Texas is almost alone among the nation’s largest states in failing to start work on a key piece of the Affordable Care Act, as legislators and state agencies follow Gov. Rick Perry’s dictum to delay action until after a Supreme Court ruling and the November election.

“Politics superseded good policy,” state Rep. Garnet Coleman, D-Houston, said of the inaction on creating an exchange to help small businesses and individuals buy health insurance.

Texas is one of nine states – other than Florida, the others are mostly small, with relatively few uninsured residents – identified by the Kaiser Family Foundation as having made “no significant progress” toward establishing an exchange. A Perry spokeswoman said there are no plans to change that.

“(Perry) feels the health care bill is unconstitutional and misguided,” spokeswoman Lucy Nashed said. “There are no plans to implement an exchange.”

But analysts say the delay makes it more likely the state will miss a Jan. 1, 2013, deadline for proving a state exchange is on track. If it’s not, the federal government will impose its own exchange.

People shopping for insurance through the exchanges may not notice the distinction – those with incomes up to about $88,000 for a family of four would qualify for subsidies in a federal exchange, just as they would in a state-run pool.

But it’s likely to add fuel to recent anti-federal regulation fervor. A 2011 survey by Texas A&M University’s Public Policy Research Institute found 63 percent of Texans preferred a state exchange to a federal operation. Almost 40 percent felt the state should not set up an exchange.

“The risk is that the federal exchange may not look exactly like the state exchange would,” said Jennifer Tolbert, director of state health reform for the Kaiser Family Foundation. “If you wait for some of these critical milestones (such as the Supreme Court ruling), states may not have enough time to get an exchange up and running.”

Most provisions of the law begin in 2014, and the exchanges are central to finding affordable health insurance and qualifying for subsidies.

High national rate

People with incomes up to 133 percent of the federal poverty level – about $14,400 for a single person – will be covered by an expansion of Medicaid, the federal-state program for low-income residents. It now covers mainly children, the disabled and low-income elderly people.

The exchanges are aimed at most other uninsured residents. At 24.6 percent of the population, Texas has the highest rate in the nation.

Opponents see two ways to overturn the law.

The Supreme Court will hear arguments next month and is expected to rule this summer on whether the mandate requiring health insurance is constitutional. It also must decide whether the rest of the law can be implemented without a mandate. The presidential election presents another chance; the Republicans vow to repeal it.

State Rep. John Zerwas, an anesthesiologist and Richmond Republican, unsuccessfully pushed a bill to create an exchange last year. “It was the desire of the governor to take a wait-and-see position, in light of the fact that it was being challenged (in court), and in consideration to what might happen in November,” Zerwas said.

He and other officials said Perry could create an exchange by executive order;Nashed said Perry has no plans to do so.

Zerwas said he believes an exchange could help the uninsured, especially those who own or work for a small business.

Tainted by Obamacare

“The problem with an exchange is, it got synonymous with Obamacare and it was tainted,” he said.

According to the Kaiser Family Foundation, 13 states and the District of Columbia have established exchanges. Arkansas and Louisiana will use a federal exchange or work with the federal government. Work is ongoing in most other states.

Texas is farther along in preparing for the Medicaid expansion, thanks to a waiver granted by the federal government late last year that could provide as much as $29 billion over five years to expand and improve care.

Coleman said that money also could be used to train more health care providers, including primary care physicians and nurse practitioners.

Good health is the gift that keeps on giving. Not only do you feel better, you probably paid less for health insurance than some of your co-workers. In recent years, many large employers have passed on the rising cost of health insurance in the form of higher deductibles and co-payments — costs borne primarily by those who use health care.

This year, though, the pain will be shared, according to an analysis by Towers Watson, a human resources consultant. Employers will pass on cost increases primarily through higher employee premium contributions. Towers Watson projects that 66% of companies will increase employees’ share of premiums for single-only coverage in 2012, and 73% will increase the share of premiums for dependent coverage. Another survey by the National Business Group on Health found that 53% of employers plan to increase employees’ share of premiums, while 39% plan to increase in-network deductibles.

If there’s any good news to be found, it’s that the increase in overall costs of providing health care to employees has slowed. Tower projects an increase of 5.9% in 2012, down from 7.6% in 2011. Mercer, another human resources consulting firm, predicts that employee health care costs will rise 5.4% in 2012.

That’s small consolation, though, to employees whose income hasn’t kept pace with the rise in health care costs. In August, personal income fell 0.1% from July, driven by a decline in wages and salaries, according to the Bureau of Economic Analysis.

With open enrollment season underway at many companies, here’s what you can expect to see:

•Higher costs for dependents. The health care reform law enacted last year requires health insurers to allow adult children to remain on their parents’ health insurance plan until age 26. More than 2.3 million young adults have been added to insurers’ plans since the law was enacted, according to the Kaiser Family Foundation. Increasing premiums for dependent coverage is one way employers are dealing that that requirement, says Beth Umland, research director for health and benefits at Mercer.

•More spousal surcharges. It’s not uncommon for working couples to compare their employers’ health insurance options and sign on to the one with the most generous plan. However, this is a practice many employers want to discourage, since covering more family members increases their costs. Spouses are even more expensive to cover than adult children because they’re older and more likely to get sick, says Helen Darling, chief executive of the National Business Group on Health.

Employers are increasingly imposing a surcharge on coverage of spouses who have access to their own employers’ plans, says Julie Stone, senior consultant with Towers Watson. Twenty percent of employers surveyed have a spousal surcharge, and an additional 25% are considering it, she says.

That means employees need to take a close look at the cost of adding a spouse to their plans, says Craig Rosenberg, national practice leader for consulting firm Aon Hewitt. If your company has added a surcharge, it may be cheaper for both spouses to use their own employer’s coverage, he says.

•More consumer-directed health plans. Employees who sign up for these plans typically pay lower premiums in exchange for a high deductible. The most common type of CDHP is a high-deductible plan with a health savings account. A health savings account allows you to use pretax dollars to pay your out-of-pocket costs, which could be considerable. To be eligible for a health savings account in 2012, you must have a deductible of at least $1,200, or $2,400 for family coverage.

Unlike flexible spending accounts, which offer another tax-advantaged way to pay your out-of-pocket expenses, unused funds in health savings accounts don’t have to be forfeited at the end of the year. You can also take the money with you when you leave your job. Some employers contribute to employees’ health savings accounts.

In 2012, nearly three-quarters of employers will offer a consumer-directed plan, according to a survey by the NBGH. At 17% of employers, a consumer-directed plan will be the only option. “Overall, these are less-expensive plans” for employers, Darling says.

If you’re healthy, a consumer-driven plan can lower your health care costs, particularly if you contribute to a health savings account, Umland says. The health care reform law requires insurers to provide preventive care without charging a deductible or co-payment, so you won’t have to pay for things such as cancer screenings, blood pressure tests and flu shots. You should, however, have the resources to pay the full deductible in the event of an accident or illness.

Many employees offer modeling tools that allow you to estimate your out-of-pocket costs, Umland says.

•More pressure to sign up for wellness programs. Employers will continue to offer workers cash or other incentives to take health assessment surveys and get screened for potential problems, such as high blood pressure or elevated cholesterol. In addition, a small but growing number of employers are penalizing workers who decline to participate in such programs, either by refusing to cover them or charging them a higher premium, according to Towers Watson.

“There’s a lot of debate on that topic now about whether incentives or penalties or some combination makes sense,” Stone says. “A lot of it varies by culture of the organization. An employer might have a surcharge for smokers, or they may position it as a discount for non-smokers.”

In King County, Wash., county employees who take a health assessment pay lower deductibles and co-payments.

Employees who follow through with a 10-week health-improvement program get an additional discount. The county says the program, launched six years ago, will reduce health care costs by $23 million this year.

Texans who buy their own health insurance could be due an estimated $481 million in refunds over the next three years, thanks to the Affordable Care Act (ACA), the much-maligned national health reform law. Unfortunately, some Texas officials are trying to deny consumers the money they are owed – and hand most of it right back to the insurance companies.

At issue is a pro-consumer provision in the ACA designed to keep insurance companies from gouging policyholders. This rule – known as the medical loss ratio (MLR) – makes sure insurance companies don’t spend more than 20 percent of customers’ premiums on non-health care items like marketing, CEO salaries, paperwork and profits. Spend any more, and the company must cut consumers rebate checks.

This rule gives insurers ample room to turn a profit while providing an incentive for them to keep unnecessary costs down. But under the state’s proposal to phase in the rule, consumer refunds would be cut by more than half, a loss of more than $200 million for consumers over the next three years.

The Texas Department of Insurance (TDI) argued that unless the MLR requirement is weakened, some insurers will withdraw from Texas, leaving residents with fewer choices. Yet the state’s fear is overstated. Texas has more than 30 insurers offering plans to consumers who buy their own coverage. That contrasts sharply with Maine, for example, which was granted an adjustment because one of just three insurers serving its individual market threatened to pull out if the requirement went into full effect in 2011.

In Texas, insurers representing more than 90 percent of the market have stated they do not intend to exit if required to increase value in their health plans.

Texas residents need strong market competition to keep health insurance costs down and service up. And the new MLR requirement provides a level playing field for that competition. But consumers don’t need an infinite number of health insurance choices if they are of poor value.

Texans work hard and deserve a fair value for their health-insurance dollar. And they deserve state insurance officials who balance their interests along with those of local insurance companies. At a time when families are tightening their belts, insurance companies should be required to do the same.

Federal officials are currently reviewing the state’s proposal and should reject Texas’ attempt to maintain business-as-usual for low-value health insurers.

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Premium rates for Texas

Here are the 2011 monthly PCIP premium rates for Texas by the age of an enrollee, effective July 1, 2011.

WASHINGTON — Enrollment in the Affordable Care Act’s fledgling program for people with pre-existing conditions inched up to 18,313 in March, the Obama administration recently announced.

The Pre-Existing Condition Insurance Plan, a $5 billion component of the president’s health care reform bill, offers low-cost coverage to people who’ve spent six months or longer excluded from the individual insurance market because of conditions like diabetes, heart disease or cancer. The federal government runs the PCIP in 23 states, while the rest of the states handle it themselves.

Enrollment jumped by nearly 6,000 from the previous update in February — the biggest increase yet. The Department of Health and Human Services (HHS), which administers the program, lowered premiums earlier this year in an effort to boost enrollment.

For those covered by the PCIP, it can be a godsend. The program was so appealing to one Arizona couple, in fact, that they canceled their insurance policies in January and are spending six months without insurance to qualify for the program come July.

Yet the PCIP’s enrollment numbers have been a disappointment for the administration. Though there are millions eligible, officials said it would reach a few hundred thousand at most. Enrollment has fallen far short of even those meager estimates.

During the legislative endgame of health care reform, Democrats touted the new program as one of the greatest “immediate deliverables” of the pending law. (High-risk pools like the PCIP also happen to be the centerpiece of Republicans’ alternative vision for health care reform).

The PCIP will be phased out in 2014, when it will be illegal for insurance companies to discriminate against the sick.

HHS buried the new numbers on its website May 6 and did not put out a press release like it did for the previous update in February. A spokeswoman did not respond to inquiries about why HHS chose not to publicize this quarter’s enrollment figures.

SOURCE

With Perry running for the Republican presidential nomination, health care in Texas and his own ideas as governor will get fly-speck scrutiny on the national stage.

His state is a study in contrasts, boasting world-renowned facilities like the MD Anderson Cancer Center in Houston, along with 6.8 million uninsured residents, or 26 percent of the population.

As a national candidate, Perry has made total repeal of “Obamacare” central to his fledgling campaign. Less clear is what he would put in its place. But if the Supreme Court ultimately upholds all or parts of the law, Perry has signaled he would help carry out key provisions to avoid defaulting to the federal bureaucracy.

Texas has already received various grants under Obama’s law for planning, insurance regulation and consumer education. The state employee benefits system says it expects to draw $60 million in federal subsidies this year to help cover its early retirees, cashing in on a provision of the law.

But when Republican state Rep. John Zerwas tried to move legislation to set up an insurance purchasing pool required by the national overhaul, he ran into a veto threat from Perry.

The purchasing pools — called exchanges — are one of the key features of Obama’s law. Close to 4 million Texans stand to gain coverage under the law, nearly half of them through exchanges.

Run by the states, exchanges would let consumers buy coverage from a choice of private plans. Most individuals and families participating would be eligible for federal tax credits to lower their premiums.

Exchanges are supposed to open in 2014. If a state doesn’t act in advance, the law authorizes the federal government to set up and run its exchange. And since the Texas legislature meets only every other year, this past session was seen as perhaps the state’s only opportunity.

But Zerwas said Perry told him he was concerned that moving ahead with the exchange legislation would undermine a multistate lawsuit against the federal overhaul that Texas is part of, not to mention creating other political problems. The lawsuit challenges the constitutionality of the law’s requirement that Americans obtain health insurance — the so-called individual mandate — an issue on which lower courts have split.

First Read: What Libya means for Obama

“Unfortunately, whether we like it or not, health insurance exchanges have become synonymous with Obamacare,” said Zerwas. An anesthesiologist from the Houston suburbs, Zerwas said he believes it’s worth taking the flak to guarantee that Texas will retain control of its insurance market. The governor disagreed.

“The position (Perry) was taking veers into some political considerations,” said Zerwas. “He felt it would not ring well with some of the constituents and grassroots out there, and frankly, he was concerned it could potentially weaken the arguments in the lawsuit.”

In the end, Zerwas said Perry reassured him that as governor he could put the exchange legislation into place through an executive order, should that become necessary. A spokeswoman for the federal Health and Human Services department agreed that would be possible.

A spokeswoman for the governor, Lucy Nashed, said Perry believes there are too many unknowns about the federal law to move ahead. “It’s premature to be setting up anything that has to do with the federal health care bill because so much of it is still up to the courts with regard to its constitutionality,” she said.

That still leaves Texas with the nation’s lowest rate of insurance coverage, even when compared to other states that have high immigrant populations. Experts say one of the key problems is a relatively low level of employer-sponsored private coverage.

Nashed said Perry has advocated a range of health care fixes, including national caps on malpractice lawsuits, conversion to electronic medical records and efforts to keep patients healthy and out of hospitals. He also signed legislation this year that would clear the way for Texas to explore a health care overhaul in conjunction with other states.

What sounds like an innocuous experiment in federalism could turn out to be more difficult than Obama’s overhaul.

The idea behind so-called state compacts is for the federal government to turn over Medicare and Medicaid funds to a group of states to use as they deem best for their citizens’ needs. The biggest re-engineering since the giant health care programs were created in the 1960s would have to overcome AARP’s disapproval.

“We oppose interstate health care compacts because they could result in the loss of guaranteed benefits, similar to turning Medicare and Medicaid into block grant programs,” said David Certner, legislative policy director for the seniors lobby, which sees “especially grave concerns for Medicare.”

Industry consultant Bob Laszewski says even if Congress were to approve of the idea, it’s unlikely that groups of states could agree on how it would actually work.

“How could any one state control its costs?” asked Laszewski. It’s like the Euro zone, he added, referring to Europe’s troubled economies. “It’s not states’ rights anymore. These states would have to cede a lot of authority to a new entity.”

SOURCE

There are a lot of Texas statistics that we’ll hear about this campaign season. You can expect Texas Gov. Rick Perry (R), for example, to bring up how his state has generated 37 percent of the country’s new jobs since 2009.

Here’s one statistic, though, you won’t hear him touting: Texas has the highest percentage of uninsured people in the country. Twenty-six percent of Texas residents lack health insurance, compared with a national average that hovers around 17 percent. That works out to about 6.3 million uninsured Texans, a population nearly equal in size to the entire state of Massachusetts.

Texas has led the country in its percentage of uninsured residents since well before Perry took office in 2000, says Anne Dunkelberg, who directs the Austin-based Center for Public Policy Priorities. “We literally started out in the 1990s at the end of the line and nothing has moved to change that position,” she explains. “Basically, it’s everything about our job market in the state and our public programs, that really were the formula for having low levels of coverage.”

Here are four main factors that contribute to Texas’ high number of uninsured:

Many Texas jobs don’t offer insurance. Texas has a higher number of retail and service jobs, as well as a decently large agricultural sector, all industries that are less likely to offer health benefits. So while Texas’ unemployment rate of 8.2 percent beats the national average, the state falls below national trends on employer-sponsored health coverage. Seventy-one percent of the uninsured in Texas are part of a family that includes a full-time worker, according to the Kaiser Family Foundation. Put another way, 63 percent of uninsured, working-age Texans do have a job —just not an offer of insurance to go with it.

The Medicaid program is relatively limited. As I touched on in an earlier post, some states have used Medicaid waivers to cover low-income populations they’re not required to cover. Texas doesn’t do this much: The state covers some optional populations, pregnant women and those in long-term care, but largely sticks with the federally-mandated minimums. That means a decent number of residents who might receive coverage in another state don’t in Texas.

Insurance rates are largely unregulated. Texas takes a pretty hands-off approach to regulating its individual market. The state does not require insurers in the individual market to sell to anyone who applies for a policy. Nor does Texas limit “rating” of customers, where insurance carriers charge more to older subscribers and women, who tend to have higher health care costs. Taken together, those two factors can make insurance prohibitively expensive – or unobtainable — for those who are older or have a pre-existing health condition.

A large immigrant population. Non-citizens make up about one-quarter of Texas’ uninsured population, according to the Center for Public Policy Priorities’ Texas Health Care Primer. Regardless of immigration status, immigrants tend to have a higher rate of uninsurance than non-immigrants. Of the 1.2 million foreign-born, naturalized U.S. citizens in Texas, for example, 31 percent are uninsured, compared to 22 percent of U.S.-born Texans.

source

An appeals court ruled Friday that President Barack Obama’s healthcare law requiring Americans to buy healthcare insurance or face a penalty was unconstitutional, a blow to the White House.

The Appeals Court for the 11th Circuit, based in Atlanta, found that Congress exceeded its authority by requiring Americans to buy coverage, but also ruled that the rest of the wide-ranging law could remain in effect.

The legality of the so-called individual mandate, a cornerstone of the 2010 healthcare law, is widely expected to be decided by the Supreme Court. The Obama administration has defended the provision as constitutional.

The case stems from a challenge by 26 U.S. states which had argued the individual mandate, set to go into effect in 2014, was unconstitutional because Congress could not force Americans to buy health insurance or face the prospect of a penalty.

“This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives,” a divided three-judge panel said.

Obama and his administration had pressed for the law to help halt the steep increases in healthcare costs and expand insurance coverage to the more than 30 million Americans who are without it.

It argued that the requirement was legal under the Commerce Clause of the Constitution. One of the three judges of the appeals court panel, Stanley Marcus, agreed with the administration in dissenting from the majority opinion.

The majority “has ignored the undeniable fact that Congress’ commerce power has grown exponentially over the past two centuries and is now generally accepted as having afforded Congress the authority to create rules regulating large areas of our national economy,” Marcus wrote.

Many other provisions of the healthcare law are already being implemented.

The decision contrasts with one by the U.S. Appeals Court for the 6th Circuit, based in Cincinnati, which had upheld the individual mandate as constitutional. That case has already been appealed to the Supreme Court.

The Court of Appeals for the 4th Circuit, based in Richmond, has yet to rule on a separate challenge by the state of Virginia.

SOURCE

Federal authorities say 20 South Texas residents have been convicted for their roles in a scheme to defraud the American Family Life Insurance Co.

In mid-June, 36 people were indicted on accusations they participated in the scheme designed to defraud Columbus, Ga.-based AFLAC millions of dollars by filing false claims, the Associated Press reported.

According to the indictments, the defendants include a local police officer, county employees and school teachers. They purchased policies under the AFLAC Accident-Only Insurance Plan from several area insurance agents at various times beginning in July 2001 through April 2010. Under the plan, a policyholder could file a claim with AFLAC and obtain a cash benefit if he or she received treatment from a physician for a legitimate, accident-caused injury including lacerations, bruises, burns, fractures or dismemberment.

The Justice Department says on behalf of the defendants two Reynosa, Mexico, doctors filed minor injury claims thought too small to draw suspicion. In return, the border-city doctors received small kickbacks.

The physicians allegedly prepared an “accident report” for each fake injury in exchange for a cash kickback of approximately $15 per accident report, according to the U.S. Attorney’s Office for the Southern District of Texas. In each report, the indictment alleges the physicians falsely claimed they had provided treatment and prescribed medication for the purported injury. In addition, the physicians and defendants allegedly attempted to conceal their scheme in numerous ways including agreeing to use injuries such as lacerations and minor burns as opposed to more serious injuries that paid higher cash benefits and could potentially attract a greater level of scrutiny by AFLAC’s claims department.

Over time, the defendants — many of whom allegedly recruited one another to purchase policies and join the alleged scheme — submitted approximately 21,600 allegedly false and fraudulent insurance claims, each accompanied by the physicians’ accident reports, to AFLAC’s claims department in Columbus, Ga. Based on the claims, AFLAC disbursed a total of approximately $3 million in insurance proceeds to the defendants.

So far, 20 defendants pleaded guilty to wire fraud. All 20 face a possible maximum of sentence of 20 years in federal prison without parole and a $250,000 fine.

Federal investigators dubbed the case “Operation Sitting Duck,” a play on the insurer’s feathered mascot.

source

Texas Health Insurance Agents Advocate HSA Plans as Deterrent to Rising Health Care Costs
Texas Association of Health Underwriters call for legislative action and consumer consideration.

As health care costs continue to rise, the Texas Association of Health Underwriters (TAHU) is calling attention to high-deductible health plans linked to Health Savings Accounts (HSAs). The professional organization of more than 1,900 independent health insurance agents finds that these plans are more cost-effective, provide better protection against the costs of a major medical problem and encourage consumers to make cost-conscious health care decisions.

“High-deductible insurance plans combined with an HSA should be at the center of our nation’s efforts to expand health insurance coverage,” TAHU President Joanna Antongiovanni said. “They are an extremely effective way to both curb rising health costs and ensure that more Americans have access to quality care. Even better, they don’t require billions in new federal expenditures.”

TAHU states that with an HSA plan individuals can set aside up to $3,050 per year in pre-tax dollars, or $6,150 for families, to pay for routine medical expenses. Once a consumer reaches his policy’s annual deductible, insurance generally covers any additional medical expenses. Funds left in the account at the end of the year remain the individual’s property for future use. According to a study by the American Academy of Actuaries, high-deductible plans can save consumers up to 20 percent within the first year and three to five percent the following years.

“Participants have an incentive to avoid paying for unnecessary services because they keep the money they don’t spend,” Antongiovanni said. “The Centers for Medicare and Medicaid Services project that total health spending will increase more than 80 percent through the end of this decade. TAHU will continue recommending HSA plans to consumers and lobbying for their inclusion in future legislation to help offset these costs and increase the number of people who have access to health insurance.”

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Texas declined to create a health insurance exchange during the legislative session that ended June 30, but the state did advance its own version of accountable care organizations.

Gov. Rick Perry strongly opposes the health system reform law and threatened to veto any legislation that would help implement the law’s health insurance exchanges. The exchanges will serve as one-stop marketplaces for qualifying health coverage beginning in 2014. Perry did not want to be seen as aiding the implementation of the health reform law in any way, said Texas Rep. John Zerwas, MD, sponsor of the leading bill to create an exchange, and Texas Medical Assn. President Bruce Malone, MD, in separate interviews.

“They definitely were just very entrenched on this idea,” Dr. Zerwas said. At least one other governor, Bobby Jindal of Louisiana, opposes creating a locally controlled exchange in his state.

The Texas Medical Assn. supported Dr. Zerwas’ measure to authorize a state insurance exchange. However, Dr. Malone called the national reform law’s subsidies to help buy health insurance through the exchanges a “middle-class welfare entitlement.” The subsidies will be available on a sliding scale to people earning up to 400% of the federal poverty level, or $43,560 for an individual.

Perry opposed Dr. Zerwas’ bill even though inaction on the issue could force the Dept. of Health and Human Services to operate a federal exchange in Texas. HHS will do so in states that decline to create their own insurance exchanges.

Perry spokeswoman Lucy Nashed said the governor is hoping that the U.S. Supreme Court will uphold lower-court rulings that part or all of the health reform law is unconstitutional. “The governor is committed to working with lawmakers and state health and insurance officials to address Texas’ health care needs, and we are looking at all of our options to determine what’s in the best interest of Texans.”

Texas could enact its own exchange at a later date, HHS officials said during a July 11 call with reporters about new proposed rules to create health insurance exchanges. HHS in January 2013 will certify whether state-created health insurance exchanges are on track to operate by January 2014. After 2014, a state that did not create an exchange could still do so if the state provides 12 months’ notice, said Steve Larsen, director of the HHS Center for Consumer Information and Insurance Oversight.

Drs. Zerwas and Malone said Perry told them he can create a state insurance exchange administratively without consulting the Legislature. Nashed did not explain what legal authority Perry might have to do so.

Perry approved a measure passed by the Legislature to create “health care collaboratives,” Texas’ version of accountable care organizations. The bill clarified that health care organizations that assume financial risk for treating patient populations will be classified and regulated as health insurance. It also requires collaboratives to have physicians on their governing boards. Individual doctors will be able to participate in more than one collaborative.

However, many details about the collaboratives need to be spelled out, Dr. Malone said. Texas physicians are likely to be skeptical about collaboratives. “I can’t imagine a scenario in which doctors would be anxious to participate in this,” he said.

SOURCE ]]> http://www.stibroker.com/stibroker/texas-refuses-to-launch-health-insurance-exchange/feed/ 0 http://www.stibroker.com/stibroker/texas-falling-behind-in-employer-based-health-insurance/ http://www.stibroker.com/stibroker/texas-falling-behind-in-employer-based-health-insurance/#comments Thu, 23 Jun 2011 20:25:55 +0000 Admin http://www.stibroker.com/?p=705  

AUSTIN, Texas – Availability of employer-based insurance coverage is significantly less in Texas than the national average, according to a study released this week.

The report shows a big drop-off in the way most American families traditionally have gotten their health insurance – through their employers. Lynn Blewett, who helped conduct the study for the non-partisan Robert Wood Johnson Foundation, says the overall cost of health care has shot up during the past decade, with most of the increase reflected in higher insurance premiums – accounting for the decline in employer-sponsored coverage.

“Many employers are deciding they can’t afford to offer coverage, and new employers coming on the market are deciding to wait to offer coverage.”

Middle- to low-income families have been hardest hit, says Blewett, director of the University of Minnesota’s State Health Access Data Assistance Center. The average Texas family plan went up from about $6,400 a year in 2000 to almost $11,000 in 2009. As a result, Blewett says, many employees are choosing to drop dependents from their policies.

In 2000, 62 percent of Texas employers offered health insurance. Less than a decade later, that figure had dropped by more than 10 points.

“If you look at the 51.5 percent of Texas employers offering, that’s well below the national average, which is about 61 percent.”

Blewett agrees with another just-released study by the Urban Institute that says that, contrary to recent political rhetoric, the new federal health-care legislation, the Affordable Care Act, will increase, not decrease, employer-based coverage…

“There will be more affordable coverage options offered through the exchange. There’ll be a place to go for small employers to look for coverage that best meets their needs.”

Critics of the Affordable Care Act have often pointed to a 2011 report by a Chicago consulting firm that suggests the federal health-care law could cause as much as a 30 percent drop in employer-sponsored health insurance. This week, however, the firm issued a clarification, saying the report was meant to express current business attitudes rather than predict an actual impact.

SOURCE

 

Some people who need medical care but can’t afford it go to the emergency room. Others just hope they’ll get better. James Richard Verone robbed a bank.

Earlier this month, Verone (pictured), a 59-year-old convenience store clerk, walked into a Gastonia, N.C., bank and handed the cashier a note demanding $1 and medical attention. Then he waited calmly for police to show up.

He’s now in jail and has an appointment with a doctor this week.

Verone’s problems started when he lost the job he’d held for 17 years as a Coca Cola deliveryman, amid the economic downturn. He found new work driving a truck, but it didn’t last. Eventually, he took a part-time position at the convenience store.

But Verone’s body wasn’t up to it. The bending and lifting made his back ache. He had problems with his left foot, making him limp. He also suffered from carpal tunnel syndrome and arthritis.

Then he noticed a protrusion on his chest. “The pain was beyond the tolerance that I could accept,” Verone told the Gaston Gazette. “I kind of hit a brick wall with everything.”

Verone knew he needed help–and he didn’t want to be a burden on his sister and brothers. He applied for food stamps, but they weren’t enough either.

So he hatched a plan. On June 9, he woke up, showered, ironed his shirt. He mailed a letter to the Gazette, listing the return address as the Gaston County Jail.

“When you receive this a bank robbery will have been committed by me,” Verone wrote in the letter. “This robbery is being committed by me for one dollar. I am of sound mind but not so much sound body.”

Then Verone hailed a cab to take him to the RBC Bank. Inside, he handed the teller his $1 robbery demand.

“I didn’t have any fears,” said Verone. “I told the teller that I would sit over here and wait for police.”

The teller was so frightened that she had to be taken to the hospital to be checked out. Verone, meanwhile, was taken to jail, just as he’d planned it.

Because he only asked for $1, Verone was charged with larceny, not bank robbery. But he said that if his punishment isn’t severe enough, he plans to tell the judge that he’ll do it again. His $100,000 bond has been reduced to $2,000, but he says he doesn’t plan to pay it.

In jail, Verone said he skips dinner to avoid too much contact with the other inmates. He’s already seen some nurses and is scheduled to see a doctor on Friday. He said he’s hoping to receive back and foot surgery, and get the protrusion on his chest treated. Then he plans to spend a few years in jail, before getting out in time to collect Social Security and move to the beach.

Verone also presented the view that if the United States had a health-care system which offered people more government support, he wouldn’t have had to make the choice he did.

“If you don’t have your health you don’t have anything,” Verone said.

The Affordable Care Act, President Obama’s health-care overhaul passed by Congress last year, was designed to make it easier for Americans in situations like Verone’s to get health insurance. But most of its provisions don’t go into effect until 2014.

As it is, Verone said he thinks he chose the best of a bunch of bad options. “I picked jail.”

SOURCE

Texas Health Insurance Exchange

President Barack Obama’s health care law would let several million middle-class people get nearly free insurance meant for the poor, a twist government number crunchers say they discovered only after the complex bill was signed.

The change would affect early retirees: A married couple could have an annual income of about $64,000 and still get Medicaid, said officials who make long-range cost estimates for the Health and Human Services department.

Up to 3 million people could qualify for Medicaid in 2014 as a result of the anomaly. That’s because, in a major change from today, most of their Social Security benefits would no longer be counted as income for determining eligibility.

Medicare chief actuary Richard Foster says the situation keeps him up at night.

“I don’t generally comment on the pros or cons of policy, but that just doesn’t make sense,” Foster said during a question-and-answer session at a recent professional society meeting. It’s almost like allowing middle-class people to qualify for food stamps, he suggested.

“This is a situation that got no attention at all,” added Foster. “And even now, as I raise the issue with various policymakers, people are not rushing to say … we need to do something about this.”

Indeed, administration officials and senior Democratic lawmakers say it’s not a loophole but the result of a well-meaning effort to simplify rules for deciding who will get help with insurance costs under the new health care law. Instead of a hodgepodge of rules, there will be one national policy.

SOURCE

Now available to Texans that have A Pre-Existing Condition and have been declined. THIS IS NOT A DISCOUNT PLAN but the Government Guarantee Issue Health Insurance.

CLICK HERE TO TALK TO A TEXAS INSURANCE BROKER THAT IS APPROVED TO SEE IF YOU QUALIFY FOR THIS PROGRAM.

CLICK HERE TO REQUEST IF YOU QUALIFY

For the second time in less than a year, the government hopes to help some of the as many as 25 million uninsured Americans with pre-existing health conditions. Critics say it may be a case of too little, too late.

Next month, a nationally funded health-care program will lower premiums and relax eligibility for some people with pre-existing conditions ranging from low blood pressure to cancer. Dubbed the Pre-Existing Condition Insurance Plan, the program is considered a cornerstone of President Obama’s health-care law, hitting a range of Americans from different economic classes, including the rising numbers of unemployed who have lost health-care coverage.

Even fans of the effort say it may be too pricey, cumbersome and unrealistic to reach the right people. Already, the existing version has had problems: Only about 22,000 people—a small fraction of the potentially eligible— have signed up. “Why is this only reaching a small number of folks when we have a much bigger problem,” says Larry McNeely, a senior associate for policy advocacy at the National Coalition on Health Care, a nonpartisan group advocating for comprehensive health-system changes. “We haven’t really cracked this problem properly.”

Under the new pricing structure, premiums will fall as much as 40% in some states. In Florida, for example, policyholders age 55 and older will pay $376 a month for standard coverage, almost 40% less than the current rates and a savings of $3,000 a year, according to data from the Centers for Medicare & Medicaid Services.

Residents of Alabama, Arizona, Delaware, Kentucky and Virginia can expect similar discounts. In 11 more states plus the District of Columbia, premiums will fall by less.

The program covers annual preventive care without a deductible, though beyond that total out-of-pocket expenses, including deductibles and co-pays, range to as much as $6,000 to $7,000 a year. And in many states, anyone who wants coverage will need to provide a doctor’s note, rather than a letter from an insurance agency denying coverage.

Critics say it doesn’t go far enough. Even with the lower premiums, the insurance will be expensive. By contrast, the average employee contributes about $75 a month for employer-sponsored coverage. And anyone who wants to qualify must first go without any coverage at all for the last six months.

For someone who loses a job and hopes to find another one, there is a tough choice: At about $430 a month on average, Cobra benefits can be significantly more costly than the government-sponsored coverage. But foregoing insurance for six months is also risky, especially for someone with a pre-existing condition that may require urgent and high-priced care.

Those factors contribute to concerns about the program’s reach. Before it was launched in 2010, the CMS’s Office of the Actuary anticipated 375,000 people would sign up within the program’s first six months; a year later, fewer than 22,000 have.

Linda Blumberg, a senior fellow in the health-policy center at Urban Institute, a nonpartisan think tank, says the low enrollment likely reflects the lack of premium assistance for those with low incomes, high cost-sharing requirements, the six-month wait and the need for additional outreach.

A spokesman for CMS, which oversees the program, says the lower rates will be comparable to state averages for healthy people, and enrollment should rise after the premiums fall—participation has jumped 70% since February, when the program made an initial round of rate cuts.

SOURCE

The House of Representatives voted last month to repeal funding for the state health-insurance exchanges, which are required under President Barack Obama’s Patient Protection and Affordable Care Act. The House GOP’s vote reflects a grassroots revolt: Republican governors and legislatures from New Mexico to Georgia have also moved to kill or stall legislation establishing exchanges. A better approach might be to rally around the original tenets of the health exchange model.

Republican hostility to the exchanges was not inevitable. The concept has been endorsed on the right, by groups such as the Heritage Foundation and officials such as former Minnesota Governor Tim Pawlenty, and exchange like-programs have been used successfully in the Federal Employee Health Benefits Program and Medicare Part D, which covers prescription drugs. The argument for insurance exchanges is relatively simple. By setting up Web sites where consumers and small businesses can easily compare insurance options (including quality, price and coverage), states will spark competition, driving insurers to offer more affordable plans to consumers.

The health law, however, takes this simple idea and makes it extraordinarily complicated – if not impossible — to execute. By adding a litany of new minimum-insurance requirements and regulations to the original bipartisan idea, health insurance purchased through an exchange will likely end up more expensive than it is now.

For instance, mandates on the minimum share of health care costs that insurers must cover for all plans, along with a richer new federal “essential benefits” package, will drive up insurance costs for individuals and small businesses. Federal premium tax credits and cost sharing subsidies on the exchanges will also “bid up” premiums as individuals gravitate toward more expensive coverage.

Overall, the Congressional Budget Office expects that non-group premiums will go up by nearly 30 percent. This cost increase may be offset by the administrative efficiency of buying coverage through exchanges, and if many young and healthy uninsured can find affordable coverage. Conservatives, though, remain worried (and rightly so) that insurance choices on the exchanges may become “rigged” in favor of more expensive plans, driving up costs for taxpayers and driving healthy consumers to remain uninsured.

The health law’s defenders may dismiss these concerns as partisan politicking, but it’s harder to dismiss another criticism: that its exchanges are too heavily prescribed to actually operate. Without clarification or changes from the Obama administration, it will be nearly impossible for them to be fully operational in all 50 states by 2014, as the law demands. Consider what needs to be put in place.

In order to qualify for federal financing, the state exchanges must be able to ensure that premium-support recipients are living U.S. citizens — a requirement to protect against fraud – and are not felons. They must have household incomes between 133 percent and 400 percent of the federal poverty line (about $90,000 for a family of four). They also cannot be recipients of other health benefits from another source, such as an employer.

Logistically, these requirements present a massive challenge. For the first time, secure data feeds from the Departments of Homeland Security (establishing legal immigrant or US citizen status), Justice (for felon history), Treasury (for tax return information to impute income) and the Social Security Administration (establishing that the recipient is not deceased) would have to be combined. These data feeds would then have to be securely coordinated by the Department of Health and Human Services. There is no history of these agencies ever bringing their data together at this scale. It would qualify as the largest IT integration project in U.S. history.

Next, all 50 states would have to integrate this data into 50 different versions of a Travelocity.com for health insurance — all while seamlessly shifting millions of recipients back and forth between private insurance and public programs like Medicaid and CHIP; allocating subsides; and collecting insurance premiums.

What if many — or even most — states can’t establish a compliant exchange by January 1, 2014? Under the health overhaul, the federal government reserves the right to operate exchanges on behalf of those states that fail to meet the deadline. If dozens of states default to the feds, the administration would have to concede that the law’s central component is unworkable.

But conservatives shouldn’t cheer at that prospect, since states would miss the opportunity to create market-friendly exchanges that offer more affordable insurance options. Even if the health law is eventually overturned by the Supreme Court or repealed by a future Congress, conservatives would still have to find better ways to expand access to affordable health insurance. Exchanges would undoubtedly be part of that solution.

A grand compromise might be possible. If the administration gave the states more flexibility — in particular, giving conservative states more leeway in certifying “qualified” insurance for sale on the exchanges and using Medicaid funds to support private coverage — it might encourage those states to set up market-friendly exchanges. Other, more liberal states might appreciate extending the health law’s exchange deadline from 2014 to 2015 or later.

Republicans might resist this option, because it’s not as ideologically clean as “repeal and replace” and would allow Obama to claim some measure of victory. But if the GOP can lift the overhaul’s heavy-handed insurance regulations, get the states more Medicaid flexibility and slash the legislation’s trillion-dollar price tag through market-based insurance reforms, wouldn’t that be a compromise worth making?

SOURCE

Texas Health Insurance Exchange

Having upbeat protection does not always intend eudaemonia like is affordable. In gain to
premiums, there are a slew of costs to discourse with — from deductibles and co-payments to
denuded therapies and medicines.
A 2011 cerebrate from the Deloitte Midpoint for Health Solutions in connexion with the Deloitte
Refer for Business Services (“The Concealed Costs of U.S. Eudaimonia Fixing for Consumers:
A Oecumenical Analysis”) takes a reliever at these lesser-known costs of eudaimonia
reparation and their personalty on Americans.
The job
Consumers spent near $363 on health mending in 2009 than what functionary government book
inform, according to the mull. The culprit? A movement in out-of-pocket medical costs. The
victims? Primarily those with examination problems, seniors and their caregivers. Here are
some expenses that Americans are shouldering on their own:
Deductibles: For those with eudaimonia insurance (peculiarly those with nonpublic eudaimonia
insurance), opting to pay higher out-of-pocket costs is a way to stronghold future premiums from
spiraling out of controller. In 2004, the norm stemma deductible on the individualist mart was
$2,220, according to the U.S. Division of Upbeat and Hominine Services. By 2007, that fair had
risen by nearly one-fourth to $2,753. In otherwise language, families are taking a hazard –
screechy deductibles restrict premiums, but can depart families status the vizor if they require a
lot of mind.
Uncompensated mend for the sick and senior: Wellbeing work costs for those 65 and older
accounted for many than one-third of all eudaemonia tutelage expenditures. And often of the
outlay of long-term mending is shouldered by fellowship, rather than by wellbeing protection.
Undischarged caregivers shelled out $199 billion in 2009 to assist for displeased and old friends
and relatives, according to the reflection.
Non-traditional medication: Some patients prefer to move non-traditional remedies and
treatments that aren’t beaded by eudaimonia insurance. A wellbeing fund calculate (HSA) can
let patients set aside money tax-free to drop on solon stretched mind, but that money relieve
comes out of their own pockets.
The consequences
The postgraduate costs of mending could generate large problems, according to the learn, as
compartment as several notional solutions.
Upper out-of-pocket costs could motivate patients to wait needed tending to avoid
accomplishment far into debt. Yet those costs also could encourage them to attempt inferior
dear anxiety. For representative, the cerebrate constitute that there is a “ontogeny
consciousness” of secondary and over-the-counter products. Moreover, consumers seem to be
much disposed to use generic drugs than they were individual age ago. These findings could
advise that consumers are winning on a solon proactive portrayal in managing their eudaimoniatutelage — and judgement distance to afford it.

Paula Fleming, a freelance copy editor in Minneapolis, spends $3,600 a year on bare-bones health insurance for herself and her husband. For the 2010 tax year, for the first time, she could deduct that amount from her income when she pays the self-employment tax, the 15 percent levy all freelancers are required to contribute to Social Security and Medicare, saving her $540. Fleming’s not counting on the same break for the 2011 tax year, though, because Congress passed it solely for 2010 in last year’s Small Business Jobs Act. “When the law no longer applies,” she says, “that’s more money out the door.”

Despite politicians’ calls for tax reform and oft-professed devotion to small business, prospects for passing two tax fixes that self-employed business owners like Fleming have sought for years are shrinking, small business advocates say. One bill would make the health insurance tax break permanent, bringing the self-employed in line with payroll workers, whose health insurance is fully deductible. The other would simplify the home office deduction, a proposal that has been around for at least a decade.

“I’m concerned that this is going to fall by the wayside,” says Kristie Arslan, executive director of the National Association for the Self-Employed, who has championed both measures. “It’s a perfect storm of politics right now. You have a divided house in Congress and you have a Presidential election coming up. The only expectation you can have is gridlock.” Arslan plans to urge lawmakers to extend the health insurance deduction when she testifies before the Senate Small Business Committee on May 19. Twenty-two million Americans are self-employed business owners, and more than half work from home, she says.

$1.9 Billion in Tax Savings

The health insurance deduction for 2010 will mean $1.9 billion in tax savings for people who work for themselves, according to an estimate by the Joint Committee on Taxation. It also corrects a quirk in the tax code that leaves this segment—already on the hook for contributions to Social Security and Medicare that are normally split between worker and employer­—as the only businesses whose health-care costs are not fully deductible.

Simplifying the home office deduction would give home-based business owners the option of a standard $1,500 write-off instead of the complicated calculations required to claim the deduction now. In an online survey of 300 members in April, the National Small Business Assn. found that only 47 percent who qualified took the home office deduction. The rest skipped it because they thought it would raise their chances of being audited or because it was too complex.

Both proposals have support from business lobbying groups and have had bipartisan sponsors in several Congresses. That doesn’t mean they’ll go anywhere. “I think they are likely not to move,” says Todd McCracken, president of the NSBA, which supports both measures. He says their best chance to pass is as part of a broader overhaul of the tax code. “The prospects of a larger tax bill get dimmer and dimmer as we move into the summer.”

Deficit Concerns

Representative Ron Kind (D-Wis.), who has co-sponsored both bills and introduced similar legislation in previous sessions, says success depends on the cooperation of Republicans in the House, who fought last year’s jobs act that included the one-year health insurance deduction. “They may not be that opposed to just letting everything expire,” Kind says. Getting the health insurance deduction extended is “a tremendous priority” for California Republican Representative Wally Herger, who introduced the bill in the current session, says spokesman Matt Lavoie.

Washington’s heightened sensitivity to increasing the deficit means that lawmakers would have to pay for any bill to extend the deduction with spending cuts or other sources of revenue. “The one challenge that anything faces now is a revenue issue,” says Bill Rys, tax counsel at the National Federation of Independent Business, which supports the deduction. He cites the effort to repeal 1099 reporting requirements—seen as a paperwork nightmare for small companies—that both parties and the President supported, which was still delayed for months by squabbles over how to offset the cost. Rys describes both the health insurance deduction and the home office simplification as “common-sense” fixes with bipartisan support. “It really achieves a goal that a lot of people are talking about here in Washington, which is simplifying the tax code.”

For Fleming and other self-employed workers, it’s a matter of fairness. For one year, she was eligible for the same tax benefits for health insurance costs that other businesses got. It doesn’t make sense for them to be rescinded, she says. “I’m an employer. Employers get to deduct the cost of health insurance for their employees.”

SOURCE

Dental Insurance for Seniors

USE ANY DENTIST YOU WANT…..No PPO LISTS

CLICK HERE TO REQUEST AN APPLICATION

Dental Insurance for Seniors UCT understands that with rising Healthcare costs, employees are dealing with reduced health benefits, loss of health benefits completely or they have to pay more to keep their health benefits. Basic Medicare does not cover dental, vision or hearing expenses. Some Medicare supplement policies may provide some coverage, but not all. From big businesses to the self-employed to retired individuals, we are all feeling the effects of these rising costs. UCT knows the importance of dental, vision and hearing care and the impact these have on a person’s overall health.

HERE ARE THE ANNUAL RATES

Vision and dental coverage is often an integral part of your client’s group health benefits package for employees and dependents. For many, there is still some confusion about how the Patient Protection and Affordable Care Act (PPACA) impacts vision and dental plans, both in terms of how they are offered and when plans are exempt from the new health care reform law.

When does PPACA reform apply to dental and vision plans?

Both the provisions in PPACA and Health Insurance Portability and Accountability Act (HIPAA) view limited scope benefits plans, such as dental and vision offerings, as either an integral part of the overall health benefit plan or as an “exception”.

• Included. If the limited benefit plan is included in a bundle of health insurance benefits and the employee does not have the ability to opt out of the coverage, the dental and vision benefits will be subject to the same terms and conditions as the overall health insurance benefits, including PPACA reform requirements.
• Excluded. If the limited scope benefit plan is offered on a stand-alone basis or is separated from the overall health insurance benefit package, the dental and vision plans (the separate limited benefit benefits) can be treated differently and do not need to comply with many of changes that have been or will be required due to the passage of PPACA.

What is the statutory test that decides whether the dental and vision plans are included in the definition “medical care” and are “exempted”?

PPACA employs the definitions that already were in existence in HIPAA¹, which defines “medical care” very broadly and contains an exception for limited benefit plans. HIPAA regulations were issued on December 13, 2006 and further defined “limited scope benefit plans”² as benefits that are substantially for treatment of the mouth, and “limited scope vision benefits” as benefits primarily for treatment of the eye. If benefits meet the definition of limited scope dental or vision benefits, they may not be subject to HIPAA or PPACA if they either are:

i)  Provided under a separate policy, certificate, or contract of insurance; or
ii) Not an “integral part” of a group health plan.

Are there any official “FAQs” that the federal government has published addressing this issue?

Yes, the concept of an “excepted” limited scope benefit plan is further illuminated by an FAQ³ that the Department Of Labor published on its website, which reads:

Q6: What if my dental (or vision) benefits are structured as excepted benefits under HIPAA? Does that exemption except my dental (or vision) plan from the Affordable Care Act’s market reforms?

Yes. If benefits constitute excepted benefits under HIPAA, the requirements of PPACA’s market reforms do not apply. Under HIPAA, dental (and vision) benefits generally constitute excepted benefits if they:

• Are offered under a separate policy, certificate, or contract of insurance; or
• Are not an integral part of the plan. For dental (or vision) benefits to be considered not an integral part of the plan (whether insured or self-insured), participants must have a right not to receive the coverage and, if they do elect to receive the coverage, must pay an additional premium.

Accordingly, if a plan provides its dental (or vision) benefits pursuant to a separate election by a participant and the plan charges even a nominal employee contribution towards the coverage, the dental (or vision) benefits would constitute excepted benefits, and the market reform provisions would not apply to that coverage.⁴

Does it matter if the limited plan is offered pursuant to a fully insured or self-insured arrangement?

Not really. The over-all criteria described in this legislative alert appear to apply to both fully funded and self-funded health arrangements. Here are some illustrative examples:

• If the limited benefit plan is insured or self-insured under the same policy as the health insurance benefit, in most cases PPACA applies.
• If the health benefit plan is insured and the dental and/or vision benefits are under separate insurance policies, and if an employee may opt out of the limited benefit plan coverage(s), the limited benefit plan likely would be eligible as an exception and would not be subject to the health insurance reform provisions of the PPACA.
• If the health care benefit is self-funded, employees must be able to choose the comprehensive plan and the limited benefit plan separately, and pay a different premium for the different levels of coverage for the limited plan to be exempt.
• If one plan is “fully insured” under one policy and the other plan is “self-funded” under another policy, in most cases that would directly support the fact that the plans are “separate” policies with different cost sharing arrangements and election options.

What are some of the PPACA provisions that will apply to dental and vision plans?

If the dental and vision plans are covered, most of PPACA’s normal requirements will apply, including:

• No annual and lifetime dollar limits on benefits
• Employees’ children remain eligible until age 26
• Mandatory coverage of preventive services with no cost sharing
• Mandatory external review of adverse claims decisions
• No preexisting condition exclusions
• No waiting periods exceeding 90 days

If the limited benefit plan is not excluded, the lifetime benefits that limited scope benefit plans often have must be deleted. Consequently, this will likely increase the cost of the limited benefit plan to the employer.

Can limited scope benefit plans be offered on a stand-alone basis though a state exchange?

Yes, under section 1311 of PPACA, there does appear to be an exception to allow a stand-alone “dental” benefit plan to be offered within a state exchange. In addition, “pediatric dental benefits” will likely be included as part of the “minimum essential benefits” requirements for qualified health plans.⁵

However, the ability to offer other limited scope benefit plans is still being sorted out. The National Association of Specialty Health Organizations (NASHO) is asking regulators to think about vision plans, behavioral health plans, and other types of specialty plans as the federal and state governments move forward with the exchanges. “One of our main concerns is, with the exception of dental, no other specialty health organizations were listed in the [reform] bill to be a part of the exchanges. Vision was in there, but it was taken out as one of the last amendments,” says Julian Roberts, Executive Director of the National Association of Specialty Health Organizations.⁶

In relation to specialty benefits, what happens after January 1, 2014 when all qualified health plans must offer the essential benefit package through the exchange?

Regarding dental coverage, the National Association of Dental Plans, makes the following observations:

By January 1, 2014, all health insurance issuers offering health insurance coverage in the Individual or small group market (with the exception of grandfathered plans) must ensure that the coverage includes the essential health benefits package, including pediatric dental benefits.

Outside of the new health insurance exchanges: Although stand?alone dental plans are specifically exempt from the requirement to offer all essential benefits, for health plans to be recognized as meeting the essential benefits package in the individual and small group market, they must offer pediatric dental benefits.

Inside of the new health insurance exchanges: By 2014, states are to establish health insurance exchanges to provide access to affordable health insurance options for individuals and small employers. (By 2017, states can allow large employers to obtain coverage through an exchange.) Plans must include all essential benefits to be offered in the exchange. However, stand?alone dental plans are allowed to offer the required pediatric dental benefits. If a stand?alone dental plan offering required pediatric dental benefits is available in an exchange, a health plan without these benefits that offers all other essential benefits can be treated as a qualified health plan to offer coverage in the exchange.⁷

As referenced in the prior Q&A, the impact of other specialty benefits still needs to be sorted out.

What can brokers do for their clients?

Brokers can do a number of things to help their clients sort out the applicability of limited scope benefit or plan offerings. In cases where a dental or vision plan is or will be exempted, brokers should encourage employers to communicate in writing to the enrollees in the limited scope benefit plan and explain that it is an exempted benefit plan and that the health insurance reform provisions of the PPACA provisions do not apply to the limited benefit plan(s). Brokers should also provide some insights on the advantages (e.g., ease of administration) and disadvantages (e.g., likely higher cost) of combining specially benefits in the comprehensive policy.

In some cases, brokers may need to provide advice based upon the specifics of each case. The regulations do not provide a definitive answer in each situation as to whether a limited benefit offering is included or exempted under PPACA. However, you can begin by forwarding applicable part of this legislative alert to your clients. In cases that are more difficult, HHS or a PPACA benefit consultant should be contacted for guidance.

With some care and planning, your clients can protect their limited benefit plans from any of the potential negative effects of health insurance reforms in PPACA. BenefitMall will keep you updated on any additional changes to the “specialty health” requirements in the coming months.

(ii) OFFERING OF STAND-ALONE DENTAL BENEFITS.–Each Exchange within a State shall allow an issuer of a plan that only provides limited scope dental benefits meeting the requirements of section 9832(c)(2)(A) of the Internal Revenue Code of 1986 to offer the plan through the Exchange (either separately or in conjunction with a qualified health plan) if the plan provides pediatric offer the plan through the Exchange (either separately or in conjunction with a qualified health plan) if the plan provides pediatric dental benefits meeting the requirements of section 1302(b)(1)(J)).

The federal appeals court in Atlanta has named three judges who will consider the constitutional challenge to the federal health care overhaul.Eleventh Circuit Court of Appeals Chief Judge Joel Dubina of Alabama will sit on the panel with U.S. Circuit Judges Frank Hull of Georgia and Stanley Marcus of Florida.Dubina was a 1990 appointee of President George H.W. Bush while Hull and Marcus were both tapped by President Bill Clinton.They are scheduled to hear oral arguments on June 8 from Georgia and 25 other states who are urging the 11th Circuit to uphold a federal judge’s ruling that the overhaul’s core requirement is unconstitutional.The federal government argued that requiring nearly all Americans to carry health insurance is a “quintessential exercise” of the legislative branch’s powers.

SOURCE

Aetna Inc.’s (AET) annual shareholder meeting was temporarily halted by a group of protesters calling for health-care reform. The meeting resumed a few minutes later, and police were called to the scene at a Philadelphia hotel.

SOURCE

Aetna Inc (AET.N) became the latest health insurer to tame investor fears that a health overhaul would crimp profits, particularly as it prospers from fewer Americans seeking care in the weak economy.

The No. 3 U.S. health insurer posted first-quarter financial results and gave a full-year forecast that trumped Wall Street expectations, and its shares rose nearly 8 percent. Health insurers’ stocks are trading at multi-year highs.

Rivals UnitedHealth Group Inc (UNH.N), WellPoint Inc (WLP.N) and Humana Inc (HUM.N) also raised their full-year profit forecasts in the past week.

Even as they start implementing U.S. healthcare reforms that became law just over a year ago, many of these companies are confident enough about their financial health to start dividends or significantly raise payouts.

Their financial results show that Americans are still wary of the cost of seeing a doctor, even if they have insurance, due to rising co-pays and other fees. That lowers the amount insurers pay on medical claims.

Tim Nelson, a senior healthcare analyst with Nuveen Asset Management, pointed to “changes in the structure of healthcare plans that steadily over the years pushed more and more responsibility for healthcare costs onto the consumer.”

Analysts had expected use of medical services to rise as the U.S. economy improved, but there is still no evidence of a significant change.

“We’re seeing a continuation of the trend we noticed in 2010,” Aetna’s Chief Financial Officer Joseph Zubretsky said in an interview. “But we’re not projecting for it to stay this low for the foreseeable future. We think that there could be a resurgence later this year as the economy recovers.”

Kathleen Stoll, a deputy executive director of nonprofit consumer healthcare advocacy group Families USA, said low use of medical services could be positive if insurers were eliminating unnecessary costs, such as duplicative tests. But such a trend would be harmful if consumers were avoiding care to save money.

“We don’t want people to forego preventive care that could mean they won’t catch something early that could be treated successfully and inexpensively and instead lead to a more serious condition,” Stoll said.

STOCKS STILL CHEAP?

One major change for this year under the new law is that insurers must meet certain thresholds for spending on medical care as opposed to administrative cost and profit.

Despite this, the companies are posting strong profits and raising their forecasts.

Even with stock price gains, large insurers, which trade between 9 and 11 times next year’s earnings estimates, are still seen by some investors as cheap. For example, the average price target for UnitedHealth shares is $54.32, more than 10 percent above the $49.10 price currently, with the high target of $60, according to Thomson Reuters data.

Other investors are concerned that the ongoing debate over U.S. healthcare could make these companies a target in campaigns for the 2012 presidential election, and so they are wary about buying these stocks.

“They’re easily vilified by the media and by politicians and therefore it’s going to mean they’re always going to remain volatile,” said Chris Konstantinos, healthcare strategist and portfolio manager with Riverfront Investment Group.

“Aetna and UNH, the bigger guys, are interesting here because they’ve started to institute dividends,” Konstantinos said. “But it’s a space that can break your heart.”

Aetna‘s first-quarter net income rose to $586 million, or $1.50 per share, from $562.6 million, or $1.28 per share, a year ago. Excluding certain items, earnings of $1.43 per share topped analysts’ average estimate of 97 cents, according to Thomson Reuters I/B/E/S.

Revenue fell about 3 percent to $8.39 billion. Aetna spent 79.2 percent of premium revenue on medical costs, down from 82.5 percent a year ago.

Aetna forecast 2011 earnings, excluding items, of $4.20 to $4.30 per share, compared with its expectation in February of $3.70 to $3.80. Analysts were looking for $3.75.

The new forecast equates to a profit increase range of 14 percent to about 17 percent expected for this year.

Aetna also said it would buy Prodigy Health Group, which runs self-funded health plans for mid-size employers, for $600 million. New York-based Prodigy operates in 15 states and has about 600,000 medical members. Its majority owner is One Equity Partners.

SOURCE

I’m betting that just about every executive of a for-profit health insurance company, whose total compensation ultimately depends on the value of their stock options, woke up on Good Friday considerably wealthier than they were 24 hours earlier. Why? Because of the spectacular profits that one of those companies reported Thursday morning.

Among those suddenly wealthier executives, by the way, are the corporate medical directors who decide whether or not patients will get coverage for treatments their doctors believe might save their lives.

UnitedHealth Group, the biggest health insurer in terms of revenue and market value, earned so much more during the first three months of this year than Wall Street expected that investors rushed to buy shares of every one of the seven health insurers that comprise the managed care sector. In my view, it would be more accurate to call it the managed care cartel.

UnitedHealth is always the first of the big seven to announce earnings every quarter, so investors consider it a bellwether. If UnitedHealth exceeds Wall Street’s expectations, as it has been doing consistently, investors assume that the other six will do likewise. Sure enough, all seven – Aetna, CIGNA, Coventry, Health Net, Humana, UnitedHealth and WellPoint — saw their stock prices close Thursday afternoon at or near 52-week highs.

UnitedHealth’s shares shot up more than 8 percent during the day. Increases of that magnitude are so rare that I could almost hear the champagne corks popping in the Minnetonka, Minnesota office of UnitedHealth’s CEO, Stephen J. Hemsley.

Wall Street analysts had worried that health insurers would have such a hard time complying with the provisions of the year-old health care reform law that their profit margins would decline. Those concerns were put to rest when UnitedHealth reported that its operating margins were “stable” at 8.7 percent in the quarter. The company’s stellar performance should also put to rest — forever — the myth that “ObamaCare” is “bleeding insurers dry,” as industry apologist Sally Pipes contended in a Feb. 24 commentary in Forbes.

Noting that UnitedHealth’s 13 percent increase in profits prompted the company to raise its full-year earnings forecast, the Minneapolis Star Tribune opined, “Life under new health care reform laws may not be so rough after all.”

Indeed. Consider these numbers: UnitedHealth’s profit during the first three months of this year increased to $1.35 billion from $1.19 billion a year ago. When you do the math to determine the company’s earnings per share, the result is nothing short of jaw-dropping. On that basis, UnitedHealth’s profit jumped from $1.03 to $1.22 per share. Wall Street analysts had been expecting the company to earn just 89 cents a share. When you beat Wall Street’s expectations by 33 cents a share, you have accomplished something that most CEOs can only dream about.

UnitedHealth’s CEO at Top of Forbes 2011 Executive Pay List

Speaking of CEOs, Stephen Hemsley in particular made out like a bandit Thursday. Already at the very pinnacle of Forbes 2011 “Executive Pay List” (you read that right, his total compensation of $101.96 million last year made him the highest paid corporate executive in the United States of America), Hemsley saw his net worth skyrocket last week.

Of that $101.96 million Hemsley “earned” last year, $98.55 million came from stock gains, mostly from exercising options. And that doesn’t even count the value of stock options he hasn’t yet cashed in. According to published reports about the company’s Securities and Exchange Commission (SEC) filings, the total value of the options Hemsley had not exercised by the end of last year totaled almost $745 million. Considering the fact that the price of UnitedHealth’s stock has increased by more than $20 per share in just the last nine months, you can be pretty certain that Hemsley is now sitting on a stash of options worth well over $1 billion. That doesn’t count the shares of UnitedHealth stock Hemsley owns outright, the value of which was estimated to be $111.4 million at the end of 2010 and which, of course, is much higher now.

As you can imagine, Hemsley and other UnitedHealth executives were peppered with questions during the company’s conference call with Wall Street analysts last Thursday. They wanted to know how UnitedHealth had pulled off such a stunning accomplishment.

As it turned out, they pulled it off by paying far fewer medical claims than anyone had expected. That in and of itself is not new. Last year was one of the industry’s most profitable years because, the big insurers insisted, their policyholders had not needed to go the doctor or check into the hospital as much as they had in the past. Consequently the insurers did not have to pay as many claims. The reason they gave was that the flu season last year was much less severe than predicted.

Insurers Mum on What’s Really Making Their Profits Skyrocket

Well, it turns out that dog won’t hunt anymore. UnitedHealth executives admitted during the call with analysts Thursday morning that “the incidence of influenza was substantially higher this quarter than last year.” So, even though more people had to be treated for the flu during the first three months of this year than UnitedHealth had expected, the company still managed to spend less on medical claims during the quarter than investors had expected.

Not being able to attribute the unexpected decrease in medical spending to a mild flu season this time, Hemsley and his colleagues said it was because of the unexpected decrease in stormy weather.

I’m not making this up. They blamed the company’s good fortune on “the effect of severe consistent winter weather conditions across significant portions of the country.”

Veteran analyst Christine Arnold of Cowen and Company apparently wasn’t buying it, so she pressed for more “clarity” during the call.

“Excluding places where you saw winter storms,” she asked, “was utilization (of health services) up?”

Earlier in the call, the executives seemed to be suggesting that the number of inpatient hospital “bed days” was down considerably because of bad weather.

“So, excluding storms,” she probed, “were bed days up?”

UnitedHealth’s chief financial officer, Dan Schumacher, finally had to ‘fess up.

“Bed days excluding storms were flat to slightly down depending on the geography,” he replied.

In other words, it wasn’t the stormy weather after all. Unfortunately, Arnold did not press further (“OK. That’s helpful. Thanks,” she said) and no one asked the logical follow-up question: “Well, then, what was it?”

Insurers Pinch Policy Holders for Higher Premiums and Out-of-Pocket Costs

Contrary to what insurance company bigwigs try to make us believe, it is not snow, sleet and freezing rain or mild flu seasons that enables these companies to blow Wall Street’s estimates out of the water. What they will not admit is that their companies are making record profits by pushing more and more of us into benefit plans that require us to pay a whole lot more out of our own pockets before they will pay anything for our medical care.

And I’m betting that if the insurers had to disclose their rates of claim denials and the number of procedures their medical directors are refusing to pay for, we would see that those numbers are increasing, and maybe substantially. Medical directors know they play a key role in meeting Wall Street’s expectations, and they’re rewarded with raises, bonuses and, yes, stock options, if management is pleased with their job performance. The less money these companies pay out for care, the more is left over to reward shareholders and a bunch of corporate executives.

This is why, folks, that “utilization” is down. Growing numbers of people who have insurance, who are paying hard-earned money every month for coverage that is increasingly inadequate as well as expensive, simply can’t scrape up enough cash to go to the doctor or hospital or, in many cases, even pick up their prescriptions.

That is a trend that the insurers are determined to continue. And while we are being forced to go without necessary care and empty our pockets to pay our premiums, insurance company billionaire Stephen Hemsley and his cohorts are stuffing their pockets — with our money.

SOURCE

Affordable Healthcare Reform Act.

It is astounding to me how so few of you know about what the new “Obama” plans actually cover. Here is the list of benefits that are now mandated by the government to be covered by your insurance carriers:
Covered Preventive Services for Adults

• Abdominal Aortic Aneurysm one-time screening for men of specified ages who have ever smoked
• Alcohol Misuse screening and counseling
• Aspirin use for men and women of certain ages
• Blood Pressure screening for all adults
• Cholesterol screening for adults of certain ages or at higher risk
• Colorectal Cancer screening for adults over 50
• Depression screening for adults
• Type 2 Diabetes screening for adults with high blood pressure
• Diet counseling for adults at higher risk for chronic disease
• HIV screening for all adults at higher risk
• Immunization vaccines for adults–doses, recommended ages, and recommended populations vary:
  • Hepatitis A
  • Hepatitis B
  • Herpes Zoster
  • Human Papillomavirus
  • Influenza
  • Measles, Mumps, Rubella
  • Meningococcal
  • Pneumococcal
  • Tetanus, Diphtheria, Pertussis
  • Varicella
• Obesity screening and counseling for all adults
• Sexually Transmitted Infection (STI) prevention counseling for adults at higher risk
• Tobacco Use screening for all adults and cessation interventions for tobacco users
• Syphilis screening for all adults at higher risk

Covered Preventive Services for Women Healthcare, Including Pregnant Women

• Anemia screening on a routine basis for pregnant women
• Bacteriuria urinary tract or other infection screening for pregnant women
• BRCA counseling about genetic testing for women at higher risk
• Breast Cancer Mammography screenings every 1 to 2 years for women over 40
• Breast Cancer Chemoprevention counseling for women at higher risk
• Breast Feeding interventions to support and promote breast feeding
• Cervical Cancer screening for sexually active women
• Chlamydia Infection screening for younger women and other women at higher risk
• Folic Acid supplements for women who may become pregnant
• Gonorrhea screening for all women at higher risk
• Hepatitis B screening for pregnant women at their first prenatal visit
• Osteoporosis screening for women over age 60 depending on risk factors
• Rh Incompatibility screening for all pregnant women and follow-up testing for women at higher risk
• Tobacco Use screening and interventions for all women, and expanded counseling for pregnant tobacco users
• Syphilis screening for all pregnant women or other women at increased risk

Covered Preventive Services for Children

• Alcohol and Drug Use assessments for adolescents
• Autism screening for children at 18 and 24 months
• Behavioral assessments for children of all ages
• Blood Pressure screening for children
• Cervical Dysplasia screening for sexually active females
• Congenital Hypothyroidism screening for newborns
• Depression screening for adolescents at higher risk
• Developmental screening for children under age 3, and surveillance throughout childhood
• Dyslipidemia screening for children at higher risk of lipid disorders
• Fluoride Chemoprevention supplements for children without fluoride in their water source
• Gonorrhea preventive medication for the eyes of all newborns
• Hearing screening for all newborns
• Height, Weight and Body Mass Index measurements for children
• Hematocrit or Hemoglobin screening for children
• Hemoglobinopathies or sickle cell screening for newborns
• HIV screening for adolescents at higher risk
• Immunization vaccines for children from birth to age 18 —doses, recommended ages, and recommended populations vary:
  • Diphtheria, Tetanus, Pertussis
  • Haemophilus influenzae type b
  • Hepatitis A
  • Hepatitis B
  • Human Papillomavirus
  • Inactivated Poliovirus
  • Influenza
  • Measles, Mumps, Rubella
  • Meningococcal
  • Pneumococcal
  • Rotavirus
  • Varicella
• Iron supplements for children ages 6 to 12 months at risk for anemia
• Lead screening for children at risk of exposure
• Medical History for all children throughout development
• Obesity screening and counseling
• Oral Health risk assessment for young children
• Phenylketonuria (PKU) screening for this genetic disorder in newborns
• Sexually Transmitted Infection (STI) prevention counseling and screening for adolescents at higher risk
• Tuberculin testing for children at higher risk of tuberculosis
• Vision screening for all children

It is also important for you to know what is NOT covered under the Act.
Your agent may tell you that all plans cover your wellness for free. This is not entirely true. Buyers beware. While a number diagnostic tests and screenings are part of the wellness services benefits, other charges related to those services SUCH AS OFFICE VISITS AND PHYSICIANS FEES MAY NOT BE. IT IS ALL UP TO THE INDIVIDUAL INSURANCE CARRIER AND THE CODES THAT ARE ENTERED ON YOUR BILL.  What I am getting at here is though all of the screenings above will be covered, the actual doctor’s visit may not be. The language is confusing and is open to dangerous interpretation. I wanted to just let you know so you have the REAL TRUTH on the matter.  Demand that your agent be specific when she/he explains how preventive care is covered under your new plan. Cost sharing will be required for certain services including annual physicals for adults 21 and over. Prostate screenings for men are not covered either. So when you go to your next physical, you must be proactive and ask the billing department to code your visit as a wellness visit so your screenings will be covered with no cost sharing.

There’s been a lot of talk in the past few years about Barack Obama’s unusual-sounding — to Western ears — name. It turns out one of the possible GOP presidential contenders, Mitch Daniels, might well have been named Mitch Esau — if the “Daniels” had not been tacked on to his Syrian grandfather’s name at Ellis Island.

It was at an Arab American Institute award ceremony earlier this month that Daniels told the story of Elias Esau Daniels’ arrival in America as a “penniless and illiterate” 21-year-old from Syria in 1905. Daniels’ Syrian background was not previously well known, so it was a surprise last month when news broke that Daniels was accepting the Najeeb Halaby Award for Public Service from the Arab American Institute. He has since taken criticism from some on the far right for taking an award from the Arab group.

Daniels’ remarks at the event — video of which had not been previously released and is at the bottom of this post — focused on the classic immigration story of his paternal grandparents.

“There is nothing at all remarkable about the Daniels family heritage except that it’s happened millions of times in America. And it’s so very, very typical of the opportunity and the promise and the lives that this blessed land has enabled,” he said.

He said that, after arriving in America, his grandfather went on to do well in his adopted hometown in Pennsylvania, partly by running a “numbers racket” at a pool hall. His grandfather later returned to Syria in the early 1920s to find a younger wife, Hannah Afifi, the woman who gave birth to Mitch’s father. Daniels said his grandfather and great aunts went on to endow a hospital in a small village in Syria.

Daniels also addressed the protests and crackdown unfolding right now in Syria.

“Now I am so proud that brave Syrians have stepped forward … against apparently brutal threats and repression [and] have stood up for the right to dream and to live free and try to pursue better lives for themselves,” he said. “I’m so thrilled about it.”

SOURCE

Republicans easily swatted down major changes to insurance regulation in a Texas House bill that would keep the current rules and bureaucracy in place.

The bill continuing the functions of the Texas Department of Insurance passed Tuesday night on a 96-46 vote. The legislation, part of a regular review of state agencies, faces a final procedural hurdle before it can move to the Senate. Democrats offered up a variety of pro-consumer amendments.

Among them were provisions such as prior approval of rate increases, a ban on credit scoring in the underwriting of home and auto insurance and the creation of an elected insurance commissioner post. The Republican-led House shot down those proposals and kept a pro-business approach in the insurance legislation.

SOURCE

Under a bill pending in the state Senate, Texas could become the second state seeking to opt out of the new federal health care law by taking advantage of a clause in the U.S. Constitution allowing states to work together by forming a “compact.”

The health care compact, as envisioned by Republican supporters, would provide member states with their shares of federal money for Medicaid, Medicare and children’s health insurance to spend on health care as each state sees fit.

Supporters believe that with greater flexibility and no federal strings attached, the money would be spent more efficiently on needs that are better understood by state officials. The idea enjoys strong support from Republicans, tea party activists and others opposed to the health care reforms pushed by President Barack Obama.

But there’s a big catch.

Congress must approve compacts, and state Democrats are skeptical that federal officials would allow member states to suspend, as the Texas bill says, “all federal laws, rules, regulations and orders” that conflict with local health care policies.

Even Republicans are cautious about the plan’s prospects.

“If you don’t ask, it won’t happen,” Kyle Janek, a former Republican state senator from 2003-08 who now lobbies in favor of a compact, told senators at a committee hearing this week. “But at least it sends a message to those lawmakers and federal officials that we’re getting tired of all the strings that you attach.”

“If 15 or 20 states do it, I think D.C. will get the message,” said Janek, a lobbyist for the Health Care Compact Alliance, a national group whose vice chairman is Leo Linbeck III, a Houston builder and son of conservative activist Leo Linbeck Jr.

Thus far, Georgia is the only state to join the health care compact.

Arizona’s Republican governor vetoed a compact bill in April, saying the law infringed on executive power and complicated efforts to reform a state-run health care system. GOP-led legislatures in Missouri and Montana sent compact bills to their states’ Democratic governors, who have yet to act.

The effort in Texas, led by Rep. Lois Kolkhorst, R-Brenham, would have the state join the compact before working out how to implement the health care policy.

Creating a compact is so complicated, Janek said, that it makes sense to seek congressional approval first, and then work out the details. Toward that end, a related bill would create a study committee of legislators and citizens to advise the Legislature on establishing a state-run health system.

Each state in the compact would design its own health care system while being free to enter into agreements with member states on such matters as combining their purchasing power for lower-cost drugs, Janek said.

The House voted 104-41 to approve Kolkhorst’s House Bill 5, with four Democrats voting in favor and no Republicans against. It and the related study bill could be debated by the full Senate early next week.

In the Senate, the health committee approved the bill over sharp objections from Democrats, who have not yet decided how to approach the measure when it comes to the floor.

Sen. Royce West, D-Dallas, said he doubted Texas could do a better job than the federal government, noting that the state is at the bottom in the percentage of citizens uninsured and in per-person spending on health care.

Sen. José Rodríguez, D-El Paso, said during this week’s hearing of the Health and Human Services Committee that the effort seemed like a poorly disguised attack on federal health care reform, which opponents deride as “Obamacare.”

The law, Janek replied, “was sort of the last straw, but that is not what started this movement through the years.”

“The purpose is to give states more flexibility with their federal health care dollars,” Janek said. “We are telling the federal government that, with your permission and with the funding that goes along with it, (Texas will) design a system that works best for our state.”

SOURCE

Politicians love to boast of the benefits they shower on favored constituents with their right hand. But as with the amazing feats performed by magicians, the unwary audience is watching the wrong hand.

It may seem that in government the right hand often doesn’t know what the left is doing. However, it is surely obvious that the goodies in the right hand did not materialize out of thin air. They had to be taken from somewhere.

Usually that somewhere is taxes. Even doctors know that. For example, while bemoaning the coming cuts in their pay from Medicaid, some ventured to say out loud, at a medical society meeting, that there is an answer to the problem: we just need to raise taxes.

The very same left-leaning doctors had just finished agreeing that many Medicaid patients come to the doctor only because they are lonely or bored. They add that this is all right with them because they get paid even though the visit was unnecessary.

With healthcare reform (“ObamaCare”) there are some frank tax increases. But even the Democrats in the 2008 Congress probably wouldn’t have passed a recognizable tax increase large enough to fund the enormously expensive bill. Instead, they gave us an insurance mandate. They insisted this wasn’t a tax, although the Obama Administration insists that it is a tax after all—if that’s what it takes to get a court to find it constitutional.

In 2014, assuming this law survives, we’ll have a clever sleight of hand that casts the redistributionist, now-you-see-it-now-you-don’t tax/nontax, as a subsidy. If you, by their criteria, can’t afford the high premiums on the comprehensive policy that is required, you get a subsidy to buy it—a negative tax. Otherwise, you have to pay the full cost yourself. So, is the absence of a subsidy a tax, or the functional equivalent of a tax? Aren’t subsidies and taxes mirror images, like left and right hands?

Say that the court finds that it isn’t a tax, for purposes of invoking the taxing powers of Congress, but is instead a way of regulating interstate commerce, the alternate constitutional justification. Wouldn’t it be unprecedented for Congress to penalize inaction under the Commerce Clause?

One advocate for ObamaCare wrote to the Wall Street Journal that “countless” types of personal inaction violate the law. Most of these, however, are “if…then” situations, contingent on a previous action. “Failure to put out your campfire” assumes that you lit a fire. “Failure to wear clothes when out in public” assumes that you decided to go out; you are not required to wear clothes in the bath. “Failure to file a tax return” assumes that you have taxable income—and that one took a Constitutional amendment. The only thing close to “If you are alive, then you must buy a certain specified type of health insurance” is “If you are a male who has reached the age of 18, then you must register for the draft.” Is the insurance mandate a form of conscription? It forces us all to pay for care that we might not want to buy, or be willing to provide, without third-party payment.

The left-handed logic used by the Administration in court is: “If you are alive, you will get sick or have accidents, and use medical care, and the rest of us might get stuck paying for it.”

Why not an individual responsibility mandate? Rather like a mandate that if you have children, you must feed them. And if you take food from the grocery store, you must pay for it. Why do people get to stick “the rest of us” with their medical bills?

With medical care, we have seemingly accepted the concept of collective responsibility—and entitlement. Under this concept, any person who is sick or injured is entitled to be taken care of. If others do not provide the care voluntarily—that’s called charity—then the government must force someone to pay.

The method might be a straight tax. Or it might be a mandate to force everyone to prepay into a collective pot called insurance. Both require force.

We see the benefits that the politicians and magicians want us to see. What their left hand does is invisible and deceptive. How much it takes, how much it wastes, how much it corrupts, how much it restricts freedom, and how much harm it does—all this has been hidden in smoke and mirrors.

Americans must demand a look behind the curtain.

SOURCE

Aetna Inc (AET.N) has returned to the catastrophe bond market with an upsized $150 million deal, after the U.S. health insurer decided to sell an extra layer of protection on its existing reinsurance programme less than five months after it closed its Vitality Re transaction.

Standard & Poor’s (S&P) assigned BBB and BB+ ratings respectively to the Class A and B notes to be issued by Vitality Re II Ltd, the credit rating agency said in a statement.

Insurers and reinsurers use catastrophe bonds to transfer major risks on their books, such as storms and earthquakes, to capital markets investors, thus releasing capital to underwrite new insurance business.

The latest risk transfer contract will be issued through Cayman Islands-based Vitality Re provides $150 million of excess of loss reinsurance coverage on a portion of Aetna’s group commercial health insurance business.

“The notes cover claims payments of Health Re Inc., and ultimately, Aetna Life Insurance Co. (ALIC), relating to the covered insurance business to the extent that the medical benefits ratio (MBR) exceeds the class-specific MBR attachment levels,” S&P said in a statement late on Thursday.

The insurer launched a $105 million deal to capital market investors at the beginning of April under its Vitality Re Ltd special purpose vehicle, but it was increased during marketing due to increased investor appetite for a non-peak peril.

Aetna closed its three-year class A notes at $110 million, and the Class B notes at $40 million said S&P.

Pricing was increased from the original guidance, coming in at 440 basis points over Libor for the Class A notes and at 625 basis points over Libor for the Class B notes, according to S&P.

The two tranches of notes will mature in January 2014.

The new transaction adds an extra layer of protection to the Aetna-sponsored notes from its previous Vitality Re Ltd transaction, which closed in December, and brings the total amount of coverage through the catastrophe bond programme to $300 million.

“Vitality Re II will invest the proceeds from the sale of the notes into two separate collateral accounts and enter into a separate tri-party repurchase (repo) agreement with Goldman Sachs & Co (GS.N) for each class of notes,” said S&P.

Goldman Sachs, as repurchase counterparty, will enter into master repurchase agreements with Vitality Re.

Under the tri-party repo agreements, Goldman Sachs will make a quarterly payment equal to three-month LIBOR to Vitality Re II. This payment plus the quarterly premium payment Vitality Re II receives from Health Re under the XOL agreements will equal the interest payments due on the notes, S&P said.

SOURCE

AUSTIN, Texas (AP) – The Texas Senate unanimously approved two major bills that would reform how doctors and hospitals are paid or operate.

Republican state Senator Jane Nelson said Senate Bill 7 would encourage greater efficiency in Medicaid services by reducing payments for preventable readmissions and complications. Medicaid patients would also be required to make copayments for unnecessary emergency room visits.

Senate Bill 8 would apply to non-Medicaid insurance programs and create a performance-based payment system. The proposed law would also allow doctors and hospitals to create health care organizations that pay more for good outcomes. The bill would also require private health providers to publicly report preventable complications among their patients.

The state would also study preventable health problems in long-term care facilities.

The bills now go to the House for consideration.

SOURCE

Health insurer UnitedHealth Group Inc.’s earnings rose 21 percent last year and so did the compensation it gave CEO Stephen J. Hemsley.

Hemsley, 58, received compensation totaling $10.8 million, according to an Associated Press analysis of a regulatory filing made Wednesday by the Minnetonka, Minn., managed care company. That’s up from $8.9 million in 2009.

Last year, Hemsley received a salary and performance-related bonus amounting to $4.7 million and stock and options valued at $6 million at the time they were granted. The company also gave him $110,079 in other compensation, mostly for matching contributions under an executive savings plan.

The CEO also made $22.5 million selling stock after exercising options to acquire 2.4 million shares, but that total is not included in the AP compensation calculation because it’s a personal finance decision tied to previous grants. A company spokesman said the options were about to expire.

Hemsley did not sell 1.2 million of the shares acquired in the options exercise, so he realized no cash value from those.

Hemsley has served as CEO since 2006, and his $1.3 million salary remained unchanged for the fourth straight year. But his performance-related bonus jumped 74 percent to $3.4 million in 2010. The value of his stock and options also rose.

The company said in the filing it considered its “strong growth, operating performance and financial results, achieved in a difficult economic environment” in determining pay last year.

UnitedHealth is the largest health insurer based on revenue, and that revenue grew 8 percent last year to $94.16 billion. Meanwhile, the insurer’s earnings climbed 21 percent to $4.63 billion, or $4.10 per share. UnitedHealth also sells wellness programs and information services.

Premiums, the insurer’s largest revenue source, climbed 8 percent last year to $85.4 billion, and health insurance enrollment rose 3 percent to nearly 33 million.

The price of UnitedHealth shares rose 18 percent last year to close 2010 at $36.11. That topped the performance of several competitors and the 12.8 percent increase recorded by the Standard & Poor’s 500 index.

UnitedHealth’s stock fell slightly in the first half of the year, after Congress passed the health care overhaul, which aims to cover millions of uninsured people but will impose a host of taxes and restrictions on insurers. But UnitedHealth shares have mostly climbed since last summer, like other managed care stocks, as investors saw minimal impact from the first few provisions of the overhaul and Republicans won seats in Congress.

Health care use slowed more than insurers anticipated last year, and that helped the managed care sector. The flu season was mild, especially compared with the final months of 2009, when the swine flu scare hit. Those factors helped UnitedHealth and other big insurers beat analyst expectations over the final months of 2010.

Last year, UnitedHealth became the first of the biggest insurers to beef up its dividend. It said in May it would spend about $560 million over the next 12 months on quarterly dividends of 12.5 cents per share.

That equates to 50 cents annually and trumps the company’s previous annual dividend of 3 cents per share. Aetna Inc. and WellPoint Inc. have since followed UnitedHealth’s lead and used some of the capital they piled up over the last part of 2010 to offer quarterly dividends.

The AP compensation formula calculates an executive’s total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.

The value that a company assigned to an executive’s stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company’s stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.

SOURCE

LAKE JACKSON, Texas — When Lisa Kelly learned she had leukemia in late 2006, her doctor advised her to seek urgent care at M.D. Anderson Cancer Center in Houston. But the nonprofit hospital refused to accept Mrs. Kelly’s limited insurance. It asked for $105,000 in cash before it would admit her.

Sitting in the hospital’s business office, Mrs. Kelly says she told M.D. Anderson’s representatives that she had some money to pay for treatment, but couldn’t get all the cash they asked for that day. “Are they going to send me home?” she recalls thinking. “Am I going to die?”

Hospitals are adopting a policy to improve their finances: making medical care contingent on upfront payments. Typically, hospitals have billed people after they receive care. But now, pointing to their burgeoning bad-debt and charity-care costs, hospitals are asking patients for money before they get treated.

Hospitals say they have turned to the practice because of a spike in patients who don’t pay their bills. Uncompensated care cost the hospital industry $31.2 billion in 2006, up 44% from $21.6 billion in 2000, according to the American Hospital Association.

The bad debt is driven by a larger number of Americans who are uninsured or who don’t have enough insurance to cover medical costs if catastrophe strikes. Even among those with adequate insurance, deductibles and co-payments are growing so big that insured patients also have trouble paying hospitals.

Letting bad debt balloon unchecked would threaten hospitals’ finances and their ability to provide care, says Richard Umbdenstock, president of the American Hospital Association. Hospitals would rather discuss costs with patients upfront, he says. “After, when it’s an ugly surprise or becomes contentious, it doesn’t work for anybody.”

M.D. Anderson says it went to a new upfront-collection system for initial visits in 2005 after its unpaid patient bills jumped by $18 million to $52 million that year. The hospital said its increasing bad-debt load threatened its mission to cure cancer, a goal on which it spends hundreds of millions of dollars a year.

The change had the desired effect: The hospital’s bad debt fell to $33 million the following year.

Asking patients to pay after they’ve received treatment is “like asking someone to pay for the car after they’ve driven off the lot,” says John Tietjen, vice president for patient financial services at M.D. Anderson. “The time that the patient is most receptive is before the care is delivered.”

M.D. Anderson says it provides assistance or free care to poor patients who can’t afford treatment. It says it acted appropriately in Mrs. Kelly’s case because she wasn’t indigent, but underinsured. The hospital says it wouldn’t accept her insurance because the payout, a maximum of $37,000 a year, would be less than 30% of the estimated costs of her care.

Tenet Healthcare and HCA, two big, for-profit hospital chains, say they have also been asking patients for upfront payments before admitting them. While the practice has received little notice, some patient advocates and health-care experts find it harder to justify at nonprofit hospitals, given their benevolent mission and improving financial fortunes.

In the Black

An Ohio State University study found net income per bed nearly tripled at nonprofit hospitals to $146,273 in 2005 from $50,669 in 2000. According to the American Hospital Directory, 77% of nonprofit hospitals are in the black, compared with 61% of for-profit hospitals. Nonprofit hospitals are exempt from taxes and are supposed to channel the income they generate back into their operations. Many have used their growing surpluses to reward their executives with rich pay packages, build new wings and accumulate large cash reserves.

M.D. Anderson, which is part of the University of Texas, is a nonprofit institution exempt from taxes. In 2007, it recorded net income of $310 million, bringing its cash, investments and endowment to nearly $1.9 billion.

“When you have that much money in the till and that much profit, it’s kind of hard to say no” to sick patients by asking for money upfront, says Uwe Reinhardt, a health-care economist at Princeton University, who thinks all hospitals should pay taxes. Nonprofit organizations “shouldn’t behave this way,” he says.

It isn’t clear how many of the nation’s 2,033 nonprofit hospitals require upfront payments. A voluntary 2006 survey by the Internal Revenue Service found 14% of 481 nonprofit hospitals required patients to pay or make an arrangement to pay before being admitted. It was the first time the agency asked that question.

Nataline Sarkisyan, a 17-year-old cancer patient who died in December waiting for a liver transplant, drew national attention when former presidential candidate John Edwards lambasted her health insurer for refusing to pay for the operation. But what went largely unnoticed is that Ms. Sarkisyan’s hospital, UCLA Medical Center, a nonprofit hospital that is part of the University of California system, refused to do the procedure after the insurance denial unless the family paid it $75,000 upfront, according to the family’s lawyer, Tamar Arminak.

The family got that money together, but then the hospital demanded $300,000 to cover costs of caring for Nataline after surgery, Ms. Arminak says.

UCLA says it can’t comment on the case because the family hasn’t given its consent. A spokeswoman says UCLA doesn’t have a specific policy regarding upfront payments, but works with patients on a case-by-case basis.

Federal law requires hospitals to treat emergencies, such as heart attacks or injuries from accidents. But the law doesn’t cover conditions that aren’t immediately life-threatening.

At the American Cancer Society, which runs call centers to help patients navigate financial problems, more people are saying they’re being asked for large upfront payments by hospitals that they can’t afford. “My greatest concern is that there are substantial numbers of people who need cancer care” who don’t get it, “usually for financial reasons,” says Otis Brawley, chief medical officer.

Mrs. Kelly’s ordeal began in 2006, when she started bruising easily and was often tired. Her husband, Sam, nagged her to see a doctor.

A specialist in Lake Jackson, a town 50 miles from Houston, diagnosed Mrs. Kelly with acute leukemia, a cancer of the blood that can quickly turn fatal. The small cancer center in Lake Jackson refers acute leukemia patients to M.D. Anderson.

When Mrs. Kelly called M.D. Anderson to make an appointment, the hospital told her it wouldn’t accept her insurance, a type called limited-benefit.

“When an insurer is going to pay the small amounts, we don’t feel financially able to assume the risk,” says M.D. Anderson’s Mr. Tietjen.

An estimated one million Americans have limited-benefit plans. Usually less expensive than traditional plans, such insurance is popular among people like Mrs. Kelly who don’t have health insurance through an employer.

Mrs. Kelly, 52, signed up for AARP’s Medical Advantage plan, underwritten by UnitedHealth Group Inc., three years ago after she quit her job as a school-bus driver to help care for her mother. Her husband was retired after a career as a heavy-equipment operator. She says that at the time, she hardly ever went to the doctor. “I just thought I needed some kind of insurance policy because you never know what’s going to happen,” says Mrs. Kelly. She paid premiums of $185 a month.

A spokeswoman for UnitedHealth, one of the country’s largest marketers of limited-benefit plans, says the plan is “meant to be a bridge or a gap filler.” She says UnitedHealth has reimbursed Mrs. Kelly $38,478.36 for her medical costs. Because the hospital wouldn’t accept her insurance, Mrs. Kelly paid bills herself, and submitted them to her insurer to get reimbursed.

M.D. Anderson viewed Mrs. Kelly as uninsured and told her she could get an appointment only if she brought a certified check for $45,000. The Kellys live comfortably, but didn’t have that kind of cash on hand. They own an apartment building and a rental house that generate about $11,000 a month before taxes and maintenance costs. They also earn interest income of about $35,000 a year from two retirement accounts funded by inheritances left by Mrs. Kelly’s mother and Mr. Kelly’s father.

Mr. Kelly arranged to borrow the money from his father’s trust, which was in probate proceedings. Mrs. Kelly says she told the hospital she had money for treatment, but didn’t realize how high her medical costs would get.

The Kellys arrived at M.D. Anderson with a check for $45,000 on Dec. 6, 2006. After having blood drawn and a bone-marrow biopsy, the hospital oncologist wanted to admit Mrs. Kelly right away.

But the hospital demanded an additional $60,000 on the spot. It told her the $45,000 had paid for the lab tests, and it needed the additional cash as a down payment for her actual treatment.

In the hospital business office, Mrs. Kelly says she was crying, exhausted and confused.

The hospital eventually lowered its demand to $30,000. Mr. Kelly lost his cool. “What part don’t you understand?” he recalls saying. “We don’t have any more money today. Are you going to admit her or not?” The hospital says it was trying to work with Mrs. Kelly, to find an amount she could pay.

Mrs. Kelly was granted an “override” and admitted at 7 p.m.

Appointment ‘Blocked’

After eight days, she emerged from the hospital. Chemotherapy would continue for more than a year, as would requests for upfront payments. At times, she arrived at the hospital and learned her appointment was “blocked.” That meant she needed to go to the business office first and make a payment.

One day, Mrs. Kelly says, nurses wouldn’t change the chemotherapy bag in her pump until her husband made a new payment. She says she sat for an hour hooked up to a pump that beeped that it was out of medicine, until he returned with proof of payment.

A hospital spokesperson says “it is very difficult to imagine that a nursing staff would allow a patient to sit with a beeping pump until a receipt is presented.” The hospital regrets if patients are inconvenienced by blocked appointments, she says, but it “is a necessary process to keep patients informed of their mounting bills and to continue dialog about financial obligations.” She says appointments aren’t blocked for patients who require urgent care.

Once, Mrs. Kelly says she was on an exam table awaiting her doctor, when he walked in with a representative from the business office. After arguing about money, she says the representative suggested moving her to another facility.

But the cancer center in Lake Jackson wouldn’t take her back because it didn’t have a blood bank or an infectious-disease specialist. “It risks a person’s life by doing that [type of chemotherapy] at a small institution,” says Emerardo Falcon Jr., of the Brazosport Cancer Center in Lake Jackson.

Ron Walters, an M.D. Anderson physician who gets involved in financial decisions about patients, says Mrs. Kelly’s subsequent chemotherapy could have been handled locally. He says he is sorry if she was offended that the payment representative accompanied the doctor into the exam room, but it was an example of “a coordinated teamwork approach.”

On TV one night, Mrs. Kelly saw a news segment about people who try to get patients’ bills reduced. She contacted Holly Wallack, who is part of a group that works on contingency to reduce patients’ bills; she keeps one-third of what she saves clients.

Ms. Wallack began firing off complaints to M.D. Anderson. She said Mrs. Kelly had been billed more than $360 for blood tests that most insurers pay $20 or less for, and up to $120 for saline pouches that cost less than $2 at retail.

On one bill, Mrs. Kelly was charged $20 for a pair of latex gloves. On another itemized bill, Ms. Wallack found this: CTH SIL 2M 7FX 25CM CLAMP A4356, for $314. It turned out to be a penis clamp, used to control incontinence.

M.D. Anderson’s prices are reasonable compared with other hospitals, Mr. Tietjen says. The $20 price for the latex gloves, for example, takes into account the costs of acquiring and storing gloves, ones that are ripped and not used and ones used for patients who don’t pay at all, he says. The charge for the penis clamp was a “clerical error” he says; a different type of catheter was used, but the hospital waived the charge. The hospital didn’t reduce or waive other charges on Mrs. Kelly’s bills.

Continuing Treatment

Mrs. Kelly is continuing her treatment at M.D. Anderson. In February, a new, more comprehensive insurance plan from Blue Cross Blue Shield that she has switched to started paying most of her new M.D. Anderson bills. But she is still personally responsible for $145,155.65 in bills incurred before February. She is paying $2,000 a month toward those. Last week, she learned that after being in remission for more than a year, her leukemia has returned.

M.D. Anderson is giving Blue Cross Blue Shield a 25% discount on the new bills. This month, the hospital offered Mrs. Kelly a 10% discount on her balance, but only if she pays $130,640.08 by this Wednesday, April 30. She is still hoping to get a bigger discount, though numerous requests have been denied. The hospital says it gives commercial insurers a bigger discount because they bring volume and they are less risky than people who pay on their own.

The hospital has urged Mrs. Kelly to sell assets. But she worries about losing her family’s income and retirement savings. Mrs. Kelly says she wants to pay, but, suspicious of the charges she’s seen, she says, “I want to pay what’s fair.”

SOURCE

Deep spending cuts in the recently passed House budget would profoundly change the state’s medical system, placing tens of thousands of Texans in the difficult position of finding alternate care from a dwindling list of prospects, health care advocates warn.

Much of the impact would be on elderly Texans, adults with disabilities, those in need of mental health care and low-income families in search of obstetricians, pediatricians and general practitioners. Private insurance rates and hospital-provided care also might be affected.

Even the still-developing Senate budget, which seeks to mitigate many of the deepest cuts, carries a measure of pain that several Republicans rue but feel powerless to prevent.

It adds up to uncertain times for health care providers and patients alike.

“This is devastating, and that’s not hyperbole,” said Trey Berndt with AARP Texas. “I’m not sure everyone understands how dire the cuts are.”

Keeping up with population growth and maintaining current health and human service programs would have cost about $31 billion in state money in 2012-13.

The House set aside $22 billion.

About $1.6 billion was saved with a 10 percent cut in Medicaid reimbursement rates for doctors, hospitals and nursing homes that serve 3.5 million Texans with disabilities or low incomes.

An additional $4.3 billion was cut from projected cases. But because Medicaid-eligible patients cannot be turned away, the Legislature is expected to return in 2012 or 2013 to pass a supplemental budget to fill the gap.

Medicaid providers fear that if the Legislature doesn’t come up with the money, those reimbursement rate cuts will grow far larger, said Eva DeLuna Castro, budget analyst for the liberal-leaning Center for Public Policy Priorities.

Because the need for most medical help will be met somewhere, politicians and advocates describe the health care system as a balloon: Squeeze it here, and it bulges out there.

For example, the House approved a 10 percent cut to Medicaid reimbursement rates for doctors, raising fears that even more physicians will stop participating in the state-federal insurance program.

If that happens, patients without access to doctors can be expected to show up in more expensive emergency rooms with advanced conditions that cost more to treat.

Private insurance rates could rise if hospitals shift higher costs to paying patients, and property taxes could rise if publicly owned hospitals must offset a financial hit.

“There is going to be a ripple effect through the entire health care community,” said Tom Banning, chief executive officer of the Texas Academy of Family Physicians. “There will be severe downstream consequences.”

Or consider proposed cuts to home health services. Without attendants and therapists to help them live at home, elderly Texans may need to move into nursing homes, which can double or triple costs to the state.

But other cuts could force many of the state’s nursing homes to close, so where would those people go?

“I’m very fearful,” said Roger Peden II, administrator of Stonebridge Health Center, a nursing home west of Austin. “If these cuts go through as proposed, it will be life-altering for seniors in Texas, as well as for medical employees and those who work in and around nursing homes.”

At the same time, one-third of the state budget goes toward health and social service programs, and higher costs are anticipated, particularly with the biggest expense: Medicaid.

A study by the conservative Texas Public Policy Foundation projects unsustainable growth for Medicaid, which might consume almost 47 percent of the state budget in 2014-15, up from 28 percent in 2008-09.

“We have some hard choices to make,” said Arlene Wohlgemuth, executive director of the foundation. “But we also have a responsibility to keep our economy in as healthy a shape as we can. That affects all Texans.”

Already-struggling families cannot be asked to pay more taxes, said Wohlgemuth, a former House member. “I have a lot of sympathy for our legislators, but the message last November continues to be strong that people want reduced spending.”

Still, Sen. Bob Deuell, R-Greenville , said recently that “even in my very Republican, conservative district,” he’s heard support for tapping the state’s rainy day fund and raising the gas tax and state fees to cushion the impact of health care cuts.

SOURCE

Only months from their 65th birthdays and the switch from employer-offered health coverage to Medicare, Phillip and Diann Green of Forney realized they had a problem. After retirement, none of the state’s insurance companies will cover their 12-year-old granddaughter, Aria, whom they have raised since her infancy.

Insurers in Texas and across the nation — protesting a provision of the 2010 federal health care overhaul that prohibits pre-existing condition limitations for children under 19, have simply stopped offering new child-only policies. For children being raised by their grandparents, who are not poor enough to qualify for Medicaid and have no employer-offered insurance or family plans to cover them, there are few options.

No agency keeps track of how many children in Texas are affected by the elimination of child-only plans, but experts suggest it is in the thousands.

“Raising a child — finding her health insurance — it’s certainly not something you expect at our age,” said Mr. Green, who, with his wife, gained custody of Aria when she was 7 months old because her biological parents were ill prepared to raise her. “But everybody has come up with an excuse for not taking her.”

Jared Wolfe, executive director of the Texas Association of Health Plans, said it is not because insurers do not want to cover children. The federal health care overhaul, and in particular the pre-existing condition language, has been interpreted to mean that insurers must write a policy for any child who applies, Mr. Wolfe said. That effectively ensures that only sick children will apply for benefits, he said — an unworkable financial scenario for insurance companies.

“It’s a bad situation,” Mr. Wolfe said. The child-only plans “are a very small percentage of the market, but for those people, it means quite a bit.”

Some states have responded to these insurers with legislation. In Texas, Representative Garnet Coleman, Democrat of Houston, has filed a bill that would require insurers participating in the individual insurance market to accept applications from children under 19 — legislation that he said mirrors measures passed in California, Kentucky, New Hampshire and Washington.

“We have to correct the market to make sure children don’t go without coverage,” Mr. Coleman said. But with an overwhelming Republican majority in the State Legislature that both cannot stand the federal health care overhaul and believes that the child-only insurance market should work itself out, such a bill appears unlikely to pass.

“Time will tell whether there really is a problem or not,” said Representative John Zerwas, an anesthesiologist and Republican of Simonton. “If there’s a viable market for it, I would like for it to sustain itself.”

Mr. and Mrs. Green never thought that being retired and having health insurance for their granddaughter were mutually exclusive. As they approached 65, and the threshold for getting on Medicare, the federal health care plan for older Americans, they started making all the requisite inquiries to get Aria insured. But in call after call last fall, insurance companies operating in Texas told them they no longer offered new child-only policies — and acknowledged that the Greens had few choices.

The Greens’ income level means Aria, who has no pre-existing conditions, does not qualify for the joint state-federal Children’s Health Insurance Program, or CHIP. Nor can she apply for a high-risk pool, which experts say requires that a child have a pre-existing condition and receive a formal denial from a private insurance company. (When no plans are offered, insurers do not have to issue denials.)

For now, Aria — who is currently insured through Mrs. Green’s employer, Wal-Mart — only has one option, Mr. Green said: a Cobra plan that costs nearly $550 a month and lasts for only a year and a half.

Officials with the Texas Department of Insurance say that they are looking for ways to entice insurers into selling child-only plans.

Some providers say they are searching for a middle ground. Blue Cross Blue Shield of Texas, which stopped offering child-only coverage last fall, said it was seeking approval from the Department of Insurance for a new child-only policy that would have “benefits and rates appropriate to the new market requirements.”

Mr. Green said that when he called federal lawmakers about the matter, they told him it is a state issue; his state representatives told him he should approach the federal government.

“Everyone I talk to about this, their response is, ‘What would you like for us to do about this?’ ” said Mr. Green, who had to take early retirement from his job at the Unisys Corporation at age 50 after having a heart attack at 34 and a quadruple bypass at 42. “I just want them to fix it.”

SOURCE

A former NHS director died after waiting for nine months for an operation – at her own hospital.

Margaret Hutchon, a former mayor, had been waiting since last June for a follow-up stomach operation at Broomfield Hospital in Chelmsford, Essex.

But her appointments to go under the knife were cancelled four times and she barely regained consciousness after finally having surgery.

Her devastated husband, Jim, is now demanding answers from Mid Essex Hospital Services NHS Trust – the organisation where his wife had served as a non-executive member of the board of directors.

He said: ‘I don’t really know why she died. I did not get a reason from the hospital. We all want to know for closure. She got weaker and weaker as she waited and operations were put off.’

Mr Hutchon, of Great Baddow, Essex, said his wife, 72, had initially undergone major stomach surgery last June but the follow up procedures were repeatedly abandoned.

The former mayor remained at the hospital for months but her family feared she was becoming institutionalised and decided to bring her home until an operation was a certainty.

Mr Hutchon, 71, said: ‘The case has been referred to the coroner because of the long time it has taken. In some ways, I would like the coroner to order a post mortem.’

The pensioner said his wife had been left very weak before her operation because she had been unable to take in nutrients.

‘From July to October there was talk of another operation and then between November and December there were three or four postponements and she was becoming so institutionalised we decided to get her home until an operation was certain.

‘It was a blessing because although neither of is could have guessed it – it gave us a last month together.

‘Nevertheless, she was unable to take proper nourishment and went into the operation on the better side of a low state – she was very weak.’

Mrs Hutchon was well known and respected after serving in local government for the past 30 years and she became mayor of Chelmsford in 2006.

Mike Mackrory, a fellow Liberal Democrat councillor, said: We were all stunned to hear she had died after the operation. There were constant delays she had to endure before surgery.

‘We were given the very sad news and as word spread it threw a pall over the civic dinner. Margaret was much loved and respected in this town.’

A spokesman for Broomfield Hospital said it could not comment on individual cases.
SOURCE

The purpose of this document is to identify and discuss issues surrounding the traditional role of Producers1 in the solicitation, sale, negotiation and servicing of health insurance in the individual and small group markets as compared to the expected role of Navigators2 established by the Affordable Care Act (ACA)3 to perform certain duties within these markets for Qualified Health Plans4 offered through an Exchange5.
Introduction and Background Regarding Navigators and Producers
In order to appreciate the comparative roles of these distinct entities and how they must cooperate in the successful implementation of the Exchange, some independent background information will be presented describing the current role of Producers in the health insurance marketplace and the expected role of Navigators. While the ACA provides some information about Navigators, additional insight is expected from regulations to be promulgated by the Secretary of the U.S. Department of Health and Human Services (“Secretary”). Note the following regarding Navigators and Producers and the important role each must play in the success of the Exchange:
Navigators
In accordance with the ACA, an Exchange must establish a program under which it awards grants to entities called Navigators to perform the following duties:
1.
Conduct public education activities to raise awareness of the availability of Qualified Health Plans;
2.
Distribute fair and impartial information concerning enrollment in Qualified Health Plans, and the availability of premium tax credits and cost-sharing reductions in accordance with federal tax laws;
3.
Facilitate enrollment in Qualified Health Plans;
4.
Provide referrals to any applicable office of health insurance consumer assistance or health insurance ombudsman, or any other appropriate state agency or agencies, for any enrollee with a grievance, complaint, or question regarding their health plan, coverage, or a determination under such plan or coverage; and
5.
Provide information in a manner that is culturally and linguistically appropriate to the needs of the population being served by the Exchange.
Navigators may include trade, industry, and professional associations, commercial fishing industry organizations, ranching and farming organizations, community and consumer-focused nonprofit groups, chambers of commerce, unions, resource partners of the Small Business Administration (SBA)6, other licensed insurance agents and brokers, and other entities that are capable of carrying out the required duties7, meet the standards established by the Secretary and provide information that is fair, accurate, and impartial.
To be eligible to receive a grant from the Exchange, an entity must demonstrate to the Exchange involved that the entity has existing relationships, or could readily establish relationships, with employers and employees, consumers (including uninsured and underinsured consumers), or self-employed individuals likely to be qualified to enroll in a Qualified Health Plan. Grants must be made from the operational funds of the Exchange and not federal funds received by the state to establish the Exchange.
The Secretary must establish standards for Navigators including provisions to ensure that any private or public entity that is selected as a Navigator is qualified, and licensed, if appropriate, to engage in the Navigator activities described and to avoid conflicts of interest. Under these standards, a Navigator shall not be a health insurance issuer8 or receive any consideration directly or indirectly from any health insurance issuer in connection with the enrollment of any qualified individuals or employees of a qualified employer in a Qualified Health Plan.
The Secretary, in collaboration with states, must also develop standards to ensure that information made available by
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Navigators is fair, accurate, and impartial. (See ACA §1311(i)(5), 42 USCS §18031(i)(5))
Furthermore, in accordance with the ACA a Qualified Health Plan means, among other things, a plan offered by a health insurance issuer that agrees to charge the same premium rate for each Qualified Health Plan it offers without regard to whether the plan is offered through an Exchange or whether the plan is offered directly from the issuer or through an agent. (See ACA § 1301(a)(1)(C)(iii), 42 USC §18021(a)(1)(C)(iii))
Producers
States have been regulating the activities of Producers for decades. Thus, substantial background information is available to describe the importance of the role Producers play in the procurement of health insurance. However, a full discussion is beyond the scope of this document. In summary, Producers are universally regulated by the various states and territories. Typically, a Producer is an individual or business entity appointed by a health insurance issuer to sell, solicit, or negotiate insurance contracts on its behalf. The term “producer” is used in many states to include both agents and brokers. A broker negotiates the purchase of insurance on behalf of the consumer (individual or business entity) rather than the health insurance issuer.
Producers are representatives of the health insurance issuer and are subject to terms of the contract or written agreement between themselves and the health insurance issuers they represent. In the conduct of their business as an agent, the Producer essentially stands in the shoes of the health insurance issuer and regulators may hold their health insurance issuer liable for the errors or misconduct of the appointed Producer. Producers are subject to strict rules in the state in which they operate. Producers must be licensed, must meet various educational requirements, including continuing education requirements, are accountable for their actions, and must demonstrate financial responsibility. These state requirements function to assure competency and professionalism, and also serve to provide a mechanism protecting consumers by license suspensions and revocations where violations of the law are found.
Producers Will Play a Crucial Role in the Success or Failure of an Exchange
In looking at the historical background of Producers in the health insurance marketplace and issues surrounding the establishment of a Navigator program under the ACA, it is clear that determining the future role of Producers is a vital part of the implementation process for the Exchanges. States must consider not only what role Producers will play in the start-up and day to day operations of an Exchange but how Producers will interact with the Navigators. There are many issues in this regard, but experience has shown that all issues must be considered with the firm belief that Producers are crucial players in the success or failure of an Exchange. Producers have a significant relationship of trust with the individuals covered by the small employer insurance market. There are also segments of the individual market that are better reached and represented by Producers rather than consumer and industry groups. Producers who are accountable and trained on the functions of the Exchange and the products and services available can increase public awareness of the Exchange and increase consumer traffic to the Exchange websites. Also, consumers who are directed to the Exchanges will need education and assistance to determine which products best suit their needs and affordability standards. Producers can assist with these matters. Lastly, an Exchange that uses the already established system of Producers to market, advertise and assist with the Exchanges can save on costly overhead and administrative expenses.
Issues
Having presented independent information about Producers and Navigators and the crucial role they will play in the success of an Exchange, a number of substantial issues have been identified concerning how these entities will interact in an Exchange. Again, this interaction will be further fleshed out in regulations promulgated by the Secretary.
1. Will the regulations promulgated by the Secretary establish a ceiling of standards or will states have flexibility with regard to the oversight and role of Producers and Navigators in their Exchange?
While most states have adopted uniform laws concerning the regulation of Producers, the states currently retain flexibility to adapt to the specifics of their markets. The ACA requires that an Exchange “shall establish a program under which it awards grants to [Navigator entities].” Further, the ACA states that an entity seeking to receive a Navigator grant “shall demonstrate to the Exchange” its relationships or ability to establish relationships needed to perform the duties of a Navigator. Both of these provisions suggest that the states, through their Exchanges, will also have flexibility vis-à-vis Navigators.
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The ACA also directs that the Secretary “shall establish standards for Navigators”, and contemplates that those standards will address such factors as qualifications, licensure, and the avoidance of conflicts of interest. How the Secretary presents these standards may dictate whether they are a floor or a ceiling. However, the nature of the eligibility criteria in ACA §1311(i)(2), 42 USC §18031(i)(2), suggest that eligibility will depend on factors that require qualitative evaluation of “existing relationships.” In addition, the ACA suggests a wide range of entities that might qualify as Navigators. Those entities may differ substantially from state to state, and even within a state. For example, a commercial fishing industry organization in Massachusetts may be far more equipped to perform Navigator activities than one in Kansas, and a professional counseling association may be far more equipped to serve as Navigators than a professional hairdressers’ association. Therefore, it is suggested that the Secretary’s standards should substantially defer to a state’s Exchange to make qualitative evaluations.
Finally, the standard preemption provision of the Public Health Service Act (PHSA) is adopted into the Exchange provisions of the ACA. Accordingly, the state Exchange may not have rules that “prevent the application” of the federal law or regulations, see ACA§1311(k), 42 USC § 18031(k). In the context of the PHSA, this standard approach has been interpreted to mean that the federal law is a floor. In sum, the language of the ACA suggests that the Secretary’s regulations, when drafted, will operate as a floor, rather than a ceiling.
2. Should the states license or certify Navigators?
The Navigator provision in the ACA does not negate or preempt state laws requiring producers to be licensed to sell, solicit, or negotiate insurance. On the other hand, the ACA does state that the “Secretary shall establish standards for Navigators … including provisions to ensure [that a Navigator] is licensed if appropriate.” Again, how prescriptive the proposed regulations will be shall significantly impact this question. However, since states each have licensing and certification provisions which depend on the particular characterizations of the states, states flexibility is essential so that states may enforce their existing licensure laws.
States may also have a variety of certification or licensure arrangements for community partners or others with a consumer assistance orientation9. To assure consistency with those already existing state laws, the states should be permitted to require parallel competency requirements for Navigators that include educational and continuing education requirements.
This may be similar to the flexibility shown in the Long Term Care Partnership provisions of the Deficit Reduction Act of 2005, where the state insurance department is tasked with assuring sufficient training and understanding on the part of individuals selling partnership policies so that the state Medicaid agency may be satisfied of the seller’s competence. In the same way, the Secretary will be looking for a certain level of competency in Navigators, and may be anticipated to rely on the state or the state’s Exchange to assure that competency.
3. Who will establish educational and continuing education requirements for Navigators?
As noted above, to the extent Navigators are selling, soliciting, or negotiating insurance, they should be subject to the laws of the jurisdiction in which they are operating. To do otherwise would be to allow persons or entities to avoid licensure requirements by using the term “Navigator,” thus undercutting the states’ regulation of the insurance marketplace for the protection of the consumer.
Moreover, because the Exchanges in the various states will operate differently, and will operate in jurisdictions with different Producer and Navigator roles, it is expected that there will need to be some variation in the education requirements, though perhaps with a set floor (as in the Long Term Care Partnership provisions of the Deficit Reduction Act of 2005).
4. How will Navigators be held accountable for errors? Will they be required to have Errors and Omissions coverage as do Producers?
Producers are required, as licensed professionals, to carry errors and omissions insurance coverage. To provide a safety net for the consumers, the same should hold true for Navigators. If Navigators are not required to be licensed or certified, there will be no mechanism for an errors and omissions coverage requirement. Yet, depending on the scope of a Navigator’s role in assisting consumers in getting the coverage that is most appropriate for them, and then assisting them further in claims resolution matters, a consumer who is harmed by a Navigator’s error or omission should have some recourse.
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5. What is meant by “facilitate enrollment”? How will the Navigator be involved with Medicaid and other public programs? What will Navigators need to know?
Navigators and Producers must have a thorough knowledge of the Exchange marketplace. They should understand the private insurance market and public programs. Similar to the health insurance advisory service program established in 42 USCS 1395b-3 (for Medicare-eligible individuals), Navigators may facilitate enrollment by providing information, counseling, and assistance to individuals with respect to:
o
The private insurance market:
o
eligibility;
o
benefits (both covered and non covered);
o
the process of payment for services;
o
rights and process for appeals of determinations; and
o
Public programs:
o
eligibility, benefits, and the application process;
o
linkages between the Exchange, tax credits and Medicaid programs; and
o
State and local agencies involved in the Medicaid program.
Navigators can be especially helpful in underserviced populations by partnering with community-based organizations that have experience working with the uninsured, populations with language barriers and other under-served communities.
On the other hand, the ACA, in describing the duties of a Navigator, consistently makes reference to Qualified Health Plans to the exclusion of public plans or programs. Therefore, it is unclear whether Navigators are expected to facilitate enrollment in public plans or programs.
6. Will HIPAA and GLBA apply to Navigators? How?
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the various privacy regulations promulgated there under generally apply to three “covered entities”: (1) health care providers, (2) health care clearinghouses, and (3) health plans. Since Producers act on behalf of health insurance issuers and health plans, some health insurance issuers consider Producers to be “Business Associates” and require them to sign confidentially agreements to safeguard protected health information (PHI) and specify how the Producer may use or disclose PHI.
The Gramm-Leach-Bliley Act (GLBA) requires financial institutions, which includes health insurance issuers, to safeguard a customer’s personal information, provide notice to consumers regarding the company’s information-sharing practices, and provide an opportunity for the customer to “opt-out” if the customer does not want personal information to be shared outside of the company (or its affiliates). Additionally, GLBA created a mechanism for federal oversight, the National Association of Registered Agents and Brokers, that preempts state law and will regulate Producer licensing unless a majority of the states implement and maintain uniformity and reciprocity standards for Producer licensing.
In response to these federal laws, the NAIC adopted model laws and regulations related to producer licensing, the privacy of consumer financial and health information, and safeguarding consumer information. The majority of states have enacted these models. Therefore, if Navigators become licensees of the various departments of insurance, Navigators will be required to comply with state laws and regulations designed to implement the various provisions of GLBA and HIPAA. If Navigators are not regulated by state departments of insurance, then these entities may not have the knowledge or tools to safeguard consumer information to the same extent as Producers. The Secretary and the states should consider the information that Navigators may have in their possession and how personal information (including PHI) will be safeguarded.
7. How do you identify, reach out, and oversee non-insurance industry partners acting as Navigators?
The ACA requires that an entity serving as a Navigator demonstrate to the Exchange that they have existing relationships or could readily establish relationships with employees, employers, and consumers that are qualified to enroll in a Qualified Health Plan. Further guidance is needed to determine what will constitute sufficient representation of the various areas in the community needing representation within an Exchange. Will Exchanges require a certain level of need for representation in specific areas to merit a grant to specialized entities (i.e. fishing industry, ranching industry, etc)? For example, a commercial fishing industry organization in Massachusetts may be far more equipped to perform Navigator activities than one in Kansas,
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and a professional counseling association may be far more equipped to serve as Navigators than a professional hairdressers association. Also, what type of documentation will be required to demonstrate relationships or ability to form relationships with individuals in the community in order to be qualified as a Navigator?
Exchanges will need to establish a certification program for all Navigators (that does not vary by industry) to assure that each Navigator has sufficient basic knowledge of the Exchange to assist and educate their consumers.
As state departments of insurance will not necessarily have regulatory authority over Navigators, Exchanges should also consider a complaint process for consumers who are dissatisfied with the performance of a Navigator. This process should take into account the varied types of “community partners” that could serve as a Navigator. The process should include consideration whether certification may be withdrawn as needed.
It would appear that, in the absence of oversight by the commissioner of insurance, the Exchange governing board must be given authority under the enabling legislation to promulgate regulations to oversee the functions of Navigators.
8. What funding source may Exchanges use for Navigator programs?
The ACA requires an Exchange to contract with, and finance, Navigators. Additionally, a Navigator may not receive any direct or indirect compensation from a health insurance issuer. An Exchange may charge a separate fee to compensate the Navigator. Regardless of the group size, plan design or health insurance issuer chosen by the consumer, compensation should not vary. A transparent compensation model that provides a market competitive payment to a Producer or Navigator will best serve consumers.
Proper disclosure will also be necessary to address the inherent conflict in the funding of Navigators that exists in the ACA. Specifically, while Navigators are to be funded “out of the operational funds of the Exchange”, ACA §1311(i)(6), 42 U.S.C. §13031(i)(6), the ACA also contemplates that the Exchange will “charge assessments or user fees to participating health insurance issuers, or … otherwise generate funding, to support its operations.” ACA §1311((d)(5)(A), 42 U.S.C. §13031(d)(5)(A). Thus, it is quite likely that health insurance issuers will be funding the operations of the Exchange, including the operational funds used for funding Navigators.
9. May Producers serve as Navigators? How will commissions be paid?
The ACA provisions relating to Medical Loss Ratio requirements and relating to the role of Navigators in the Exchange demonstrate that one concern behind this legislation is the question of who Producers truly work for and the value that they bring for the consumer. The marketplace is moving towards a structure that would allow compensation of Producers by employers in lieu of carriers. Discussions with the Secretary would indicate that this is a route with which the Secretary would concur. States should anticipate that Producers will continue to serve a vital role in the industry, although it is expected that the nature of their services will evolve.
States will want to look closely at the ways to make allowances for Producers in the future marketplace. Some states have statutory schemes in place that would prevent a Producer from being compensated by an employer. Statutory analysis may be needed to determine if legislation should be pursued to allow new compensation schemes. This may include setting parameters for Producers to place business within an Exchange and receive some kind of compensation for that service. Or it may include allowing Producers that are not receiving compensation from health insurance issuers to function as Navigators.
There are special considerations for Producers in the small group market. Producers form a working relationship with client employer groups, with the employer often utilizing the Producer as an expert. If a Producer is working with a small employer group that decides to send their employees to the Exchange to purchase coverage, how can the Producer continue to assist the employer and their employees obtain coverage? In this instance, the Producer (as opposed to a Navigator) may be the individual with the best relationship and tie to these individuals.
States should examine the goals of the Navigator program and determine if Producers are suited to this function or if it would be more advisable to limit Producers to a role in enrolling individuals in Qualified Health Plans. Exchanges would have to consider how a Producer might interface with Medicaid or CHIP programs. Also, Producers may not have the necessary knowledge to assist with subsidy issues.
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If a state determines that Navigators should “facilitate” enrollment in the Exchange and Producers may be used to complete enrollment within Qualified Health Plans, how will the Exchange ensure that Navigators aren’t using preferential treatment in which Producer they refer people to? What if Producers are paying “commission” to Navigators?
Regardless of the exact role of the Producer within the Exchange (Navigator or Producer), Producers will not have the necessary knowledge to fully utilize the system without additional training. States may want to look to the educational requirements of the Long Term Care Partnership provisions of the Deficit Reduction Act of 2005 for ideas about the design of the required education for Producers with regard to Exchanges. Under the Deficit Reduction Act of 2005, the state insurance department is tasked with assuring sufficient training and understanding on the part of individuals selling partnership policies so that the state Medicaid agency may be satisfied of the seller’s competence. In the same way, the Secretary will be looking for a certain level of competency in Navigators, and it may be anticipated that the Secretary will rely on the state or the state’s Exchange to assure that competency. It is advisable to set a “floor” of core competencies required by Producers who are involved with the Exchange and allow individual states to determine further educational requirements as needed based on the individual needs of their consumers. Notwithstanding the roles to be played by Navigators or Producers, state Medicaid departments and the state agency that oversees public programs will ultimately be responsible to make enrollment/entitlement determinations.
10. Ethical issues for producers who wish to serve as Navigators
The ACA requires that Navigators avoid conflicts of interest and provide fair and impartial information concerning enrollment in Qualified Health Plans. An Exchange must consider if there is an inherent conflict of interest if Producers desire to function as Navigators for the Exchange. Exchanges will need to set criteria or must seek guidance from the Secretary as to what level of health insurance issuer related activity constitutes a conflict of interest. For example, does a conflict exist if a producer: Is currently receiving commissions on unrelated blocks of business? (Is this indirect compensation?) Receiving commission with regard to large group products that cannot be offered through the Exchange? Would Producers that had a prior relationship with a carrier but are no longer functioning as a Producer in the fully insured market be considered to have a conflict of interest? What about Producers that work in the self-funded marketplace and therefore are not receiving any commission from a carrier?
Conclusion
There are many interrelated issues that must be addressed to assure that the professional competencies of Producers, as well as the educational assistance function of Navigators, may benefit the consumers of the Exchange. By presenting the background and information above, this paper may assist states in considering how best to structure their Exchanges with regard to Producers and Navigators.
1 States differ in licensure terminology. For purposes of this document, unless otherwise stated, “Producer” shall include Agent, Broker, Consultant, Insurance Producer, and any other term or designation currently used to refer to those individuals or entities that are required to be licensed by the state to be engaged in the solicitation, sale, negotiation and servicing of insurance, regardless of whom they represent.
2 For the purposes of this document, “Navigators” refers to entities carrying out the program established under ACA §1311(i), 42 USC § 18031(i)
3 On March 23, 2010, the President signed into law the Patient Protection and Affordable Care Act. Then, on March 30, 2010, the Health Care and Education Reconciliation Act of 2010 was signed into law. The two laws are collectively referred to in this document as the Affordable Care Act (“ACA”)
4 A “Qualified Health Plan” is defined at ACA §1311(c), 42 USC §18021(a). The Secretary must promulgate regulations to establish the criteria for certification of health plans offered through the Exchange. See 42 USC §18031(c).
5 For the purposes of this document, “Exchange” refers to the American Health Benefit Exchanges as described in ACA §1311(b), 42 USC § 18031 (b)
6 The SBA provides small business counseling and training through a variety of programs and resource partners, located strategically around the country. One example is the Office of Small Business Development Centers (SBDC) which provides management assistance to current and prospective small business owners. SBDCs offer one-stop assistance to
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individuals and small businesses by providing a wide variety of information and guidance in central and easily accessible branch locations. The program is a cooperative effort of the private sector, the educational community and federal, state and local governments and is an integral component of Entrepreneurial Development’s network of training and counseling services.
7 Although not specifically mentioned in the ACA, community partners that assist in the SCHIP programs of various states have been suggested as performing parallel functions to those duties performed by a Navigator.
8 ACA uses the term “health insurance issuer” to describe a health insurer or health insurance company. For purposes of this document, health insurance issuer is an entity licensed by the state or territory that is engaged as principal and as indemnitor, surety, or contractor in the business of entering into contracts of health insurance.
9 Community partners may be community-based agencies, organizations, coalitions, hospitals, church groups, guidance counselors, school nurses, health care providers, and other groups or individuals that wish to help an interested person learn about or receive some service or benefit. Typically their work focuses on outreach and education, but may also include providing assistance in completing applications for those services or benefits. Community partners are not licensed, and therefore are not permitted to sell, solicit, or negotiate contracts of insurance. While community partners may be subject to some form of state approval, this approval typically functions as a means to access electronic application systems, rather than as regulatory oversight.

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Professional Health Insurance Advisors (EX) Task Force

2011 Charge

The Executive Committee Task Force on Professional Health Insurance Advisors shall work in an expedient manner to identify, analyze and recommend options to the Executive Committee for addressing the negative impacts on health insurance brokers/agents, insurance consumers and insurance markets, prior to and as a result of, the Medical Loss Ratio (MLR) requirements of the Patient Protection and Affordable Care Act (PPACA) and the regulation as issued by the U.S. Department of Health and Human Services (HHS).

NAIC Notice of Hearing
Professional Health Insurance Advisors (EX) Task Force
Sunday, March 27, 2011 3:30 p.m. – 5:30 p.m.
Austin, TX Hilton Austin – Austin Grand Ballroom Salon H – 6th Floor.

The purpose of the hearing is to solicit comments from all interested parties regarding the impact of the Medical Loss Ratio (MLR) requirements of the Patient Protection and Affordable Care Act (PPACA) on health insurance brokers/agents, insurance consumers and insurance markets. In particular, the Task Force is interested in comments to address the following questions:

• What is or is likely to be the impact of removing commissions from what is defined as premium under the MLR requirements?
• Have commissions been reduced since the passage of the federal law? If so, what is the impact of present and potential future commission reductions? Will this cause access issues? Is it likely agents/brokers will abandon health insurance markets? Please cite specific examples.
• What will be the impact of a legislative change that treats producer commissions in the same manner as Federal and State taxes for purposes of calculating the MLR?
• What is your opinion on the optimal solution to balance health plan/insurer concerns, consumer interests and the interests of agents/brokers?

NAIC Hearing 2011 Task Force Agent commissions.Ashmore & Associates

Hartford managed care provider Aetna Inc. is suing six New Jersey doctors over medical bills it calls “unconscionable,” including $56,980 for a bedside consultation and $59,490 for an ultrasound that typically costs $74, Bloomberg News reports.

The lawsuits could help determine what pricing limits insurers can impose on “out-of-network” physicians who don’t have contracts with health plans that spell out how much a service or procedure can cost, the online news service said.

One defendant billed $30,000 for a Caesarean birth, and another raised his fee for seeing a critically ill patient in a hospital to $9,000 in 2008 from $500 the year before, the insurer alleges in the suits. The Caesarean price was more than 10 times the in-network amount Aetna quotes on its website.

“If these charges are accurate, consumers and purchasers should be outraged,” said David Lansky, president of the San Francisco-based Pacific Business Group on Health, a coalition of health-insurance buyers that includes Chevron Corp., Walt Disney Co. and General Electric Co.

Lawyers for the doctors declined to comment on specific charges in the suits, and said their clients did nothing wrong, Bloomberg reports.

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A Texas House committee, defying Washington, has approved legislation opposing elements of the sweeping federal health care legislation signed by President Barack Obama last year.

One of the bills, approved Tuesday, says Texans do not have to buy health insurance, as the law would require for many Americans beginning in 2014. The health care law already has been challenged in federal court by Texas and other states.

The House Select Committee on State Sovereignty also approved a non-binding resolution expressing opposition to the health care legislation passed by Congress.

The law “infringes on the liberty of individuals by mandating that all citizens and legal residents of the United States obtain qualifying health care coverage or pay a tax penalty,” says the resolution, sponsored by Rep. Wayne Christian, R-Nacogdoches.

A third bill would require state agencies to compile reports on any activities associated with implementing the federal health care law. All three bills were approved unanimously in the committee and now head to the full House.

Democrats have said the committee is debating anti-Washington bills only to gain favor with tea-party conservatives and not to solve the state’s health care woes.

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Texas, where three out of 10 adults do not have health insurance, has the highest uninsured rate, a U.S. poll indicates.

The Gallup-Healthways Well-Being Index, conducted from January through December 2011, involving more than 350,000 interviews with U.S. adults from all states, indicates Mississippi and Louisiana have high rates of uninsured residents, with about one in four lacking health insurance.

Massachusetts, where state law requires all adults to have health insurance — had the lowest percentage of uninsured residents — 4.7 percent.

Nationwide, 16.4 percent of adults were uninsured in 2010, statistically unchanged from 16.2 percent in 2009, but up from 14.8 percent in 2008, the survey indicates.

Seven out of the 10 states with the fewest uninsured residents are in the Northeast, while Southern and Western states have a disproportionately large percentage of uninsured residents, the survey found.

Most states had an increase in the uninsured or had no change in the uninsured in 2010 compared with 2009, except Wyoming, where those who lacked health insurance dropped from 21.1 percent to 16.1 percent.

The total sample had a margin of error of 1 percentage point. Most states had a margin of error of 1 percentage point to 2 percentage points, but smaller population states had a margin of error of 4 percentage points.

The earthquake that devastated parts of northern Japan caused as much as $35 billion in insured property losses, a figure that would mark Friday’s quake as the costliest ever for the insurance industry even before the effects of the tsunami are factored in, according to a disaster-modeling company.

While the actual cost of the catastrophe will take months to become clear, Boston-based AIR Worldwide said Sunday the quake alone caused insured property losses of $15 billion to $35 billion. If claims come in at the middle of that range, the cost of the disaster would surpass all other natural catastrophes besides 2005′s Hurricane Katrina.

Loss estimates from AIR and its rivals are closely watched by the insurance industry and by Wall Street to gauge potential losses for individual insurers. No major companies have disclosed estimates of their own losses yet, but the size of AIR’s estimate will fuel conversations in the industry–already underway–about whether the quake will force an abrupt spike in the price of insurance and reinsurance.

Such a spike would be felt by businesses and homeowners in catastrophe-prone areas around the world, including Florida and California.

AIR’s loss estimate includes “insured shake and fire-following damage to onshore residential and commercial buildings and contents, and to properties in agricultural line of business,” but doesn’t include the potential increase in the cost of building supplies and other materials that often occurs after a disaster, AIR said.

The estimate doesn’t yet include estimates for the loss caused by the tsunami, the risk-modeling agency said. But on Saturday, AIR said it had examined prefectures most directly affected by the tsunami, and concluded that $24 billion of insured property had sat within three kilometers of the shore in those areas. Of that amount, $5 billion was within one kilometer of the coast. The company warned against adding its loss estimates to any outside estimates of tsunami damage provided by others, “as that would result in significant double counting.” AIR noted that “many of the properties destroyed by the tsunami first sustained damage from ground shaking and fire, as witnessed by videos of tsunami waves sweeping along entire buildings ablaze.”

AIR said it plans to independently estimate the loss caused by the tsunami, as more detailed information becomes available–including satellite photos from NASA of the flood extent–and provide a combined loss estimate that avoids double-counting in the affected areas.

There have been few reports about major structural damage in the Tokyo and Chiba prefectures, except for several serious fires. However, the risk-modeling agency cautioned that the high concentration of insured properties in the area and some quake impact felt means that “even relatively small individual claims will likely add up to significant numbers.”

Munich Re AG (MUV2.XE) and Swiss Reinsurance Co. (RUKN.VX), the world’s largest reinsurers by gross premium income, reiterated Sunday it was too early to provide estimates of their potential losses. Smaller peer Hannover Re AG (HNR1.XE), and Allianz SE (ALV.XE), Europe’s largest primary insurer by premium income, said the same. So did American International Group Inc. (AIG) and Lloyd’s of London, the U.K.’s 322-year-old insurance and reinsurance market.

However high the insured losses run, total economic losses are likely to be significantly more. Japanese homeowners and businesses have been reluctant to buy insurance to cover all of their potential losses because the cost of the protection has been perceived as too high. AIR estimated about 10% to 12% of commercial property exposures are insured against earthquakes outside of Tokyo.

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Banner Life Insurance AIG Genworth Guardian Metlife Investors Midland National
Protective Life Prudential Transamerica West Coast Life Insurance New York Life

Northwestern Mutual MassMutual Mutual of Omaha

Rep. Lois Kolkhorst has filed a bill asking that Texas join other states in wresting control of their health care systems from the federal government.

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A drug for high-risk pregnant women has cost about $10 to $20 per injection. Next week, the price shoots up to $1,500 a dose, meaning the total cost during a pregnancy could be as much as $30,000.

That’s because the drug, a form of progesterone given as a weekly shot, has been made cheaply for years, mixed in special pharmacies that custom-compound treatments that are not federally approved.

But recently, KV Pharmaceutical of suburban St.Louis won government approval to exclusively sell the drug, known as Makena (Mah-KEE’-Nah). The March of Dimes and many obstetricians supported that because it means quality will be more consistent and it will be easier to get.

None of them anticipated the dramatic price hike, though — especially since most of the cost for development and research was shouldered by others in the past.

“That’s a huge increase for something that can’t be costing them that much to make. For crying out loud, this is about making money,” said Dr. Roger Snow, deputy medical director for Massachusetts’ Medicaid program.

“I’ve never seen anything as outrageous as this,” said Dr. Arnold Cohen, an obstetrician at Albert Einstein Medical Center in Philadelphia.

“I’m breathless,” said Dr. Joanne Armstrong, the head of women’s health for Aetna, the Hartford-based national health insurer.

Doctors say the price hike may deter low-income women from getting the drug, leading to more premature births. And it will certainly be a huge financial burden for health insurance companies and government programs that have been paying for it.

The cost is justified to avoid the mental and physical disabilities that can come with very premature births, said KV Pharmaceutical chief executive Gregory J. Divis Jr. The cost of care for a preemie is estimated at $51,000 in the first year alone.

“Makena can help offset some of those costs,” Divis told The Associated Press. “These moms deserve the opportunity to have the benefits of an FDA-approved Makena.”

The U.S. Food and Drug Administration is not involved in setting the price for the drugs it approves.

A KV subsidiary, Ther-Rx Corp., will market the drug. On Tuesday, it announced a patient assistance program designed to help uninsured and low-income women get the drug at little or no cost.

But Snow and others said someone is going to have to pay the higher price. Some of the burden will fall on health insurance companies, which will have to raise premiums or other costs to their other customers. And some will fall on cash-strapped state Medicaid programs, which may be forced to stop paying for the drug or enroll fewer people.

“There’s no question they can’t afford this,” said Matt Salo, executive director of the National Association of Medicaid Directors.

Salo and Snow said they do not know how many state Medicaid programs currently pay for Makena, which as a generic was recommended by the American College of Obstetricians and Gynecologists.

Aetna will continue to pay for the drug, Armstrong said, but it will be an expensive pill to swallow. Aetna currently covers it for about 1,000 women a year, so the new federal endorsement is likely to cost an estimated $30 million more annually.

Makena is a synthetic form of the hormone progesterone that first came on the market more than 50 years ago to treat other problems. Hormone drugs came under fire in the 1970s, following reports they might damage fetuses in early pregnancy. In the 1990s, the early incarnation of Makena was withdrawn from the market.

But the drug got a new life in 2003, with publication of a study that reported it helped prevent early births to women who had a history of spontaneous preterm deliveries.

These very early births produce children who — if they survive — need months of intensive care and often suffer disabilities. The cause of sudden preterm delivery is not understood, but it occurs in black mothers at much higher rates than whites or Hispanics.

The study of women at risk for this condition found that only about 36 percent of those given the progesterone drug had preterm births, compared with 55 percent among those not on the drug.

It’s believed the treatment calms the muscles of the uterus, experts said.

There is no good alternative in most cases and in the years following the study, more obstetricians, Medicaid programs and others began prescribing it. By some estimates, about 130,000 women a year might benefit from the drug. Only a fraction of them get it, but the number has been growing steadily.

One success story is Beatrice Diaz, 33, of Chapel Hill, N.C.

During her first pregnancy nine years ago, Diaz unexpectedly went into labor at about 24 weeks. She delivered a son, Garrison, who was so fragile she was not allowed to hold him for a month. Today he is in a wheelchair and has the mental capacity of a 9-month-old.

It was a shock, said Diaz, who at the time was a legal assistant in a prosecutor’s office.

“Honestly I thought the only people who had 1-pound babies were crackheads,” she said.

When she became pregnant again, her doctor prescribed the progesterone drug, a weekly injection that starts as early as the 16th week and may be given for as much as 20 weeks. She has since had two healthy, full-term baby girls, Hailyn and Alexa.

Diaz said she’s not planning to have any more children — and that’s a good thing.

“That’s an insane amount of money. I don’t know what I would do to get the money to afford it,” she said.

The Ther-Rx patient assistance program promises free injections or much reduced prices based on income. Uninsured households making less than $100,000 are eligible for a copay of $20 or less.

Ther-Rx and its parent company became involved about three years ago and acquired rights to the drug from a Massachusetts company named Hologic Inc., said Divis, who is also Ther-Rx’s president.

To get FDA approval, the company is spending hundreds of millions of dollars in additional research, including an international study involving 1,700 women, Divis said. The FDA last month signed off and gave Makena orphan drug status. That designation ensures Ther-Rx will be the sole source of the drug for seven years.

The March of Dimes, which gets hundreds of thousands of dollars in funding from Ther-Rx, celebrated the approval in a press release, saying if all women eligible for the shots receive them, nearly 10,000 spontaneous premature births could be prevented each year.

“For the first time, we have an FDA-approved treatment to offer women who have delivered a baby too soon, giving them hope that their next child will have a better chance at a healthy start in life,” said Dr. Alan Fleischman, the organization’s medical director.

As for the cost, he said the drug maker’s financial assistance program will ensure no eligible woman is denied the drug due to inability to pay.

Some doctors said they were happy getting the cheaper version from compounding pharmacies, and Aetna’s Armstrong said she was unaware of any quality concerns.

Still, doctors will use the Ther-Rx brand, in part because of legal worries.

Not that they have a choice: Last month, KV sent cease-and-desist letters to compounding pharmacies, telling them they could face FDA enforcement actions if they kept making the drug.

SOURCE
Blue Cross Blue Shield of Texas

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A possible spike in teacher retirements could drain the state fund that provides retiree health care within the next two-year budget, senators were told on Wednesday.

As school districts have amped up their talk of layoffs in recent weeks, there is a growing sense that the number of teachers who choose to retire could increase by perhaps 10,000 or more, up from 15,000 in a typical year.

“Our phones are starting to ring like crazy,” said Ronnie Jung, the executive director of the Teacher Retirement System of Texas, during testimony before the Senate Finance Committee.

The $107 billion pension fund would be able to absorb the unexpected surge in new retirees; its assets can cover obligations for the next 60 years.

But the health care fund, which is separate from the pension fund, could not sustain the multiple hits that would come from an increasing number of users, a lower state contribution and fewer active teachers pay into the system.

If that spike in retirements were to occur, the fund would run out of money in 2013, which could lead to an increase in retiree health insurance premiums of 20 percent to 30 percent. Retirees already pay an average monthly premium of $500 to $600.

Current law requires the state to contribute 1 percent of school payroll to the retiree health care fund, but the proposed state budget cuts in half its total to $267 million.

The rates paid by active teachers and school districts would not change.

Lawmakers would need to vote specifically on the reduced health care contribution rate as a well as proposal to drop the state’s pension contribution from 6.64 percent of payroll to 6 percent, the minimum allowed by the state constitution. The members’ pension contribution would also fall to the same level.

Steve Jennings, a retired teacher from Comal County, said he kept up his end of the deal, working for 36 years, but now the state is not doing the same. “I’m out there hustling and somebody else has not been hustling enough,” Jennings said.

State Sen. Robert Duncan, R-Lubbock, lamented that the budget proposal undoes many of investments made by teachers and the state to improve the retirement system.

Unless the state increases its contributions to the pension and health care funds, “we’re going to dig a hole we can’t get out of,” said state Sen. Kevin Eltife, R-Tyler.

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Texas Health Insurance

As judges around the U.S. weigh the constitutionality of the Affordable Care Act — Obama’s sweeping health care reform law — it’s worth asking how Europe navigated the same questions.

The problem in most state challenges to the new law is the un-American-sounding mandate, the requirement that everyone in the nation must buy health insurance. Europeans have had similar mandates for decades, but you hear very little soul-searching here about fairness or freedom of choice. Is it because Europeans are all a bunch of socialist weenies who don’t mind an overregulated market?

Not quite. The European Union — that garden of overregulation — has fair-competition rules meant to keep markets free, just as the U.S. Constitution has the Commerce Clause. Now, no less than the years after World War II, when Western European countries built their modern health care systems, forcing the public to buy something, whether bowling balls or fire insurance, would seem un-European as well as un-American. It would be an artificial prop for an industry.

But health care, early on, was judged to be different. In the freest European systems — the Swiss, Dutch and German schemes — people can choose from a vast variety of health care providers. But by law they have to choose one. In return for this gift of guaranteed business, the government regulates the companies heavily. The justification for such meddling is that health care is a “social insurance,” a basic service, not a standard sold product.

As Timothy Stoltzfus Jost, a law professor at Washington and Lee University, pointed out in a paper last year, the result is not exactly a market-disciplined health care system. “This [European] understanding of the nature of health insurance is not merely conceptual, but is reflected in the approach that Switzerland and the Netherlands take to financing and regulating health insurance,” he writes. “In both countries, public funding is extensive.”

The German system, intriguingly, reverses the grim “risk-based” equation familiar to every American looking to buy insurance. German citizens pay into a pool for health care according to their income, not their health risks — but the Krankenkasse receives a lump of money back from the pool according to each patient’s risk. That means German insurance companies draw more money for taking on patients with more risk — a built-in reason to cover the old and infirm.

It involves a lot of government fiddling, but what Krankenkassen don’t do under this system is suffer. They do, however, act like insurance companies. When you buy coverage in Europe, you get it.

The incentive structure in America right now pushes companies in the other direction, away from paying coverage wherever they can. That’s the problem Obamacare wants to solve. No purely market-driven system on earth has yet solved it. The systems in Switzerland and the Netherlands were held up for a while as possible free-market models for the U.S., but they’re not strictly market-driven, founded as they are on a notion of health care as a social service.

Legal arguments over the mandates in Obamacare focus on whether the Commerce Clause of the Constitution gives Washington the power to regulate an industry that tends, historically, to be handled by individuals, or by localities and states. It probably does, but the idea of being forced to buy insurance by law will still confuse a lot of Americans when Obamacare kicks into high gear in 2014.

America has to find her own way through this thicket of legal distinctions. There’s no reason to ape the Europeans, because their systems aren’t perfect; in fact it would be nice to watch the American legal process forge something new. But Europeans settled the underlying moral questions — to their own satisfaction — decades ago.

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TEXAS HEALTH INSURANCE

President Obama is moving to quell a rebellion among the ranks of the nation’s governors, who want more of a say in how billions of dollars in shared health care dollars are spent.

At a working session Sunday, several governors called for turning the joint federal-state Medicaid program into a system of “block grants,” where they would be able take federal dollars and spend them as they see fit.

That’s something long pushed by Republicans, and long opposed by Democrats.

Instead, however, at the governor’s annual visit to the White House Monday, President Obama offered a much smaller concession to health spending flexibility: Endorsement of a bipartisan proposal to allow states to opt out of most of last year’s health law’s requirements sooner than was originally envisioned when the law was passed.

“Beginning in 2017, if you can come up with a better system for your state to provide coverage of the same quality and affordability as the Affordable Care Act, you can take that route instead,” Obama told the governors.

And Obama said he supported moving that date up to 2014, as proposed by Sens. Ron Wyden, D-Ore., and Scott Brown, R-Mass., to “give [governors] flexibility more quickly, while still guaranteeing the American people reform.”

A lot of people have called this the “calling their bluff” proposal. And Sen. Wyden, who’s been shopping the bill around to both Democratic and Republican governors, doesn’t completely disagree.

“You’ve got a lot of states where Republican governors, Republican legislatures, are clearly going to have their ideas about health reform,” Wyden said in an interview. “As long as they meet the coverage requirements in the bill, they can do it. And progressive folks are gonna try the same kinds of approaches.”

In fact, noted Wyden, Vermont Gov. Peter Shumlin is pushing for the idea of having a “single payer” system rather than requiring everyone to have private health insurance.

Republicans governors, however, aren’t yet embracing Wyden’s proposal, or President Obama’s promise of more flexibility in health care spending.

“He says very nice things and he says them very nicely,” said Gov. Chris Christie, R-N.J. “But in the end I have a job to do, and what I’d like is to have the flexibility to exercise the authority that the people of New Jersey gave me in November of 2009.”

Meanwhile, Kansas Republican Gov. Sam Brownback, echoing the concerns of many governors, says what he really wants isn’t more flexibility when it comes to the health care law, but for Medicaid.

“Medicaid is creating a huge hole in my budget and we had to take money from all other places in state government to fill the Medicaid hole,” Brownback said.

On Tuesday several governors will testify before the House Energy and Commerce Committee on the impact of the new health law on Medicaid and state budgets. It’s a hearing that’s expected pour more fuel on the fire of the ongoing health wars.

SOURCE

Texas Health Insurance

Blue Cross and Blue Shield of Illinois health plan members are facing higher out-of-pocket costs if they see a physician not in the health plan’s network, under a new doctor-payment system being rolled out by its parent company.

Chicago-based Health Care Service Corp., the nation’s fourth-largest health plan, operating Blue Cross plans in Illinois, Texas, Oklahoma and New Mexico, has begun basing its doctor-fee schedules on rates paid by the Medicare health insurance plan for the elderly, which generally pays lower rates to physicians.

Exactly how much more a patient will pay for out-of-network care will vary. Medicare rates, according to the American Medical Association, typically are 20 percent below the cost of providing medical care, and they vary depending on where the patient lives.

The average visit to a doctor’s office by an “established” patient is $87, resulting in $43.50 in out-of-pocket costs for the consumer, according to an AMA analysis of large private health plans nationwide. A patient could end up paying at least $50, an increase of about 14 percent, according to AMA figures provided to the Tribune.

Patients can avoid the extra cost by staying in the Illinois Blue Cross network, which includes more than 95 percent of the state’s physicians.
The move comes at a time when insurance companies are under pressure to prepare for the health overhaul law, which demands medical insurance plans keep their administrative costs low while providing quality care. Insurance companies say using Medicare’s rate structure for out-of-network doctors will provide more consistency and make things simpler for regulatory bodies and standard-setting groups.

An increasing number of health plans have based out-of-network doctor fees on Medicare payment rates. Health Care Service is the largest health plan in the country to lower rates to Medicare levels, the AMA said.

The change has rankled doctor groups, which say they are being squeezed by private and government health insurance plans. They say the Medicare rate structure is largely “flawed,” and that doctors typically get 80 cents for every dollar it costs to care for a patient. They also say lower rates will force them to shift more of the medical bill burden on Health Care Service’s hundreds of thousands of patients nationwide.

“Patients enrolled in preferred provider organizations offered by Health Care Service Corp. need to closely review their benefit plan to determine if the insurer’s new out-of-network payment policy will result in a cut in benefits,” said Dr. James Rohack, immediate past president of the American Medical Association and a cardiologist from Texas. “The more the out-of-network benefit is reduced, the less flexibility patients have to choose a physician from outside the insurer’s network. For some patients, out-of-network care may become unaffordable.”

PPOs, the most popular form of health insurance, allow patients to leave the health plan’s network of preferred health professionals for care at a higher cost. But they are unlike HMOs, which restrict choices of doctors and hospitals to their networks.

“By underpaying medical bills, insurers often shift blame to physicians and undermine relationships between patients and physicians,” Rohack said.

Health Care Service said the rate change allows for “transparency” for medical care providers who have complained in the past about inconsistent fee schedules.

“Medicare is the most widely accepted level of reimbursement nationally and recognized by many providers, regulatory bodies and others as a national standard,” Health Care Service said in a statement to the Tribune. “As a result, we expect this methodology to increase transparency for providers and members through availability of information about Medicare standards.”

Health Care Service says only 3 percent of its PPO health plan members use physicians not in their health plan networks. Health Care Service provides benefits for 12.7 million people, including 6.7 million in Illinois.

SOURCE

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Texas Health Insurance

One of the little-recognized and often-overlooked facts about the high cost of health insurance is that states play a significant role in driving up those costs.  States also play a role in determining patients’ access to health coverage, doctors and even medicines—with cold and allergy products containing pseudoephedrine being the most recent example.

For more than 40 years states have increasingly mandated health insurers cover specific providers, products and services.  The Council for Affordable Texas Health Insurance estimates that there are 2,156 such state mandates nationwide—and that number grows every year, as states seek to impose even more mandates.

While mandates make health insurance more comprehensive, they also make it more expensive, just as a new car loaded with options is going to be more expensive than the basic model.

To be fair, the vast majority of state legislators are acting honorably and trying to serve their constituents when they propose such mandates.  But they also make health care more complicated, while pricing millions of Americans out of the health insurance market.

However, a new type of mandate is emerging that may initially appear different, but it can have a similar impact: the effort in Kentucky, Indiana and Kansas to have some over-the-counter drugs reclassified as prescription only.

The problem some legislators are facing is the abuse of the drug pseudoephedrine, the active ingredient in a number of cold medicines.  If criminals are able to get the drug in sufficient quantities, they can illegally process it into methamphetamines, or “meth,” a particularly devastating drug used by low-income populations.

In an effort to control access to the drug, Congress passed the Combat Methamphetamine Epidemic Act in 2005, which (1) requires over-the-counter products containing pseudoephedrine, ephedrine and phenylpropanolamine to be kept locked up behind the pharmacist’s counter, (2) limits how much one can purchase, and (3) requires the purchaser’s identification and signature—all common-sense steps intended to preserve consumer access while reducing crime.

Criminals try to get around the current restrictions by paying people to buy the product and by other means.  As a result, 12 states have moved to an electronic-tracking system that alerts pharmacists so they can stop people from buying more than the legal limit of pseudoephedrine.

But two states, Mississippi and Oregon, decided to go a step further and mandate that products with pseudoephedrine be sold by prescription only.  Those states are now touting their actions, and other states are considering joining them.

Kentucky’s interest is surprising.  It joined seven other states in the mid-1990s imposing numerous mandates on the state’s health insurance system, driving up premiums and driving health insurers out of the state.  Kentucky legislators learned their lesson and eventually repealed several of those laws, and the health insurance system revived.

Ditto Indiana.  Under Governor Mitch Daniels the state has moved to the forefront of embracing what’s known as consumer-driven health care, which seeks to empower consumers, rather than insurers, to make value-conscious health care decisions.

Yet now both states are considering making it harder for consumers to get the products and services they need, and driving up the cost of health insurance to boot.

Parents know the problem well.  A child who is prone to getting earaches has to be taken to a doctor in order to get a prescription antibiotic.  The generic drug may only cost $4.00, but the doctor’s visit may cost 20 times that much.  While requiring a prescription may be a good policy with regard to antibiotics, does it make sense to force a person with a cold—which in most cases the doctor can do nothing about—to also incur a doctor’s fee just to get a standard cold medication?

And once legislators make pseudoephedrine products prescription only, there will be an expectation—and probably lobbying efforts—to make health insurance pay for it.  Will state legislators then feel compelled to mandate that health insurance cover those drugs?  Will patients have to wait until Monday to get a prescription if the cold hits on a Friday evening?  Or bypass the family doctor, who is off for the weekend, and head to the more-expensive acute care clinic?

That effort is going in exactly the opposite direction of the trend toward more consumer empowerment, giving patients more information and more control over their health care dollars—through Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs)—and letting them make informed choices.

Yes, there is a problem with meth, but the answer isn’t to make it more difficult and expensive for law-abiding patients to get the products they need.  The answer is to make it harder for criminals to commit crimes.  Crime-fighting technology, not new mandates on the health care system, is the best way to address the problem.

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START YOU TRAINING HERE

After a full year of research and development, Agent Navigator was launched in December of 2010. The goal is to become the premier website for education and information for all lines of insurance. Currently we support the life, senior and health insurance markets with property and casualty due to launch by the end of 2011.

The concept of this site started after quickly discovering that there is no single place to go for insurance agents to find information regarding any aspect of their business; be it getting contracted or purchasing a product. Some information can be found scattered around the internet. Other information cannot be found at all.

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Agent Navigator focuses on three areas:

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We offer free training for life, health and senior agents. On top of live webinars and podcasts we also have a video and article library.

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Our state map is arguably one of the site’s best features. Insurance across all lines is very state specific. Carriers, products and commissions change based on each state’s department of insurance regulations. We also offer a comprehensive guide of products available per state.

In addition to listing the insurance carrier’s products, we also feature state-specific news as well as a marketplace for products and services that only apply to a particular state.

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We are firm believers that knowledge is power. Agents should be able to shop and compare any product or service just like we compare others products in the marketplace. In the past, agents had to search the net for any particular product or service then start calling vendors one by one in order to compare. However, using our quote engine, agents can finally do side-by-side comparisons.

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Insurance Training
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Insurance errors and omissions

THIS isn’t the story of a poor family with a mother who has a dreadful disease that bankrupts them, or with a child who has to go without vital medicines. Unlike many others, my family can afford medical care, with or without insurance.

Instead, this is a story about how broken the market for health insurance is, even for those who are healthy and who are willing and able to pay for it.

Most employees assume that if they lose their job and the health coverage that comes along with it, they’ll be able to purchase insurance somewhere. The members of Congress who want to repeal the provision of last year’s health insurance law that makes it easier for individuals to buy coverage must assume that uninsured people do not want to buy it, or are just too cheap or too poor to do so.

The truth is that individual Texas health insurance is not easy to get.

I found this out the hard way. Six years ago, my company was acquired. Since my husband had retired a few years earlier, we found ourselves without an employer and thus without health insurance.

My husband, teenage daughter and I were all active and healthy, and I naïvely thought getting health insurance would be simple.

Why did we even need insurance? First, we wanted to know that, if we had a medical catastrophe, we would not exhaust our savings. Second, uninsured patients are billed more than the rates that insurers negotiate with doctors and hospitals, and we wanted to pay those lower rates. The difference is significant: my recent M.R.I. cost $1,300 at the “retail” rate, while the rate negotiated by the insurance company was $700.

An insurance broker helped me sort through the options. I settled on a high-deductible plan, and filled out the long application. I diligently listed the various minor complaints for which we had been seen over the years, knowing that these might turn up later and be a basis for revoking coverage if they were not disclosed.

Then the first letter arrived — denied. It never occurred to me that we would be denied! Yes, we had listed a bunch of minor ailments, but nothing serious. No cancer, no chronic diseases like asthma or diabetes, no hospital stays.

Why were we denied? What were these pre-existing conditions that put us into high-risk categories? For me, it was a corn on my toe for which my podiatrist had recommended an in-office procedure. My daughter was denied because she takes regular medication for a common teenage issue. My husband was denied because his ophthalmologist had identified a slow-growing cataract. Basically, if there is any possible procedure in your future, insurers will deny you.

The broker then proposed that the three of us make individual applications. Perhaps one or two of us might be accepted, rather than the family as a group.

As I filled out more applications, I discovered a critical error in my strategy. The first question was “Have you ever been denied health insurance”? Now my answer was yes, giving the new companies reason to be wary of my application. I learned too late that the best tactic is to apply simultaneously to as many companies as possible, so that you don’t have to admit to a denial.

I completed four applications for each of the three of us, using reams of paper. I learned to read the questions carefully. I mulled over the difference between a “condition” and “something for which you have sought treatment.” I was precise and succinct. I felt as if I was doing a deposition: Give the minimum true information, and not a word more. I was accepted by exactly one insurance company. So was my daughter, although at a 50 percent premium over the standard charge for a girl her age. My husband was also accepted by one insurer but was denied by the company that approved me.

Our premiums, which were reasonable at first, have increased substantially over the last six years; the average annual increase has been 20 percent. I now am paying premiums that are more than double what they were initially. And because these are high-deductible policies, we still are paying most of the medical bills ourselves.

The new health care reform legislation is not perfect. Nothing that complex could be. But I have no doubt that the system is broken and reform is absolutely essential. If we are not going to have universal coverage but are going to rely on employer plans, then we must offer individuals, self-employed people and small businesses a place to purchase insurance at a reasonable price.

If members of Congress feel so strongly about undoing this important legislation, perhaps we should stop providing them with health insurance. Let’s credit their pay for the amount that has been paid by the taxpayers, and let them try to buy health insurance in the individual market. My bet is that they all would be denied. Texas Health insurance reform might suddenly not seem to them like such a bad idea.

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Troubling report card

A legislative study finds Texas stands out in too many bad categories.

In its fifth annual report on the state of the state, the Texas House of Representatives Legislative Study Group composed of Democratic lawmakers takes a statistical look at how we stack up compared to our 49 U.S. counterparts. The findings enumerated in Texas on the Brink are ominous.

True to its image, Texas remains big, young and booming. The birthrate of its residents, the percentage of population under 18 and enrollment in public schools all rank second highest in the nation. Its residents are among the least taxed in the country, and likewise receive less in tax expenditures per capita. Texas leads the nation in job creation, and its surging population has earned it four new congressional districts. Those are the bright spots.

On the downside, what should be future strengths are undercut by debits. Texas has the highest percentage of adults and children without health insurance and ranks fourth in the percentage of children living in poverty. Texas has the lowest percentage of pregnant women receiving prenatal care in their first trimester. We spend less for mental health services per capita than any other state, and we’re next to last in Medicaid coverage of the poor and per capita Medicaid expenditures.

Our schools may be packed with students, but they are not producing the well-educated young workers the state needs. We are in the bottom 10 in state and local expenditures per public school pupil, while the high school graduation rate ranks 43rd. The percentage of Texans 25 and older with a high school diploma or higher is the lowest in the nation.

Texas racks up an unenviable string of No. 1s on environmental issues. It is tops in the nation in emissions of carbon dioxide, releases of carcinogenic pollutants into the air, toxic chemicals released into water and hazardous waste generated. At the same time, Texans are fifth in per capita consumption of energy.

Houston State Rep. Garnet Coleman chairs the study group. He says the report conveys to readers both a sense of the state’s potential and the perils for its future growth. “They should come away with the realization that Texas is not the place they think it is,” says Coleman. “What they don’t know is how we rank in comparison to other states. Many will be surprised to know we rank first in dirty air and last in the percentage of people with health insurance.”

As lawmakers prepare for draconian cuts in education and health spending, Coleman hopes Texas on the Brink will encourage both lawmakers and their constituents to consider the impact of the coming reductions.

Coleman says that the last time Texas faced a serious shortfall in 2003, it was 43rd in per capita spending on mental health. After the cuts inflicted in that session, the state slid to 49th. It has since reached bottom.

The explosive population growth that has boosted the Texas economy must be accompanied by quality public education and health care. Otherwise, the state will not be able to attract industries with good-paying jobs that are the underpinning of prosperous communities.

SOURCE

Texas Health Insurance

Two bills introduced into the Texas Senate would change health care billing procedures to encourage doctors to focus on patient outcomes, best practices and maintaining good health, Lt. Gov. David Dewhurst and Sen. Jane Nelson said on Wednesday.

Dewhurst said the U.S. health care system was the most expensive in the world, yet produced poor results. He said Senate Bills 7 and 8 would create free-market incentives for doctors and hospitals to work together to make care more efficient and effective.

“In Texas, we don’t have health care, we have sick care,” Dewhurst said. “America, almost exclusively, pays doctors based on how many procedures are done, versus paying for good medical outcomes and paying for following best practices.”

Senate Bill 7 would overhaul the Medicaid and Child Health Insurance Program payment systems, while Senate Bill 8 would focus on other health care plans for state employees and others. Both would create incentives for doctors and hospitals to provide better health care at a lower cost, Dewhurst said.

“The research shows that in this model, as implemented by the Mayo Clinic, it decreases acute care costs by 28 percent, while increasing the quality of medical outcomes, using the Intermountain example in Salt Lake City, by 40 percent,” Dewhurst said.

Representative from the Texas Medical Association and the Texas Hospital Association appeared with Dewhurst and Nelson to endorse the bills.

“The current system of paying for health care is based on volume, not quality,” said Dan Stultz, president of the Texas Hospital Association. “Payment reform is needed to change the incentives and reward ‘right behaviors,’ such as using best practices and evidence-based protocols to improve quality.”

Nelson, R-Flower Mound, said the bill would move Texas “toward a payment system that rewards quality outcomes rather than quantity of services.”

“I guarantee you, it’s not only going to save us money, it will improve and we’ll have healthier Texans,” Nelson said.

Among other things, the bill would allow doctors and hospitals to collaborate on billing practices, something forbidden under current law.

“Texas hospitals are ready to embrace the concept of health care collaboratives where physicians, nurses and hospitals work together to achieve the best quality results for their patients,” Stultz said. Removing antitrust barriers and creating financial incentives . . . will help drive the movement to improve quality, and over time lead to tangible cost savings and better outcomes.”

Rep. Lois Kolkhorst, R-Brenham, plans to introduce a companion bill in the House. The Senate bills will now go to committees for public hearings.

SOURCE

Texas Health Insurance

The 66-year-old Garland woman has cancer between her esophagus and lungs and is being treated by a medical team at Texas Health Resources.

But she worries that a power struggle between the hospital system and Blue Cross Blue Shield of Texas could force her to pay more for care or to find another oncologist, pulmonologist, internist and cardiologist.

“The challenge is in finding a good doctor,” said Lutz, who has Blue Cross insurance through her husband’s employer. “I’m not talking about treating the common cold here.”

Like Lutz, an estimated 800,000 Blue Cross members in North Texas soon could be expected to pay more money if they visit any one of Texas Health’s 24 hospitals.

The Arlington-based hospital system and Richardson-based insurer have until Dec. 31 to sign a new contract covering reimbursement rates. After that date, Texas Health will be considered out-of-network for Blue Cross members.

The dispute between the region’s largest health insurer and its largest hospital system highlights a challenge in reforming health care.

The new health care law adopted earlier this year aims to tame cost increases and provides funding for pilot programs to help meet that goal. But those programs require cooperation between insurers and hospitals.

It’s difficult to reform health care with a power struggle between the payers and providers, said Mary Grealy, president of the Healthcare Leadership Council, a Washington, D.C.-based think tank of chief executives. Blue Cross and Texas Health are both members of the council.

Grealy said incentives must be changed. