Week In Review: State Insurance Regulators Take Center Stage; New Polls Released; Medicare Drug Premiums

Much of the focus on health reform this week shifted from the Washington D.C. to Washington state, where the National Association of Insurance Commissioners was meeting in Seattle.

The state regulators voted unanimously Tuesday to approve a guideline for what insurers can count as medical costs — as opposed to administrative expenses — under new health law rules, Politico reported. The health law requires large group insurance plans to spend at least 85 percent of premiums on medical expenses. Small group plans must spend 80 percent. The NAIC, in its proposal, “approved amendments that narrow inclusions of utilization review in the calculation and expand the definition of ‘wellness and health promotion activities’ to include ‘public health marketing campaigns that are performed in conjunction with state or local health departments.'” Despite the unanimous vote, “familiar fault lines emerged between consumer advocates and industry over the document and how it categorizes medical spending” (Kliff, 8/17).

Insurers were disappointed that the regulators did not include fraud prevention and other investments, according to The Hill. America’s Health Insurance Plans President and CEO Karen Ignagni said that “the current proposal could have the unintended consequence of turning-back-the-clock on efforts to improve patient safety, enhance the quality of care, and fight fraud” (Pecquet, 8/17).

Nonetheless, Modern Healthcare reports that the NAIC document “includes some flexibility” for insurers. Activities that could be counted by health plans as quality improvement efforts “include case management, care coordination, chronic-disease management and wellness programs, hospital discharge planning, some call lines and public health education campaigns conducted with local health authorities” (Vesely, 8/18).

The NAIC proposal can be found on its website.

The final regulation will be issued by the Department of Health and Human Services and is expected later in the fall. Kaiser Health News profiled one health insurance company’s efforts to influence the decision. (Weintraub, 8/16).

(For complete coverage of the NAIC meeting, read KHN’s Daily Report for Aug. 18 and Aug. 19.)

Adminstration Presses Ahead 

Meanwhile, the Obama administration is “sending $1-million grants to state insurance regulators to help increase oversight of rising health insurance premiums, a key step in implementing the new healthcare law,” The Los Angeles Times reported, adding that the grants “will enable many to expand public access to information about rate hikes and to hire experts to review what insurers want to charge. More than a dozen states also plan to seek additional authority to block insurance premium increases they deem unjustified. … Fewer than half of state insurance commissioners … [can] stop proposed rate increases in the individual and small-group markets. Some states do not even require insurers to publicly report proposed rate hikes” (Levey, 8/17).

On a different part of the law, Kaiser Health News found “an unexpectedly small number of people” have signed up for “health insurance under a new federally subsidized program for uninsured people with health problems” (Galewitz, 8/19).

The law may be having an effect on businesses. Reuters wrote that as large employers take steps to comply with rules, such as removing plans’ spending limits and covering more preventive services at no cost to patients, they are also planning to shift more health care costs to workers, according to a report by the National Business Group on Health. The report is based on a survey of some of the group’s 72 member companies — including big names, like Wal-Mart and General Electric, though the specific companies making changes are not named. “The report shows companies expected their healthcare costs to grow by nearly 9 percent on average in 2011. That is about two percentage points higher than the 7 percent average increase for 2010” (Lentz, 8/18).

The survey also shows that “63 percent of businesses plan to make employees pay a higher percentage of their premium costs in 2011,” the group said, according to Bloomberg’s reporting. That trend is not new (Young, 8/18).

In other reactions to the law, Kaiser Health News also reported, “Colleges and universities say some rules in the new health law could keep them from offering low-cost, limited benefit student insurance policies – and they’re seeking federal authority to continue offering them. But their request drew immediate fire from critics who say student health plans should be held to the same standards as other insurance” (Appleby, 8/20).

The Public Mood

There were several new polls out this week. A CNN poll found that health care remains a big issue for voters ahead of November’s midterm elections with more than 80 percent of respondents saying it was very or extremely important to them, The Hill reports. The issue, however, is behind jobs and the economy in importance among respondents (Pecquet, 8/16).

In the meantime, The Wall Street Journal reports that a new poll and focus group found “voters, fixing on the $1.5 trillion federal deficit as a symbol of Washington’s paralysis, appear increasingly willing to take drastic steps to address the red ink. … That is a source of political peril for both Democratic and Republican parties, which are trying to talk about the deficit without addressing the specifics of how they would tackle it. … And to reinforce lawmakers’ anxiety, voters remain divided about what ought to be done.” Some say they would accept higher copayments and deductibles for Medicare medical care. “With the baby boom generation retiring, the deficit will begin rising again because of rising Social Security, Medicare and Medicaid spending” (Weisman, 8/16).

The Associated Press reports that a survey by the Robert Wood Johnson Foundation finds the new health reform law “hasn’t helped Americans feel any more secure about their own medical care. … Consumer confidence spiked in April after [President Barack] Obama signed landmark legislation to expand coverage and start trying to control costs. But confidence levels have since fallen back to what they were last year at the beginning of an epic congressional debate” (Alonso-Zaldivar and Tompson, 8/18).

Politico reported that, in advance of the midterm elections, Democrats are “dramatically shifting their attempts to defend health care legislation, abandoning claims that it will reduce costs and deficit, and instead stressing a promise to ‘improve it.'” That message shift came during a telephone conference call Thursday in a presentation “organized by FamiliesUSA – one of the central groups in the push for the initial legislation. … The presentation also concedes that the fiscal and economic arguments that were the White House’s first and most aggressive sales pitch have essentially failed. ‘Many don’t believe health care reform will help the economy,’ says one slide {in the presentation]” (Smith, 8/19).

The Washington Post noted that Democrats are courting seniors, who have been cool to the new health law (Somashekhar, 8/20). And Republicans are continuing to press on the issues of unemployment and the deficit “to argue that the healthcare reform law is bad for the economy,” The Hill reported (Pecquet, 8/19).

CNN found that “federal and state political candidates have spent $24 million on anti-health care reform television commercials since Congress passed the bill in late March. Over the past 30 days alone, more than $6 million has been spent on TV ads attacking the law, and there is no sign these commercials are going away” (Preston, 8/20).

Medicare Drug Program Premiums

Finally, Medicare officials announced that seniors “will see a modest increase in their Medicare prescription premiums next year but benefits will also improve, federal health officials said Wednesday. The average monthly premium charged by Medicare drug plans for standard coverage will rise to an estimated $30 in 2011, an increase of $1 over 2010,” The Associated Press reported. But, the AP notes that “Medicare prescription plans vary widely in costs and benefits. … Consumer advocates recommend that seniors and family members use Medicare’s online plan finder to see which insurer provides the best deal for an individual’s medications” (Alonso-Zaldivar, 8/18).

The New York Times said that the “estimated total cost of the drug benefits to taxpayers has fallen significantly because of lower drug price increases, generic competition, and added negotiating authority bestowed under the new law” (Wilson, 8/18).

(For complete coverage of the Medicare drug announcement, read KHN’s Daily Report for Aug. 19.)


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Insurance Medicare The Health Law