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Health Law and Policy Update

This week's updates:

Headlines of the week

Insurance commissioners delay vote on measure to weaken MLR
The National Association of Insurance Commissioners (NAIC) this week delayed a vote on a measure that would have weakened consumer protection in the national health reform law by enabling insurance companies to spend less on patient care.

NAIC members had been under pressure to endorse a measure pending in Congress that would change the way medical loss ratios are calculated under the Patient Protection and Affordable Care Act. The measure would have excluded broker fees and commissions from the calculation of medical loss ratio, the share of premium dollars spent on medical care.

The move represents a win for consumers, and particularly consumer advocacy groups. The Affordable Care Act says insurers must spend 80 to 85 percent of premiums on patient care, while the rest can go to expenses such as advertising, profits and broker fees. Excluding broker fees from that calculation would have rendered the medical loss ratio calculation meaningless and stripped consumers of a vital resource for judging the value they receive for their money.

Advocates stepped up the pressure over the course of last weekend's meeting, and the fact that commissioners were hearing from consumers at home helped slow down the vote, which was delayed for at least a month. In addition, commissioners had a lot of questions about the effect of eliminating broker fees and commissions from the MLR calculation, including about its effect on brokers, consumers and insurance costs, and they agreed that additional information would be helpful. The debate is not over, merely delayed - we will keep you informed. In the meantime, there is still a bill pending before Congress that would change the MLR calculation. While the NAIC vote is important, it's important largely because of the effect NAIC's recommendation will have on Congress.

Exchange bill passes Senate committee, needs your help to keep going
Senate Bill 11-200, establishing Colorado's Health Insurance Exchange passed the Senate Health and Human Services Committee this week on a party-line vote. The bill is co-sponsored by Sen. Betty Boyd, D-Lakewood, and Rep. Amy Stephens, R-Monument. The bill represents months of hard work and negotiation and was being held up as a model of bipartisan cooperation. During the past week, however, Stephens began hearing strong opposition from members of the Tea Party and others opposed to federal health care reform.

Although the exchange is an idea that has its roots in recommendations made by the Heritage Foundation long before health reform was introduced, and has been adopted by states as diverse as Utah and Massachusetts, the fact they are contemplated under the Patient Protection and Affordable Care Act appears to be enough to make them unpalatable for some. In fact, Colorado has been moving toward its own version of health reform for some time. The bipartisan 208 Commission recommended in 2008 that Colorado establish an exchange to serve as a marketplace for purchasing health insurance. The Affordable Care Act gives the state the tools the state lacked to move forward the recommendation.

Testifying in favor of the bill at Thursday's hearing on the bill were representatives of Colorado's business community, including the Denver Chamber of Commerce, the Colorado Association of Commerce and Industry, and NFIB; a strong coalition of consumer advocates including CCLP, the Colorado Coalition for the Medically Underserved, and the Colorado Consumer Health Initiative; the Colorado Hospital Association, AARP, Colorado Medical Society, Colorado Association of Health Underwriters and many others. Virtually all who testified talked about the potential for the exchange to reduce costs and help consumers and businesses access health insurance.

Only two people opposed the bill, both from Elbert County. And yet, despite many months of work and bipartisan effort represented in the extraordinary coalition that supported the bill, the vote split along party lines. Sen. Shawn Mitchell, R-Broomfield, offered last-minute amendments. The first would have prohibited the state from seeking federal funds for the establishment or operation of an exchange, and the second, requested by Stephens, would have required Gov. John Hickenlooper to "opt out" of the Affordable Care Act before the state proceeded with the exchange. Both amendments failed.

Boyd responded to the last-minute change of course saying she and Stephens had previously agreed neither would propose an amendment unless both agreed. Most at the hearing did not learn of Stephens' change in course until mid-way through the hearing. Stephens' letter to Boyd, dated Thursday, outlines her concerns.

For more about the hearing see coverage in The Denver Post, the Denver Daily News, the Denver Business Journal, the Fort Collins Coloradoan and KCFR-radio.

