insurance exchange in Colorado, including discussion at a state-sponsored forum Wednesday in Denver.

All states will participate in an exchange as part of reforms in the Affordable Care Act. Colorado can choose to design its own, partner with other states or defer that responsibility to the federal government. The exchanges are designed to provide one-stop shopping markets for a range of subsidized and non-subsidized health insurance coverage options.

Wednesday's forum on creating an exchange in Colorado was the last meeting before the start of the 2010 legislative session. Proposed laws outlining the governance structure of a Colorado exchange are likely to be debated during the session. Sixteen members of the Health Advocates Alliance (HAA), including the Colorado Center on Law and Policy, proposed five key governance issues at the forums. They include:

  • Colorado should have one, statewide exchange.
  • The governance structure should be designed to maximize public accountability, efficiency, transparency and independence.
  • The board of directors should have majority consumer representation.
  • In order to avoid real or perceived conflicts of interest, health plans and insurance brokers should not serve on the board of directors or be involved with decision making regarding operation of the exchange.
  • The governing body must provide defined and meaningful processes for stakeholder input.

Other stakeholder perspectives, including those of HAA, insurance companies, insurance brokers, the Colorado Medical Society and other advocacy groups are compiled in a document on the state's website.

  

What's new

Insurance Commissioner Morrison deserves thanks for her service
Colorado Insurance Commissioner Marcy Morrison left behind a strong record of defending the interests of health insurance consumers when she departed the post last week.

During Morrison's service, she commissioned several investigations of health insurance practices such as excessive charges. She forbade Kaiser Permanente from sending millions of dollars out of state to its parent company and required premium relief instead for Colorado members. Morrison required for-profit insurance companies to roll back excessive price increases. She endorsed vigorous consumer input to the regulatory process.

The National Association of Insurance Commissioners recently recognized Morrison with an award for "Excellence in Consumer Advocacy."

Morrison deserves specific thanks for championing a definition of medical loss ratio that protects maximum value for consumers, a position later adopted by NAIC and the federal Department of Health and Human Services. The regulation protects the intent of the Affordable Care Act, begins to constrain health care costs and focuses insurance revenues on the real costs of health care and quality improvement.

Advancing the debate

Searching for revenue, some target Medicaid
While the Affordable Care Act prohibits states from restricting eligibility for Medicaid until 2014 and CHP until 2019, some state policymakers are viewing Medicaid as a tempting target for cost savings as states struggle with falling revenues and the expiration of federal help under the Recovery Act. Proposals in some states represent radical departures from past practice and severe threats to vulnerable populations, such as opting out of Medicaid entirely, reducing benefits or converting Medicaid to a block grant program.

Medicaid provides health care coverage for more than 58 million Americans and more than half a million low-income Coloradans. That roll will shift as the Affordable Care Act is implemented and Medicaid shifts from being a safety net program to a foundation for coverage for lower-income Americans. The program's effect on the lives of low-income Americans as well as the economy is enormous. Proposed changes to Medicaid, especially those aimed at reducing benefits or eligibility, should be approached cautiously considering the program's enormous benefits.

Study examines states' rate-review authority
Regulators in most states have legal authority to review health insurance premium increases, but the way that authority is applied varies widely, according to a new study by the Kaiser Family Foundation.

Some state regulators with strong statutory authority conduct only limited reviews in reality, while other states with less formal authority achieve reductions in rates through informal negotiations with carriers, the study found. The study compared rate-review authority in all 50 states and the District of Columbia. Researchers took a closer look at a handful of states, including Colorado, to show how rate regulation works in practice.

Colorado's Division of Insurance has prior approval authority over the individual and small-group markets. Insurance companies that seek an increase in premium rates must submit rate filings to the Division of Insurance. About 25 percent of the rate filings receive a comprehensive review by an actuary, according to the report. Division of Insurance staff told the researchers 10 to 15 percent of filings are formally disapproved, and staff resolve problems with additional filings without triggering a formal disapproval.

Researchers found considerable differences in how regulators operate nationwide. Among the study's main findings:

  • A state's statutory authority often tells little about how rate review is actually conducted in the state.
  • In many cases, statutory authority to disapprove rates does not extend to all market participants.
  • Most states ... interviewed use a subjective standard to guide the review and approval of rates.
  • Most of the states ... interviewed have made little or no effort to make rate filings transparent.
  • Many states lack the capacity and resources to conduct an adequate review.

State authority to regulate premium increases is important because the Affordable Care Act provides money to expand states' rate review capabilities. Colorado has been awarded $1 million under that provision of the act, which state regulators plan to use to hire additional analysts, staff to manage consumer complaints, and to improve the Division of Insurance website to make rate filing more accessible and understandable to consumers.

Health Law and Policy Update is issued weekly by the health staff of the Colorado Center on Law and Policy. Subscribe by e-mail or read previous editions.

Health Care Director
Elisabeth Arenales   

Health Care Attorney
Adela Flores-Brennan   

Special Counsel
Ed Kahn   

Communications Director
Perry Swanson

Released Dec. 9, 2010