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Health Law and Policy Update

This week's updates:



Headlines of the week

U.S. House approves federal budget plan that would devastate public programs
More disturbing implications of a federal budget proposal introduced in the U.S. House on April 5 emerged this week as research and advocacy organizations including the Colorado Center on Law and Policy continued analysis of the measure. The measure passed the U.S. House on Friday on a 235-193 vote.

One of the most irresponsible aspects of the plan advanced by Rep. Paul Ryan, R-Wisconsin, caps funding for the Medicaid health insurance program for low-income people, the elderly and people with disabilities, and converts it into block grants for the states. An issue brief CCLP released Wednesday shows moving toward a block grant program would undermine the integrity of Medicaid, leading to draconian cuts in services, eligibility and provider payments, and creating inequality among states. Medicaid was designed as a safety net for the lowest income and most vulnerable members of society. A block grant system would destroy the ability of Medicaid to serve in that capacity by eliminating flexibility and removing its ability to respond to needs.

In addition, a state-by-state analysis released by the Center on Budget and Policy Priorities shows federal funding for state Medicaid programs would have been substantially reduced between 2000 and 2009 if the Ryan proposal had been in effect. Colorado would have seen a 15 percent or $2 billion reduction in federal funds over that period, and a 26 percent or $478 million cut in 2009 alone.

Other research came from the Kaiser Family Foundation.

2011 federal budget cuts weaken some components of health reform
The U.S. House and Senate passed a compromise fiscal year 2011 budget that makes at least $38 billion in cuts to the current fiscal year, compared to spending levels last year. An agreement on the current year budget was reached late last week, narrowly averting a government shut-down. As part of the compromise budget, some cuts to health care include $2.2 billion in cuts to the Consumer Operated and Oriented Plan Program (Co-Op), termination of the Free Choice Voucher programs that would have been created under the Patient Protection and Affordable Care Act, as well as cuts to community health centers and other programs designed to increase access to health care for the uninsured.

Co-Op funding supports the creation of state-based, nonprofit, member-owned alternative health plans. Sen. Kent Conrad, D-North Dakota, was a proponent of Co-Ops during the federal health reform debate as an alternative to a public option. The $2.2 billion cut was for Fiscal Year 2011, $3.8 billion in funding for Fiscal Year 2012 is still available.

The Free Choice Voucher Program would have required employers to provide vouchers to participate in a state's health insurance exchange to employees for whom the cost of employer-sponsored insurance was between 8 percent and 9.8 percent of income. There are no savings to be realized until 2014 from the removal of the provision, which was designed to help people with the purchase of affordable health insurance by making it possible for them to go into the exchange.

The compromise also includes new related reporting requirements related to the Affordable Care Act. For example, the chief actuary for the Centers for Medicare and Medicaid Services is required to report on the effect of the guaranteed issue, guaranteed renewal, and community rating provisions of the act.

President Obama also weighed in this week with the presentation of his own fiscal year 2012 budget proposal. The proposal rejects a block grant concept but suggests restructuring the federal matching rates to the states.

Senate repeals health reform's 1099 reporting requirement
The U.S. Senate on April 5 voted to repeal an unpopular portion of the Patient Protection and Affordable Care Act that required extensive financial reporting from businesses. Repealing the so-called "1099 reporting requirement" does not undermine the entire health reform law, but repealing that section is paid for by increasing the penalty that families who receive subsidies through a health insurance exchange would pay if their income increases over the tax year.

"While repeal of 1099 reporting requirements is an important priority for small businesses, the costs of this adjustment should not come directly from the pockets of struggling families," Community Catalyst Policy Analyst Katherine Howitt said in a blog post.

The bill now goes to President Obama for his signature. In a prepared statement, White House Press Secretary Jay Carney said "eliminating the 1099 reporting requirement is the right thing to do."

Kaiser Health News compiled a roundup of news coverage of the repeal.

State budget moves forward, including cuts to critical programs
Colorado's budget for Fiscal Year 2011-12 moved toward completion this week as the House of Representatives approved a measure that left largely intact a compromise reached earlier among Republicans and Democrats. The Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy, released an update on the budget process Thursday that noted some of the plan's more damaging reductions in programs. If the plan is adopted, for example, funding for mental health institutions will have declined 12.1 percent during the past three years. Other funding cuts:

  • A Colorectal cancer screening program will be cut by about 77 percent, leaving about $2.7 million in the fund balance (there is usually about $13 million in that program).
  • A tobacco quit line and local tobacco control will suffer a 78 percent cut in funding.
  • A breast and cervical cancer screening program will be cut by 44 percent or $1.6 million.


What's next

State exchange bill set for hearing Tuesday
The Colorado Health Benefit Exchange bill (Senate Bill 11-200) will be heard by the Legislative Council committee on Tuesday, April 19 at 7:30. The bill sets up the governing structure to begin implementation of a health insurance exchange, a competitive marketplace designed to facilitate the purchase of affordable health insurance for individuals and small businesses. The measure goes to Legislative Council because the bill creates a legislative oversight committee to oversee the work of the Exchange Board. The Colorado Center on Law and Policy supports Senate Bill 11-200 because it creates another access point for affordable, quality health coverage for Colorado. Please consider calling members of the Legislative Council committee to urge support of the bill.

Advancing the debate

Health reform law provides valuable resources to states
States can work toward achieving important health policy goals by using resources provided in the Patient Protection and Affordable Care Act, a new report from The Urban Institute finds. The report examines resources provided in the health reform law to help states:

  • Increase coverage and access to care;
  • Reform health insurance to function more like a traditional market;
  • Hold insurers accountable;
  • Reform health care delivery to slow cost growth and improve quality; and
  • Reduce state budget deficits.

Leaders must consider race in addressing health disparities, report says
Closing health disparities among racial groups will require considering race as central to decisions by policymakers, advocates and community leaders, a new report argues. The report, "Why Race and Place Matter," is produced by PolicyLink and The California Endowment.

"Race is a central consideration for the healthy communities movement," the report says. "Race has shaped our regions, creating places that offer profoundly unequal opportunities to their residents. In many ways, race remains our deepest divide. Effective strategies to build healthy, vibrant, sustainable communities must address both race and place, openly and authentically. This report illustrates how to improve the economic, social, physical, and service environments of vulnerable communities through race-conscious strategies."

What you can do

Watch for an action alert asking the governor to veto Senate Bill 11-213
A broad coalition of advocacy groups was not able to defeat Senate Bill 11-213, which will require certain families with children insured through Child Health Plan Plus (CHP+) to pay monthly premiums of $20 to $50. An item in last week's edition of Health Law and Policy Update offers analysis of the bill, which has passed both houses and is set to go to conference committee.

CCLP objects to the bill for the following reasons: First, the increase in costs to families is expected to cause 2,500 children to lose health insurance by 2013-14. Second, we have serious concerns about the ability of the state to effectively reprogram the flawed Colorado Benefits Management System (CBMS) to collect monthly premiums. Third, the administrative expense of collecting monthly premiums can be significantly more than the dollars collected. For example, in 2002 Virginia found it was spending $1.39 for every dollar collected in premiums.

Unfortunately, the measure has become the focus of a philosophical debate about the role of government, the need for public programs and the reach of those programs. CCLP notes that families at the income category targeted - 206 percent to 250 percent of the Federal Poverty Level are not eligible for any other public program and often have a hard time affording health insurance. CCLP research shows 25 percent of those families have negative balances at the end of the month, before any health spending. Colorado has focused a great deal of energy over the past few years on making sure all children have health insurance. Senate Bill 11-213 moves Colorado in the wrong direction.

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 15, 2011

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