As President Barack Obama prepared to take to the airwaves to defend his health care overhaul last week, Hernando school officials got a little insurance sticker shock of their own.

The district’s insurance carrier, Blue Cross Blue Shield of Florida, is seeking a 21.5 percent rate increase.

“We expected increases in health insurance, but you don’t really expect 21 percent increases,” said Heather Martin, the district’s executive director of business services. “It’s very disappointing in these economic times.”

The actual increase will likely come in at least a few percentage points below that, Martin said. Last year, for example, Blue Cross started with an 18 percent increase. By tweaking plans and raising deductibles and co-pays, the two sides brought that down to 12 percent.

Martin said she’s hopeful this year’s increase will be closer to 15 percent and that the district’s insurance committee — composed of staffers and members of both unions — had made progress toward that number during talks with Blue Cross on Wednesday.

Blue Cross declined to comment beyond a written statement issued through spokesman Mark Wright.

“The specifics of our negotiations with any client are confidential. However, I can say that for groups such as this, projected claims experience for the upcoming plan year is the determining factor for premium rate calculations.”

In other words, the company uses the district’s claims history and estimates for what next year’s claims will be to justify the rate increase.

The district’s history isn’t exactly pretty, Martin acknowledged.

Claims have been “relatively high” in recent years, she said. Last year, Blue Cross paid more than $14 million in claims.

“We are not an extremely healthy district,” Martin said. “We have not improved it.”

Martin noted, though, that the district is “punished” for the lack of urgent care facilities in the county. That forces employees to go to hospital emergency rooms, an expensive way to get urgent care that drives up the district’s clams, she said.

The School Board has agreed in past years to have the district absorb most or all of insurance premium increases and should try to do the same again this year, said board member Sandra Nicholson.

“If there’s any possibility of us being able to eat the increase, I think we probably will,” Nicholson said.

That could be a tall order, considering this year’s proposed budget has only $1 million in reserves that aren’t set aside for some purpose.

But it would help employees who have seen out-of-pocket costs rise, said Colin Davies, president of the Hernando United School Workers.

Davies said some employees have decided to go without insurance because they can no longer afford it, and he predicted that number could rise.

“You choose whether to eat or have insurance,” Davies said.

The unions accepted smaller pay raises last year in exchange for the district covering more insurance premium costs. Insurance will likely dominate negotiations again this year, said Joe Vitalo, president of the Hernando Classroom Teachers Association.

Vitalo expressed the kind of sentiment voiced by many Americans and that Obama says is motivating him to get health care reform done sooner rather than later.

“It’s probably the most legalized form of extortion there is,” Vitalo said.

By: Individual Health Insurance

About the Author:

The House is scheduled to leave town for summer recess on July 31, and the Senate’s current schedule sends them home a week later on August 7. It will be next to impossible for the House to address health care reform on the floor in that timeframe, and the Senate Leadership has already put off Senate floor action until September. The focal point in the Senate, the Finance Committee has three options: work out a deal and go to mark-up before the break; put out paper but no mark-up before the break; do nothing now and put it all off until fall. The last option seems to be gaining favor daily and may soon become the choice by default. In the House, the conservative Blue Dog Coalition has the numbers to keep a bill from emerging from the Energy & Commerce Committee, which while not fatal is certainly a wake-up call to Democrats that Congress may be moving too fast on health care reform with little or no real focus on health care costs. The on-again/off-again talks between Blue Dogs and E & C Chairman Waxman broke off at the end of last week with conflicting reports on whether they will resume this week. Technically, House Leadership can proceed to the House floor with approval from only two of the three Committees with jurisdiction. But this would send a very bad signal to the public and could portend even more fireworks on the House floor. The bottom line is that neither chamber of Congress is likely to do anything official before the break, but there could well be a years’ worth of policy and political activity in these last two weeks.

States

CALIFORNIA: The budget plan, which requires a two-thirds vote in the state Assembly and Senate, includes about $15 billion in cuts and some gimmicks to generate revenue in the 2009-10 fiscal year. Next to education, health and welfare programs will absorb some of the largest cuts with $1.3 billion coming out of Medicaid funding and $124 million from Healthy Families, a program that provides health insurance for 930,000 low-income children. The plan borrows about $2 billion from local governments’ property tax revenue, captures $1 billion in redevelopment money from local governments, and temporarily redirects to state coffers $1 billion in transportation funding. Local government groups have told legislators and the media that they will sue the state if these transfers occur. Meanwhile, hospitals are divided over a non-budget related tax proposal designed at drawing down additional federal Medicaid funds. If the proposed two-year fees help generate $2 billion in state funds, California could qualify for an additional $3.2 billion in federal funding. Facilities that either don’t treat Medi-Cal patients or do so on a very limited scale are opposing the measure. Gov. Arnold Schwarzenegger has said in the past that he supports using hospital fees to boost funding for health programs but is non-committal about this bill.

