Health Reform Weekly


A weekly compilation from Aetna of health care-related developments in Washington, D.C. and state legislatures across the country


Week of February 11, 2013

The Congressional Budget Office (CBO) released its annual report on the “Budget and Economic Outlook” last week providing updated projections that factor in the impact of legislation and other developments since the last outlook was published in August 2012. Concerning the Affordable Care Act (ACA), the report projects that roughly 26 million people will be enrolled in insurance exchanges in 2022 – about 500,000 more than previously estimated. The ACA is now projected to increase the number of people enrolled in Medicaid by 12 million in 2022, compared to the 11 million increase previously projected. Penalties arising from the individual mandate are projected to total $45 billion over 10 years (compared to the previous estimate of $55 billion). About 7 million fewer people are projected to have employment-based health insurance in 2022 as a result of the ACA (compared to the previous estimate of 4 million fewer). Penalties paid by employers are expected to total $130 billion over 10 years (compared to the previous estimate of $117 billion), because “fewer businesses are now expected to offer insurance coverage.”


President Obama delivered remarks last week calling on Congress to pass “a smaller package of spending cuts and tax reforms that would delay the economically damaging effects of the sequester for a few more months until Congress finds a way to replace these cuts with a smarter solution.” Under current law, across-the-board sequestration cuts triggered under the Budget Control Act of 2011 are scheduled to take effect on March 1, 2013. With respect to health care spending, the President expressed interest in reducing the cost of care rather than shifting costs to “middle-class seniors, or the working poor, or children with disabilities.” The President did not identify specific policy proposals. House Speaker John Boehner (R-OH) issued a response that expressed opposition to tax increases and stated that the sequester “should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years.”

By a vote of 253 to 167, the House approved legislation proposing that if the President’s fiscal year 2014 budget does not achieve balance within the next 10 years, the President would be required to submit to Congress by April 1, 2013 a supplemental budget that specifies the first year in which it would produce a balanced budget. Rep. Tom Price (R-GA), the primary author of this bill, predicted that House Republicans will pass a plan this year to balance the federal budget in 10 years.


CALIFORNIA: A series of bills related to market “conformity” and Medicaid expansion are reintroductions of legislation vetoed by Governor Jerry Brown last year because they did not make strong enough references to federal law and guidance.  The new bills do not currently address the governor’s veto and further propose to revisit issues that were debated and settled in the last legislative session.  Primary among those issues is the establishment of geographic rating regions that plans can use to establish premiums.

New legislation has been introduced that would require publicly held corporations to annually issue reports to California shareholders on past political expenditures.  The bill would also require notifying shareholders 24 hours prior to making such contributions and it would create a civil cause of action for shareholders against corporations that fail to issue the report and meet the notification requirements.  Last year a similar bill was pulled from the Senate Banking Committee before it was heard.  Given the changes in the committee membership, it may be more difficult for that to happen again.

CONNECTICUT: Governor Dannel Malloy has released his proposed $43.8 billion budget for the next two fiscal years, and it includes a number of provisions related to the ACA. The budget, for example, includes transferring Medicaid coverage of most parents earning between 133 percent and 185 percent of the federal poverty limit to the state Health Insurance Exchange in 2014.  This would save the state nearly $66 million over the two fiscal years.  The budget proposal also calls for elimination of the Charter Oak Health Plan and would reduce uncompensated care payments to hospitals and other facilities as a result of increased insurance coverage expected in 2014.  The budget would raise about $700 million in new revenues, in part by preventing certain tax changes previously enacted from sun-setting for two more years.  This includes maintaining the reduction of the Electronic Date Processing tax credits at 30 percent and maintaining the 20 percent corporate tax surcharge.

INDIANA: Governor Mike Pence announced last week that he has ruled out expanding Medicaid under the federal health care law unless Indiana is allowed to use its Healthy Indiana health savings accounts plan to cover the new enrollees. Absent any Medicaid expansion, Indiana's Medicaid rolls are expected to grow by approximately 90,000 as more children who already qualify for Medicaid are enrolled in the program because of the health care law's individual mandate. Milliman analysts have determined this would cost the state an additional $67 million next year and another $105 million in fiscal year 2015, which has been factored into budget projections.

MICHIGAN: Governor Rick Snyder announced his support for implementing the ACA’s Medicaid expansion in his recent state-of-the-state address.  State budget hearings will start next week in both the House and Senate Appropriations Committee, and Medicaid expansion is expected to pass.

NEVADA: Governor Brian Sandoval noted in his state-of-the-state address that Nevada would move forward with Medicaid expansion while retaining the ability to opt out of the ACA requirements should the state deem it necessary. The remarks were delivered at the February 4 start of the legislature’s biennial session. No significant health-care-related bills have been introduced yet.

OHIO: Governor John Kasich has released his biennial budget plan, which includes Medicaid expansion as incented by the ACA.  In his announcement, Governor Kasich stated the expansion will provide insurance coverage to an additional 275,000 Ohio residents.  A report prepared by a partnership of organizations that includes the Urban Institute and the Ohio State University, and released last month, shows that expansion of Medicaid could result in a net savings to the state budget of $1.4 billion through 2022.  The Ohio General Assembly begins consideration of the budget, including the Medicaid expansion, this week.

UTAH: Governor Gary Herbert met last week with Health and Human Services (HHS) Secretary Katherine Sebelius to press his case for allowing the state’s Avenue H exchange to remain intact and serve the small employer community, while the federal government operates an individual exchange. This shift reflects the legislature’s continuing opposition to supporting an ACA-compliant state exchange. While agreeing to continue working with the governor, Secretary Sebelius made no commitments.


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