There is serious doubt about what will happen in the House of Representatives and concern over the partisan nature of the vote. CCLP continues to support the bill as the best opportunity to move forward and hopes it wins bipartisan support. Please call your state senator and urge support of the bill as it moves forward, and make sure it gets out of the Senate. Find your senator's contact information at Project Vote Smart.

What the exchange bill does
Senate Bill 11-200 establishes the governance framework for a Colorado Health Insurance Exchange to foster a competitive marketplace for insurance. It would set up the exchange as a nonprofit, unincorporated public entity and establish a governing board to be appointed by the governor, and House and Senate leadership. The board would be comprised of nine voting members, each required to have at least one, and preferably two, areas of expertise as defined in the bill. A majority of the board must be business representatives or individuals not directly affiliated with the insurance industry.

The bill establishes a legislative oversight committee with 10 members. The committee may meet up to five times annually and offer five bills related to the health insurance exchange during a legislative session. The oversight committee must approve the executive director of the exchange, any grant applications made by the exchange before submission and the exchange's initial work plan. The committee would also review the work of the exchange board.

The exchange is not permitted to solicit bids, engage in active purchasing or undertake any of the functions of the Division of Insurance, including rate setting. The bill includes a conflict-of-interest provision, which board members must observe, and makes the board subject to sunshine and ethics laws. The exchange board is required to undertake certain functions including review of a model template for an internet portal, considering whether the exchange should operate as one entity or two (one for small business and one for individuals, or a combined exchange); consider the size of the market for the exchange (whether 50 employees or more than 50 should be served through the exchange); and develop options and determine waivers that would best serve the interests of Colorado.

Fort Collins-based hospital reassures CoverColorado clients
The chief of a major health care provider based in Fort Collins on Thursday tried to reassure people insured in the CoverColorado insurance plan they can still get care from the health system he oversees.

Rulon Stacey, president and CEO of Poudre Valley Health System and Poudre Valley Medical Group made the reassurances on his blog after a letter sent to CoverColorado's members said the health system would no longer accept CoverColorado insurance for medical care starting today.

CoverColorado Executive Director Suzanne Bragg-Gamble maintains the health system said it would no longer see CoverColorado members.

"That's why we notified our members. We are actively working with all parties to ensure a positive outcome for our members. Anything that moves us in that direction is a positive development," she said, according to the Greeley Tribune.

Colorado's Civil Union bill fails in committee
SB11-172 (Steadman/Farrandino) was defeated in the House Judiciary Committee yesterday, on a party line vote, with all Democrats voting in favor of the bill and all Republicans against. While it is inevitable that civil unions will pass someday in Colorado, we at CCLP are tired of waiting for people in loving relationships to be afforded basic rights and protections. Among those rights are the right to insure financial security through inheritance and in the event of separation or dissolution, a guaranteed role in health care decision making, joint parenting rights, and access to partner benefits including health care. We are tired of justice denied. One person testifying yesterday said that civil unions is not a civil rights issue. To that we say that any time a group of people is denied the protection of the law because of their status, it's a civil rights issue. Thank you to those who voted for the bill, Representatives Levy, Kagan, Ryden, Duran and Lee.

Advancing the debate

Study identifies 'lessons learned' for setting up health exchanges
States can take lessons from Utah and Massachusetts as they set up health insurance exchanges as allowed under the Patient Protection and Affordable Care Act, a new study by the Georgetown University Health Policy Institute finds. Utah and Massachusetts are sometimes viewed as sitting at opposite ends of a spectrum of choices for setting up an exchange, but in fact "it's not an 'either-or' choice," the study concludes. Among other "lessons learned" identified in the study:

  • Policymakers must consider exchanges' interactions with broader insurance market rules.
  • Exchanges can be effective market innovators.
  • Exchanges require the participation of both consumers and health plans.
  • Effective "active purchasing" requires market knowledge and nimbleness in the face of consumer demands.
  • You get what you pay for.
  • Exchanges without associated subsidies can do little to make insurance more affordable.
  • A "defined contribution" model for employer-sponsored coverage will not necessarily attract small employers to exchanges.
  • Public outreach and simple enrollment are keys to success.

Additional resources on health insurance exchanges exchanges

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 April 1, 2011

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