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 January 14, 2013

New research released in the past week details the significant issues that continue to plague the health care system in terms of both quality and cost. Concerning costs, the Department of Health and Human Services (HHS) has released new data showing that national health care spending grew by 3.9 percent in 2011 – consistent with 2009 and 2010 but above the general rate of inflation. As for health care quality, a new Institute of Medicine (IOM) and National Research Council (NRC) study found that Americans live shorter lives and in poorer health than their counterparts in other wealthy countries. The report found serious and persistent gaps across both income and educational groups.


Congress was in recess last week.


Thirty-one states and the District of Columbia were in session as of late last week, with a total of 43 state legislatures scheduled to convene January. Two convened in December, while the remaining six state legislatures will convene in February, March, and April.  Virtually every state is busy preparing for the launch of new health insurance exchanges under the Affordable Care Act (ACA) in October, be they state-based, state-federal partnerships or federally facilitated. Some state legislatures this year are expected to wrestle with whether to expand Medicaid coverage as prompted by the ACA. Other significant issues in many states are expected to include benefit mandates, provider contracting and prescription drug coverage.

CALIFORNIA: Governor Jerry Brown has asked the legislature to approve an additional $350 million for Medicaid expansion in his 2013-2014 budget plan.  Most of the money would go toward the state’s share of the costs for enrolling more people in Medicaid as encouraged by the ACA.  In addition, the governor announced the state budget deficit is now gone, the first time in nearly 10 years that a deficit has not been hanging over the state.  However, the state is counting on collecting a little more than $7 billion in additional revenue as a result of tax increase, most of it applied retroactively back to 2012, passed in November.

COLORADO: The 69th General Assembly convened last week with Democrats in control of both chambers. Nonetheless, Governor John Hickenlooper, a Democrat, called for bipartisan legislation in his state-of-the state address. Health care issues expected to surface include harmonizing state laws with the ACA, biologic drug substitution, pharmacy audits and a state vaccine purchasing program.

CONNECTICUT: The General Assembly convened last week with a state-of-the-state address by Governor Dannel Malloy, who opened with a very emotional recognition of the Sandy Hook tragedy.   A state budget deficit of over $2 billion for the biennium will take up a significant portion of the new session’s focus. Based on the early introduction of bills, consideration will be given also to a host of health care issues, including behavioral health, rate review and health insurance exchange-related issues.  The new session is scheduled to run through early June.

DELAWARE: The legislature convened its 2013 session last week with pharmacy legislation concerning specialty drug tiers and biosimilars expected to emerge as health care issues. On ACA- related matters, the Department of Insurance (DOI) recently released a bulletin asking health plans to submit a letter of intent to the DOI if they plan to offer products on the state’s partnership exchange.  The bulletin also provides background information on Delaware’s qualified health plan (QHP) standards, including benefit design, accreditation requirements, network adequacy standards, rating and service areas, quality standards, and marketing rules.

FLORIDA:  Gov. Rick Scott met with HHS Secretary Kathleen Sebelius early last week about implementing the ACA but afterward said that he still is not ready to decide whether the state should set up an exchange or expand Medicaid under the health care law. Scott said he is still worried about the cost of expanding Medicaid, claiming that it would cost his state $26 billion to broaden the program’s coverage to low-income residents. Sebelius reportedly made the case to Scott that a partnership exchange, in which the state would handle some functions and the feds would take care of the rest, would be a good choice for Florida, which has one of the biggest uninsured populations in the nation.

ILLINOIS: The legislature’s veto session adjourned last week with the Assembly failing to finish its preliminary actions to expand Medicaid under the ACA. The House Appropriations Committee had approved a bill that would have added 520,000 state residents to the Medicaid system, providing a 50 percent match for nearly one-third of those individuals who qualify under current standards.  The remaining new enrollees would be adults between the ages of 19 and 62 who have no children and incomes that are less than 133 percent of the federal poverty level.  While the federal government initially would pick up 100 percent of the increased cost for the new enrollees, Illinois would gradually pick up part of the cost, expected to total about $100 million annually. An amendment was offered that would automatically eliminate new enrollees from the program if federal funding drops below 90 percent.  The bills already have been re-filed along with the amendment. Passage of the bills is considered likely in February or March.

MICHIGAN: With the state-of-the-state address scheduled for January 16, Republicans appear ready to cut spending to balance the state budget, while the Administration’s priorities include improving the state’s credit rating by paying down more of the state's unfunded liabilities in health care and retirement costs. Likely areas of consensus include re-passing the Blue Cross Blue Shield of Michigan conversion bill, which would end BCBSM’s operation as “insurer of last resort.”  The BCBSM bills were originally supported by the governor and passed in both the Senate and the House, but they were vetoed in late December after Republicans added language barring abortion coverage except by a special rider.  Because the bills include a “most-favored nations” clause prohibition in provider contracts, Aetna endorsed the bills that were passed by the House Insurance Committee prior to amendment.

The legislative agenda will also include improving access to health care and providing incentives to promote wellness programs; Medicaid expansion; an all-payer claims database; and amendments to the law implementing the Health Insurance Claims Assessment (HICA), which fell $144 million short last year.  Michigan is expected to continue to pursue a state-federal partnership exchange.  Policymakers must decide how to handle the eligibility and enrollment mechanisms, as well as updating the current Medicaid eligibility system and auto-enrollment process.

NEW JERSEY: Governor Chris Christie delivered his state-of-the-state address to a joint session of the legislature last week and devoted nearly the entire speech to “Super Storm Sandy”, the most disastrous storm in state history.  He took time to acknowledge the efforts of emergency personnel, elected officials, and residents who responded heroically to the storm.  There was no mention of health care reform or health care-related issues.  Still outstanding is whether New Jersey will go the route of a state-federal partnership exchange or default to the federally facilitated exchange.  Despite an anticipated $2 billion revenue shortfall in the current budget, according to the non-partisan Office of Legislative Services, Governor Christie committed to no new taxes.

In other news, the Senate recently confirmed Kenneth Kobylowski as the new commissioner of the Department of Banking and Insurance (DOBI).  Kobylowski had been serving in an interim acting capacity since the earlier part of 2012.

NEW MEXICO: Governor Susana Martinez has announced that the state will accept federal dollars to expand Medicaid coverage to an estimated 170,000 adults. In doing so, she becomes only the second Republican governor (with Nevada’s Brian Sandoval) to embrace funding available through the ACA for Medicaid expansion.  The state is expected to receive more than $6 billion between 2014 and 2020 to pay for the expansion. Currently 560,000 people, or one-fourth of the population, receive Medicaid benefits costing the state about $940 million under a 70-30 percent federal-state match. Enrollment for the expanded population will begin in October with benefits to begin January 1, 2014.  The anticipated 170,000 new enrollees will choose from among commercial managed care organizations that serve current Medicaid beneficiaries.


Health Reform Connection
America's Health Insurance Plans
Aetna 2011 Annual Report 

Aetna is the brand name used for products and services provided by one or more of the Aetna group of subsidiary companies. Those companies include Aetna Health Inc. and Aetna Health Insurance Company, 151 Farmington Avenue, Hartford, CT 06156.

Related Resources