CONNECTICUT: In a special “veto session” held last week, the General Assembly failed to override Governor M. Jodi Rell’s veto of the controversial health care pooling bill but it did succeed in overriding her veto of the SustiNet plan. The pooling bill would have required the comptroller to offer employee and retiree coverage under the state benefit plan to: non-state public employers beginning January 1, 2010; municipal-related and nonprofit employers beginning July 1, 2010; and small employers beginning January 1, 2011. The SustiNet legislation establishes a nine-member Board of Directors to make recommendations to the Assembly by January 1, 2010 for the creation of a SustiNet universal coverage plan by January 1, 2012. The legislature and the governor will have to agree on the issue of self-insurance. SustiNet proposes to make the state liable for all insurance claims, though it is unclear how the revenue would be generated. Estimating the cost of SustiNet at $1.1 billion in 2012, the Governor and Republican legislators said the SustiNet program is simply too expensive, with a projected $8.85 billion deficit looming. Aetna will continue to work with all boards, councils and commissions for real health care reform that improves quality, reduces costs and expands access to insurance.

MARYLAND: The Insurance Administration circulated a draft regulation that would impact payments to non-participating providers under a PPO policy. The proposed regulation would require parity between a member’s in-network and out-of-network cost-sharing responsibility for services provided as 1) emergency care, 2) through a referral, and 3) by a hospital-based physician in a preferred facility. The Commissioner’s position is antithetical to the controlling statutory requirement and his own public statements that insureds are not protected from balance billing in a PPO environment. In addition, the Health Care Reimbursement Task Force, in which the Commissioner participated, considered this issue earlier and decided to make no recommendations regarding PPOs.

MISSOURI: A group of orthopedic surgeons in Springfield has initiated the state-required legal process to achieve an “any willing provider” statute through the 2010 general election ballot. These physicians and possibly other advocates are calling themselves Missourians United for Choice in Health and have reportedly amassed $1.5 million to start the initiative petition process. A coalition of opponents is forming. Aetna is evaluating whether it should be a member of the opposition effort.

NEW YORK: In just two days recently, the Senate passed hundreds of bills previously passed by the Assembly over several months before it adjourned. Health insurance legislation that has gone to Governor Paterson for his signature include bills expanding dependent coverage to age 29, extending COBRA eligibility to 36 months and opening the Family Health Plus program to voluntary employee benefits associations (VEBAs). The Managed Care Reform Act also passed. It would require that a provider be given notice of an adverse reimbursement change to a provider contract and an opportunity to cancel the contract; extend overpayment recovery limitations to all health care providers and permits them to challenge such recoveries; require that providers moving to New York be provisionally credentialed until the final credentialing determination is made; shorten utilization review timeframes for post-hospital home health care services; allow providers to appeal concurrent adverse determinations through the external appeal process; and establish a new external appeal standard for rare disease treatments. The bill also would authorize the Superintendent of Insurance to require that mandated submissions be filed electronically and lower the prompt-payment-of-claims threshold to 98 percent, rather than the current zero-tolerance policy. Bills that failed to pass include prior approval of claims and 85 percent medical loss ratio legislation.

NEW JERSEY: Neil Jasey has was named interim commissioner for the Department of Banking and Insurance. This was a surprising development given the indeterminate nature of the post, due to the upcoming gubernatorial election. Mr. Jasey spent more than 25 years with Prudential serving as general counsel prior to his retirement in 2004. His wife is a current assemblywoman running for reelection.

NORTH CAROLINA: The Governor has rejected a budget compromise that did not include an increased premium tax increase. So it is back to the drawing board and, in all likelihood, another extension of the legislative session. Last month, the Budget Committee of the legislature introduced a proposal to increase the premium tax across all lines of business from 1.9 percent to 2.25 percent effective January 1, 2011. Strong opposition to the tax increase helped take it off the table, but things could change as legislators search for a new budget solution.

OHIO: The state’s budget crisis concluded with Governor Strickland signing a compromise bill that includes a provision placing the contentious and heavily partisan video lottery terminal issue on the November ballot. Bill provisions affecting health care plans include: extending coverage to dependent children up to age 28; transferring oversight of health plans’ network adequacy from the Department of Health to the Department of Insurance; expanding the open enrollment program for individuals with a more gradual reduction in the rate cap; requiring a health insurer to cover a service if the Director determines it is a covered service; requiring a carrier to conduct an external review automatically upon notification by the Director that determination of coverage involves a medical issue; requiring electronic payment of electronically submitted provider claims; submission to the Director of an annual report detailing components of administrative expenses by line of business; requiring filing of small employer premium rates; and requiring employers of 10 or more to offer Section 125 plans. An autism mandate was removed.

By: Health Insurance Quote

About the Author:

The insurance industry is up in arms over congressional proposals to create a publicly financed competitor in an effort to bring down health-care costs. That may be because it doesn’t have to face much in the way of competition now: Most regions of the U.S. are dominated by just one or two health insurers.

Each year the American Medical Assn. (AMA) surveys the commercial health-insurance landscape and finds little if any competition. Its latest report says that, out of 314 metropolitan markets, 94% are controlled by one or two companies, or fewer. In 15 states, one insurer has 50% or more of the entire market.

Such market concentration has become a potent argument for supporters of a public insurer, President Barack Obama among them. With no need to generate profits, a public plan could offer lower premiums, thus bringing competitive pressure to bear on the private insurers to do the same.

Insurers argue that creating a public plan would be a disaster for their industry. They point to an analysis by the Lewin Group, a subsidiary of UnitedHealth Group (UNH), that predicts 103 million Americans would jump to the cheaper public option out of the 160 million now covered commercially. The Congressional Budget Office, however, estimates that only 9 million to 10 million would switch by 2019. Karen Ignagni, president of the lobbying group America’s Health Insurance Plans (AHIP), told Congress in a letter that a public plan would “significantly increase costs for those who remain in private coverage.”

Insurers say they are already offering plenty of changes to their business practices to help further reform, so they should be spared this additional burden. AHIP favors ending the practices of charging higher premiums for sicker enrollees and denying coverage for preexisting conditions. “We do think comprehensive reform is needed,” says Alissa Fox, senior vice-president of Blue Cross Blue Shield.

AHIP even launched an ad campaign on July 20 titled “Let’s Fix Health Care,” a far cry from the devastating “Harry and Louise” ads that helped sink reform efforts in the early 1990s. The ads call for a health-system overhaul but don’t mention the public plan, which polls show the public supports. As Charles Boorady, health-care analyst with Citi Investment Research & Analysis, says: “The health insurers … have a difficult PR battle.”

DAMAGING STATISTICS

There are plenty of statistics that come out against the industry with regard to competition. Insurance companies complain about the AMA’s methodology in its market concentration studies, but the U.S. Government Accountability Office came to similar conclusions in a recent report on small business coverage. It found that the median share of the largest carrier in a region was 47%, and in 16 markets the largest carrier had a 50% share or higher. “There is obviously a need for more competition,” says Karen Davis, president of the nonprofit Commonwealth Fund, which researches health care.

AHIP, the industry group, notes that the Justice Dept. investigated and concluded the insurance industry is competitive. And insurers argue that, with some 1,300 companies in the business, it can be cutthroat. “It doesn’t feel like the market is not competitive to us,” says Brad Fluegel, chief strategy officer for WellPoint, the largest U.S. insurer.

The benefits of healthy competition are hard to spot, however. Over the past 10 years health-insurance premiums have increased 120%, compared with cumulative inflation of 44% and cumulative wage growth of 29%, according to a Henry J. Kaiser Family Foundation survey. On July 21, UnitedHealth reported an 8% gain in second-quarter premium revenues, despite falling enrollments. Analysts expect other insurers to have equally robust results.

It doesn’t help, says Davis, that insurers cannot use their market power to bring down medical costs because they are facing off against hospitals with just as much power. A 2006 study found that one or two hospitals controlled the market in 88% of the nation’s large metropolitan areas. “You’ve got a dominant insurer up against a dominant health-care provider,” says Davis. “That just doesn’t work out well for lowering costs.”

By: Individual Health Insurance

About the Author: