State and Federal Health Care Reform Activity
Presented by
Janet Stokes TrautweinExecutive Vice President and CEO
National Association of Health Underwriters
November 7, 2006—Election Day
• Control of Congress remains unclear
• Democrats need 15 seats in the House and 6 in the Senate to gain control
• Lobbying reform scandals, support for the administration, and the handling of the Iraq War are major factors in this year’s election
• How will the elections affect health care reforms?
November 7, 2006 –At the State Level
• 85% of state legislative seats up for re-election
• 36 Gubernatorial races (including OH, IL, and TN)
• Current state legislative majorities– Republican controlled - 20– Democrats controlled - 19– Divided - 11
What is Congress Doing?
• Congress adjourned on September 29 and members returned to their districts until after the election
• Pension reform legislation passed just prior to August recess (H.R. 4)– Did not include FSA rollover
• HSA legislation (H.R. 6134) marked-up by Ways and Means Committee
• Lame duck session post-election
High-Risk Pool Funding Extension
• Passed Congress in February 2006 • Extends funding to states for existing high-risk
pools and appropriates funding for states to start up high-risk pools
• Increased the authorization level to $75 million annually through 2010
• HOWEVER…the funding reauthorization was too late to make it into the appropriations bills
• NAHU working to work out technical issues to have the funding for HRPs included for 2006
Health Savings Accounts
• Over 3.2 million covered under HSAs since HSAs were first made available in 2004 (AHIP study)
• NAHU advocates for HSAs to be portable and more accessible
• Increase tax incentives for employees and employers to put money into their HSAs
• Mark-Up of the Health, Opportunity Patient Empowerment Act of 2006 (H.R. 6134) held on Sept. 26
H.R. 6134
• Allows rollovers from FSAs and HRAs into HSAs for a limited time
• Removes deductible as a limit on HSA contributions and increases contribution level
• Requires earlier indexing of cost of living adjustments• Allows full deductible contribution for months preceding
month that taxpayer is an eligible individual• Modifies employer comparable contributions
requirements• Allows one-time rollover from IRAs to HSAs
S. 1955, the “Enzi bill”
• Health Insurance Marketplace Modernization Affordability Act of 2005
• Alternative to traditional AHP legislation • Bill aimed to create a level-playing field within the small
group market.• Allows only fully-insured AHPs and only if the plans adhere
to state regulation and some level of mandated benefits (SBHPs)
• Failed vote of cloture, so it died before it could be brought to the floor for a vote
• Look for a version of the Enzi bill to reintroduced in the 110th Congress
Executive Action on Transparency
• On August 22, 2006, President Bush Signed An Executive Order To Help Increase The Transparency Of America's Health Care System - Empowering Americans To Find Better Value And Better Care.
• This Executive Order Directs Federal Agencies That Administer Or Sponsor Federal Health Insurance Programs To: – Share with beneficiaries information about prices paid to health care
providers for procedures. – Share with beneficiaries information on the quality of services
provided by doctors, hospitals, and other health care providers. – Use improved health IT systems to facilitate the rapid exchange of
health information. – Develop and identify approaches that facilitate high quality and
efficient care.
Health IT
• Senate and House passed different health IT bills – now in conference
• Conferees not named but staff level discussions continue during recess
• Expectations are that agreement will be reached during lame duck session
Key Issues to Resolve in Conference
• Funding – Senate bill provides grant funding for entities to employ health IT, house version does not
• Safe harbors – House version provides safe harbors to hospitals who provide their business partners technology but doesn’t require interoperability which could lead to closed systems
• House version includes coding update to ICD-10 codes (219,000 codes) with implementation date set for 2010. Industry has requested additional 18-24 months to comply.
• Of these key issues, safe harbors may be the most difficult.
Why is Health IT Important?
• Reduces repeated testing
• Reduces number of physician visits
• Will reduce medical errors
• Less hassle for patients – won’t need to repeat family history over and over and potentially miss something important. New history information can be easily added.
State Trends in Health Reform
• Massachusetts-style legislation• Pay or play legislation• Employer Mandates• City/County programs• Single Payer• Wal-Mart legislation• High-Risk Pools• Medicaid Expansion• Long-Term Care Partnership Implementation• Individual Mandate Legislation
Massachusetts Starts the Trend
• MA stood to lose $385 M in federal Medicaid funding
• Implements an individual mandate to purchase health insurance “if affordable” by Jan. 1, 2007
• All employers with 11+ employees must offer a Section 125 plan or be assessed a $295 annual penalty per employee
• Establishes the Commonwealth Health Insurance Connector, which will offer individual plans (non-group market)
Other Provisions of the “Massachusetts Legislation”
• MassHealth (Medicaid) Expansion to children of guardians who earn up to 300% FPL
• Uncompensated Care Pool safety net• Yet to be Determined…
– What is considered “affordable coverage?”– Co-pays and deductibles?– How many plans will be available?– How an agent will be compensated for plan sold through the
Connector?– How much will policies cost? (Target=$200/mo)– Who provides independent advice when someone purchasing without
an agent has a question or problem?
*The Devil is in the Details…
Vermont Follows Suit
• Catamount Health– High-deductible private insurance– Subsidies available up to 300% FPL
• Chronic Care Initiative (thru Medicaid)• If 96% are not insured by 2010, then the
legislature will consider an individual mandate• Financed though sliding scale premiums,
employer assessment ($365/FTE), tobacco tax, and matching federal grant money
“Fair-Share” Legislation
• Pay or Play legislation• Big push of AFL-CIO—introduced in 35 states• Passed in Maryland only—became known as the
“Wal-Mart Bill”• Required employers with more than 10,000
employees to contribute 8% of their payroll towards health benefits or pay into a state health care fund
• MD court recently overturned the decision because it violated ERISA
Medicaid Waivers
• Applying for a Medicaid Waiver was simplified in the DRA
• Kentucky and West Virginia were the first to file Medicaid Waivers under the new standards
• KyHealth Choices will be a managed care system with four choices for beneficiary groups
• Cost-sharing and co-payments will be included, however, there is an OOP maximum of $450 annually
Tennessee Reforms TennCare
• Access TN – HRP• Cover Kids—creates SCHIP program in TN• Cover TN
– Voluntary partnership among the state, individual and “willing” employer
– Available guaranteed-issue to previously uninsured with household income up to 250% FPL
– Plans are portable and cover “basic services”
– Plans are estimated at $150 per month and vary based on age, tobacco use and obesity
City of Chicago
• Targeted at non-union “big box” stores• Companies with more than 90,000 square feet must
provide a living wage of $10 per hour for each employee
• Also requires $3 per hour toward employee benefits• Target has already pulled 2 planned stores and Wal-
Mart has put plans on hold in the Chicago area• Mayor Daley vetoed the legislation—his first in his
17 year tenure
San Francisco
• Pay or Play System• All employers with 20+ employees must contribute to
employee health benefits or pay into a state fund– 20-99 employees=$1.06 per hr/per employee– 100 or more=$1.60 per hr/per employee
• Will treat only city residents, including illegal aliens• Cost estimate $200 million annually• Co-pays and premiums are income-based and established
on a sliding scale
Looking Ahead to 2007
• NAHU is preparing for single payer proposals for next year
• The rising cost of health care is causing officials at the federal, state, and local level to look at possible solutions
• The Fall elections look to be favorable for government-directed health care fans
• Many states will propose “Massachusetts-style” proposals next year
Janet Stokes TrautweinExecutive Vice President and CEO
National Association of Health Underwriters
