Health Law and Policy Update
This week's updates:
- Quick action needed to defeat measure that would undermine key PPACA provision
- Affordable Care Act marks first anniversary
- Health Benefits Exchange Bill introduced; hearing next week
- Senate bill could damage communities' investments in health care
- Group questions ties between insurance commissioners and industry
- Estimated 42,351 Coloradans benefit from rebates to help close drug coverage gap
Headlines of the week
Quick action needed to defeat measure that would undermine key PPACA provision
A measure under consideration at this weekend's meeting of the National Association of Insurance Commissioners (NAIC) would undermine a key consumer-protection provision of national health reform by reducing the money health insurance companies are required to spend on patient care. Health advocates can help defeat the measure by contacting Colorado's top insurance regulator.
Under the Patient Protection and Affordable Care Act (PPACA), insurers must spend at least 80 percent of premiums for individual and small group policies and 85 percent for large groups on actual medical care, not administrative expenses, advertising, profits, broker commissions and fees, and other costs. The proposal being considered by the NAIC would allow insurers to move broker commissions and fees off the books for purposes of calculating the medical loss ratio (MLR),,the share of premium dollars spent on medical care.
The MLR provision was intended to enhance the value health insurance consumers get for their money. Insurers that don't meet the targets are required, beginning in early 2012, to provide rebates to their customers. Consumers will realize an estimated $1.4 billion in rebates as a result.
An enormous struggle and compromise about what counts as a medical expense resulted last year in the exclusion of taxes from the MLR calculation. Now brokers and agents are trying to exclude broker fees and commissions as well. The more that is left out of the calculation the less meaningful the 80 percent and 85 percent targets for spending on medical expenses, and the less refunded to consumers in the form of rebates for not hitting those targets.
The National Association of Insurance Commissioners (NAIC) is meeting in Texas this weekend and will consider whether to support the effort to exclude broker fees and commissions. The group's endorsement would carry enormous weight nationally.
Senator Jay Rockefeller sent a letter to NAIC President Susan Voss prior to the meeting: "The proposal offered... would protect the income of health insurance agents and brokers, but at the expense of millions of American consumers and businesses. Indeed their proposal would undermine one of the key consumer-protection provisions of the health care reform law.... The proposal is not consistent with congressional intent, and it flouts the NAIC's own accounting standards. It would also allow the health insurance industry to retain a large portion of the billion or more dollars in premium cuts and rebates that the current law requires it to share with American consumers in early 2012," Rockefeller wrote.
If the bill passes, the MLR will no longer be a useful benchmark for consumers. Passage would also mean, in CCLP's view, that other consumer protection and cost savings provisions of PPACA are vulnerable to industry pressure.
The Colorado Center on Law and Policy asks fellow health advocates to e-mail Interim Colorado Insurance Commissioner John Postolowski to ask him to resist the effort to weaken the MLR's protection of consumer interests.
There is also legislation pending before Congress designed to accomplish the same goal. The measure is H.R. 1206, the Access to Professional Health Insurance Advisors Act of 2011. If the bill passes, the MLR will no longer be a useful benchmark for consumers. Passage would also mean, in CCLP's view, that other consumer protection and cost savings provisions of PPACA are vulnerable to industry pressure.
Please contact your Member of Congress and let them know that you do not support H.R. 1206. Find contact information for your representatives at Project Vote Smart.
Affordable Care Act marks first anniversary
The federal Patient Protection and Affordable Care Act, which marked its one-year anniversary Wednesday, has brought considerable change to help improve the consumer health insurance experience, control costs and increase access to coverage. Major insurance market reforms have gone into place, new options have opened up for people with pre-existing conditions, small businesses can now avail themselves of tax credits for offering insurance to employees, and seniors who fall into the prescription drug coverage gap in Medicare have begun seeing some relief.
In a new issue brief from the Colorado Center on Law and Policy, Health Care Attorney Adela Flores-Brennan examines major provisions of the Affordable Care Act during the first year and how they affect Coloradans.
Flores-Brennan discussed health reform's first anniversary in a radio news story produced by Public News Service. The Colorado Center on Law and Policy also marked the event during a Tuesday meeting with health advocates and former CIGNA executive Wendell Potter, who discussed the reasons for his departure from the health insurance industry and ways to inform the public about the benefits of health reform. Potter was interviewed by Public News Service, KDVR-TV and Health Policy Solutions.
What's new
Health Benefits Exchange Bill introduced; hearing next week
A measure introduced at the Colorado General Assembly this week would create a Colorado Health Benefits Exchange, implementing a key provision of national health reform. Senate Bill 11-200 is sponsored by Sen. Betty Boyd, D-Lakewood, and Rep. Amy Stephens, R-Monument. The first committee hearing will be 1:30 p.m. Thursday in the Senate Health and Human Services Committee in Senate Hearing Room 356. The Colorado Center on Law and Policy favors passage of the bill. Look for an issue brief early next week.
Senate bill could damage communities' investments in health care
A measure introduced Thursday at the Colorado General Assembly would create an unwarranted exception to Colorado's hospital conversion law, potentially allowing hospital assets to be diverted from health care purposes to the detriment of the community.
Senate Bill 11-202 is sponsored by Sen. Bill Cadman and Rep. Bob Gardner, both Colorado Springs Republicans. It's been assigned to the Senate Local Government Committee.
The state's hospital conversion law, passed in 1998, provides that if control of a hospital or a hospital is sold, the proceeds must continue to be used for health care purposes. It sets up a carefully constructed mechanism to obtain fair market value for the hospital, and to make sure the value of the hospital continues to be used for health care purposes in the community. Rose Community Foundation and the Colorado Trust are two notable institutions created from hospital conversions.
The bill would allow evasion of the requirements of the conversion law and allow monies received to be devoted to any public purpose on the vote of the sellers of the hospital. CCLP opposes the measure because it could diminish the resources devoted to health care that many communities have worked decades to build.
Advancing the debate
Group questions ties between insurance commissioners and industry
An advocacy group is raising concerns over state insurance commissioners' ties to health insurance companies. Twenty-four state insurance commissioners worked for the health insurance industry before being appointed, according to a new report by Consumer Watchdog.
"Commissioners shouldn't be regulating former employers or campaign supporters," said Carmen Balber, Washington director for Consumer Watchdog.
State insurance commissioners are playing an important role in the implementation of the Patient Protection and Affordable Care Act, including as members of the National Association of Insurance Commissioners.
Estimated 42,351 Coloradans benefit from rebates to help close drug coverage gap
A provision in the Affordable Care Act to help senior citizens pay for prescription drugs is providing vital help to tens of thousands of Coloradans, AARP Colorado said in a statement issued Tuesday. The statement cited figures from the Department of Health and Human Services showing 42,351 Coloradans fell into the Medicare Part D coverage gap or "donut hole" in 2010 and received $250 rebate checks from Jan. 1 to Feb. 28 this year. That coverage gap affects seniors on Medicare who must pay out-of-pocket for annual drug costs that fall between $2,830 and $6,440. The health reform law also provides a 50 percent discount on brand-name drugs for people who fall into the coverage gap. New provisions will kick in annually until the donut hole closes completely in 2020.
"We've been hearing from our members for years about the challenges they've faced paying for their prescription drugs," Cortez said. "That's why we fought to get help for them and all older Americans in the health care law, and we're pleased to see some progress for millions of people in Medicare across the country," AARP Colorado Communications Director Angela Cortez said in a prepared statement.
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 March 25, 2011