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 May 28, 2013

The new Milliman Medical Index shows that the total annual cost of health care for a family of four covered by an employer-sponsored plan this year is $22,030. Of this total, $9,144 is borne directly by the family. Even if medical cost trend has slowed somewhat in recent years, costs still increased 6.3 percent – with a total dollar increase of $1,302 – over 2012. Last year’s MMI was notable for finding that average family health care costs had exceeded $20,000 in 2012 for the first time. This year the MMI is exciting interest by making a series of comparisons with other family-related costs. For example, Milliman found annual health care costs to be comparable to purchasing an average mid-sized sedan or a single year’s education at an in-state public college.   


The House Ways and Means Subcommittee on Health held a hearing last week on options for reforming cost-sharing for Medicare beneficiaries. Subcommittee Chairman Kevin Brady (R-TX) expressed interest in three proposals in the President’s budget that would achieve an estimated $54 billion in budget savings over 10 years: 1) increasing income-related premiums under Medicare Parts B and D for beneficiaries who have higher levels of income; 2) increasing the annual Medicare Part B deductible; and 3) establishing a co-pay for home health services. Ranking Democratic member Jim McDermott (D-WA) emphasized that the President’s proposals were offered in “the spirit of a grand, balanced bargain” that included both spending cuts and revenue increases. He suggested that Congress instead should focus on requiring pharmaceutical companies to provide larger rebates.  Proposals to restructure Medicare cost-sharing requirements were discussed by three witnesses – Joseph Antos from the American Enterprise Institute, Alice Rivlin from the Brookings Institution, and Joe Baker from the Medicare Rights Center.

The “Family and Retirement Health Investment Act” was introduced last week by Sens. Orrin Hatch (R-UT) and Marco Rubio (R-FL) in the Senate and by Rep. Erik Paulsen (R-MN) in the House.  The bill proposes a number of changes that would promote the use of Health Savings Accounts (HSAs) and Flexible Spending Arrangements (FSAs). Some of the proposed changes include permitting FSA and HSA funds to be used to purchase over-the-counter medications; deeming HSA-qualified plans as having met the requirements for qualified health plans (QHP) under the Affordable Care Act (ACA); allowing HSA account funds to be used to pay premiums for long-term care insurance and HSA-qualified plans; repealing an ACA provision that limits deductibles for plans sold in the small group market to no more than $2,000 for single coverage and $4,000 for family coverage; and permitting states to establish savings accounts – known as Health Opportunity Accounts – that Medicaid beneficiaries could use to pay out-of-pocket medical expenses.


Covered California, the state-run health insurance exchange, held a press conference last week at which it announced the identity of carriers participating on the exchange next year. The exchange board chose 13 plans, ranging from statewide plans, such as Anthem and Kaiser, to regional plans, such as Sharp, and traditional Medi-Cal plans, such as Molina Healthcare.  Aetna decided not to participate next year, as did the other major national carriers.

FLORIDA: A bill that would suspend prior review of health insurance rates by the Office of Insurance Regulation (OIR) has been sent to the governor for his signature.  He has until June 5 to sign or veto the legislation.  The bill addresses several aspects of the ACA.  It suspends prior rate review by the OIR for 2014 and 2015 and implements provisions of a collaborative arrangement with HHS.  In addition, the legislation would implement a requirement that health plans notify policyholders of provisions of the ACA that impact their premiums. The OIR is required to develop a form for this notice; a rule notice is expected in the near future.

GEORGIA: The Governor’s office currently is reviewing legislation recently adopted in other states related to Medicaid expansion. The governor’s office recently reiterated that Medicaid expansion under the ACA will not be pursued in the state.  However, recent novel approaches, such as that adopted in Arkansas, have prompted a new review of the matter.

IOWA: Lawmakers on a joint conference committee have put forward revised legislation that would expand Medicaid and implement changes requested by the governor related to accountable care organizations and health homes. Titled “Iowa Health and Wellness Plan”, the bill would provide health coverage for individuals with incomes up to 138 percent of the federal poverty level (FPL).  Individuals with incomes up to 100 percent of the FPL would receive coverage through Medicaid, with a benefits package modeled after the state employees’ health benefits plan. Individuals with incomes between 101 percent and 138 percent of FPL would be covered by policies purchased through the exchange with premium assistance. The plan provides structures for creating accountable care organizations and health homes, and would provide property tax relief beginning in FY 2015 based on the savings accrued from shifting more Iowans into the plan. A waiver will be requested to implement the plan using the federal financing structure provided by the ACA to take advantage of the 100 percent federal funding available in the first three years.

MASSACHUSETTS: The Health Policy Commission (HPC), a new independent state agency created last year, has announced its first Cost and Market Impact Review (CMIR), which will be conducted on the proposed merger of Partners Healthcare System and South Shore Hospital.   The review will examine the potential effects of the proposed merger on costs and the health care market.  Partners HealthCare is a large system that owns and operates seven hospitals, four medical groups and five community health centers.  The HPC will report its initial findings at the next public meeting of its board on June 19. At that time the board will vote on whether to continue the review.  The transaction cannot be completed until 30 days after the HPC issues its final CMIR report.  The HPC may also refer its findings to the Attorney General.

NEW JERSEY: The Senate Health, Human Services, and Senior Citizens Committee in conjunction with the Senate Legislative Oversight Committee held a joint hearing last week to hear testimony from invited witnesses regarding conversion of non-profit hospitals to for-profit entities and the possible need for greater state oversight of these transactions.  Recent reports that Bayonne Medical Center had some of the highest charges in the country helped prompt the hearing.  The New Jersey Association of Health Plans (NJAHP) highlighted the significant increase in emergency room claims data at certain northern New Jersey hospitals in the past four years.  Concerned by the business model employed by newly converted for-profit hospitals, committee members called for greater pricing transparency by hospitals.  Separately, legislation to expand the state’s Medicaid program has been approved by the Senate Health, Human Services, and Senior Citizens Committee.  The legislation still requires a full vote in the Senate and consideration by the Assembly.  Governor Christie announced his support of Medicaid expansion in February, making it likely that Medicaid expansion will become law in the near future.

NEW MEXICO: Though the legislature passed exchange legislation this year, the New Mexico Exchange Board acknowledged it will be unable to have an operational exchange by the start of open enrollment on October 1. The state will maintain responsibility of the SHOP exchange, and individuals will be served by a federal facilitated exchange. The board will assume control over the individual exchange in 2015.

TEXAS: The House last week passed a bill that would prevent the state from expanding its Medicaid program in the manner recommended by the ACA. The House measure, which is an amendment to a Medicaid-related bill, says that state health officials "may not provide medical assistance to any person who would not have been eligible for that assistance" under the criteria already in effect in Texas. A version of the bill without the amendment has already passed in the Senate. Now the two chambers must work out differences in their versions of the legislation. The biennial legislative session will end this week.

WASHINGTON: The legislative special session is scheduled to end June 11, but there is speculation that a budget deal may be delayed until later in June when new revenue and expense forecasts are available.  A Senate budget proposal includes restrictions on premium taxes going to the Health Benefits Exchange, as well as other exchange financing limitations that would create a significant funding gap for Washington’s exchange.


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