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 March 11, 2013

While new health insurance exchanges created by the Affordable Care Act (ACA) are expected to launch in 2014, most employers remain committed to offering employee health care benefits. However, employers plan aggressive actions to better manage rising health care costs.  New research by Towers Watson/National Business Group on Health found that more than 80 percent of respondents plan to continue to raise employees’ share of premiums, and they are planning to rethink their subsidy strategy for dependents. Employers also are looking at new options for active employees and retirees. Nearly 30 percent of employers are already facilitating access to an exchange-based solution for retirees in 2013, with another 36 percent planning to do so over the next three years. The same strategy appears unlikely for active employees. Eighty-two percent said it is not at all likely that their organization will direct active employees to an exchange without a subsidy in the next five years, and 60 percent said the same even with a subsidy. 


The House of Representatives approved a bill last week that would provide appropriations for most federal agencies and programs (with the exception of entitlement programs such as Medicare and Medicaid) through the remainder of fiscal year 2013.  Appropriation levels under this bill are reduced below the fiscal year 2012 levels by the amount of sequestration cuts that became effective on March 1. While the bill does not specifically mention funding for ACA implementation, funding available to health-related agencies reflect the continued imposition of sequestration cuts.  The Senate has not yet taken action on the bill. Senate Democrats have mapped out plans to expand on the House-passed stopgap spending bill. The White House released a statement indicating that the administration is “deeply concerned” because the sequestration cuts reduce appropriations for key government services.  The statement indicates that the “President continues to work to replace sequestration with a larger, balanced deficit reduction agreement.”  The federal government currently is operating under a “continuing resolution” that is set to expire on March 27, the deadline by which Congress must finalize legislation to avoid a government shutdown. 

The House Ways and Means Subcommittee on Oversight held a hearing last week examining the tax provisions of the ACA. Subcommittee Chairman Charles Boustany (R-LA) emphasized in his opening statement that the ACA’s health insurance tax threatens to “stifle small business growth.” Douglas Holtz-Eakin, President of the American Action Forum, noted in his written testimony that consumers ultimately will bear the cost of the health insurance tax. The tax would also limit insurers in their ability to make future investments in health information technology programs, wellness initiatives, and disease management tools. On March 5, the Republican staff of the House Energy and Commerce Committee, the Senate Finance Committee, and the Senate HELP Committee released a report that examines the impact of the ACA on health insurance premiums in the individual and small group markets. The report compiles data from more than 30 studies and concludes that the ACA “will make coverage dramatically more expensive and unaffordable for individuals and families.”


ARIZONA: Despite opposition from the legislature, Governor Jan Brewer continues to make her case for the expansion of Medicaid. Last week she held a series of press conferences and led a rally on the Capitol grounds surrounded by medical professionals wearing white coats. The business community and health care industry continue to galvanize support through a coalition that is using print and televised media to inform the public and persuade legislators as to the benefits of Medicaid expansion. Legislative leadership so far remains reluctant to endorse the governor’s plan both as a concept and in the absence of an actual bill. It is becoming increasingly likely that legislators will seek some type of concession in exchange for affirmative votes.

CALIFORNIA: The Assembly and Senate are considering two bills from the special session on health care designed to implement ACA market reforms and restrict the state's geographic rating regions. Last year, Governor Jerry Brown vetoed similar market reform legislation because of insufficient tie-back language to federal law. The current bills still lack tie-back language for guaranteed issue, adjusted community rating, elimination of pre-existing condition exclusions, and prohibition on health status underwriting. The bills also would shrink the state's current 19 rating regions to six regions in 2014 and 13 regions in subsequent years.  However, the legislature is expected to amend the bills to expand the rating regions back to a total of 19.

CONNECTICUT: Strengthening the behavioral health system has been the subject of much debate of late, even before the Sandy Hook tragedy in December brought a new level of intensity to the issue.  Multiple task forces created by legislature, Governor Dannel Malloy and municipalities are now coming forth with specific recommendations. The legislature’s mental health services working group, related to Sandy Hook, agreed on four consensus behavioral health recommendations.  The consensus recommendations, as well as a number of non-consensus recommendations, now go to the leadership of each respective caucus for possible inclusion in an emergency certification bill. The bill is likely to be considered by the full General Assembly in the next couple of weeks.  In addition, the Program Review and Investigations Committee and the Office of the Healthcare Advocate have produced separate behavioral health and substance abuse recommendations.  More recently the House Speaker introduced his own comprehensive mental health bill.

FLORIDA: The House Select Committee on the Affordable Care Act has instructed staff to draft legislation refusing to enact Medicaid expansion up to 138 percent of the federal poverty level. The bill has a good chance of passing. Senate leaders indicated in a statement that they may not take up Medicaid expansion if the House votes it down. The developments are a setback to Governor Rick Scott, who called for expanding Medicaid coverage to cover about 1 million more Floridians. The legislature began its session last week and will remain in session for 60 days.

ILLINOIS: On a straight party-line vote of 40-19, the Senate last week approved an expansion of the state's Medicaid program as envisioned by the ACA. The measure would allow all adults (regardless of household size) to qualify for Medicaid if their income is at or below 138 percent of FPL.  The Illinois State Chamber of Commerce and the Civic Federation expressed support for the expansion.  The bill now goes to the House where its fate is uncertain. House members want further discussion of expansion costs after the third year because Medicaid reforms enacted last year have also been the subject of debate. The Department of Healthcare and Family Service admitted before the House Appropriations-Human Services Committee that anticipated cost-savings under last year’s Medicaid reform law have come in lower than anticipated.

MICHIGAN: The U.S. Department of Health and Human Services announced last week that it has given conditional approval for Michigan to operate a state-federal partnership exchange.  In addition, the House of Representatives recently passed legislation authorizing the spending of a $31 million exchange grant awarded to the state.  That legislation is currently pending in the Senate. 

WASHINGTON: Legislators passed a bill last week meant to ensure financial sustainability for the exchange by imposing a premium tax and allowing for an assessment on qualified health plans (QHPs). Collections from the 2 percent tax will determine whether the exchange needs to impose an additional assessment on plans sold by QHP carriers inside and outside the exchange. Carriers not participating in the exchange would be exempt from the assessment.


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

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