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 July 1, 2013

With young adults badly needed to help pay the cost of older, sicker Americans on the new health insurance exchanges, the Obama administration is creatively trying to get them there. Last week, a hotline for questions about the law was launched as was a revamped website explaining the provisions of the Affordable Care Act (ACA). Better yet, federal officials are talking with the National Football League and other professional sports to enlist the help of sports stars to promote the health law to young adults. The administration estimates it needs to convince about 2.6 million young, healthy people to sign up for exchange coverage to balance the risk presented by millions of older or sicker people who may flock to the exchanges. The problem is that healthy young adults are notorious for failing to sign up for insurance if they are not employed. Making matters worse, recent polls show a significant percentage of Americans are still unsure if the law is still on the books.

Also, there is widespread agreement that a decision by the U.S. Supreme Court last week overturning the Defense of Marriage Act (DOMA) will have a big impact on health care. The law had barred the government from treating same-sex partners as married. But it may be some time before tax experts and employers figure out the full impact of the ruling. Many are looking for clarification from federal regulators in the months ahead. 


The House Energy and Commerce Subcommittee on Oversight and Investigations heard from the business community last week during a hearing on “Challenges Facing America’s Businesses Under the Patient Protection and Affordable Care Act.”
This hearing included testimony from four business owners and representatives of the U.S. Chamber of Commerce, the National Retail Federation, the Main Street Alliance, and the National Restaurant Association.

Jeffrey Kelly, CEO of Pennsylvania-based Hamill Manufacturing Company, testified that new ACA-related fees will increase his company’s health care costs by an additional $49,000 next year. Other business owners outlined similar concerns. Neil Trautwein, testifying on behalf of the National Retail Federation, urged Congress to consider delaying implementation of the ACA’s employer responsibility requirements for up to one year to help lessen disruption of existing coverage. The National Restaurant Association’s Michelle Neblett called for more workable rules for determining if a business is a large employer, repeal of the automatic enrollment requirement, and a transition period for employers to comply with ACA provisions. Concerns were also noted that the ACA does very little to control health care spending growth and instead imposes benefit requirements, taxes, and penalties that will increase the cost of coverage and limit flexibility for both employers and employees.


CALIFORNIA: The state budget package that Gov. Jerry Brown signed into law last week, which was adopted by the legislature a week earlier, includes legislation expanding the state's health care program for poor Californians. The bill is expected to bring about 1 million new enrollees into the public program called Medi-Cal. Millions more will be able to buy insurance through a state-run marketplace established under the ACA. The state is expected to pick up $196 million of the $2.1-billion tab for the Medi-Cal expansion. The cost of the new state-run health insurance exchange will be largely funded by Washington in 2014 and by assessments of about $13 to $18 per member per month in 2015 and beyond. Enrollment in the exchange begins October 1, while officials plan to enlarge Medi-Cal membership in January. California was an early supporter of Obama’s health care program, and President Obama was in San Jose in June to tout the state’s progress.

KENTUCKY: Kentucky Spirit, a Centene subsidiary, has appealed a state court ruling that the company cannot cancel its contract with the state early and leave the Kentucky Medicaid program. Kentucky Spirit has threatened to leave due to financial losses. The ruling by the Franklin Circuit Court states that leaving early would be a breach of contract and subject the company to fines. The Kentucky Cabinet for Health and Family Services is seeking an immediate injunction to prevent Kentucky Spirit from leaving the program and wants to keep Kentucky Spirit operating for two months during a transition period. If Kentucky Spirit stops operations, the two remaining plans, including Coventry Cares, an Aetna-affiliated company, will likely take over coordination of care for those individuals currently enrolled in Kentucky Spirit.

NEW HAMPSHIRE: A compromise plan that will narrowly align some of the state’s insurance rules with provisions of the ACA has passed both houses of the legislature. The subject of much consternation and debate earlier in the legislative session, the bill now moves to Governor Maggie Hassan, who is expected to sign it into law. The bill carves out state-regulations on “age banding” to avoid the potential implementation of pure community rating. Both sides fear community rating would most likely lead to increased premiums and an upward costs spiral. The governor’s spokesman indicated that the legislation is “essential for protecting consumers and ensuring that we do not completely cede control of our health insurance market to the federal government.”

NEW JERSEY: In its last week before the summer recess, the legislature overwhelmingly passed a state budget in advance of the July 1 deadline and took action on a number of ACA-related bills. Health care-related bills sent to Governor Chris Christie include legislation: authorizing expansion of Medicaid; requiring the Department of Banking & Insurance (DOBI) to create a public awareness campaign regarding the state’s federally facilitated exchange; and requiring students enrolled in state institutions of higher education to maintain health insurance coverage that meets the essential health benefits standard.

While expressing support for Medicaid expansion, the governor vetoed the bill adopted by the legislature, citing concerns about costs associated with making the expansion permanent via statute. The legislature is expected to continue to pursue ACA expansion since its projected $227 million in savings is critical to balancing the state budget. The other two bills were vetoed by the governor as well. Another notable piece of legislation heading to the governor’s desk would require 24 months of claims experience to be made available to public employers participating in the State Health Benefits Plans (SHBP) and the School Employees Health Benefits Plan (SEHBP) respectively. Both legislative houses are expected to remain in recess through most of the summer as members ramp up their reelection campaigns.



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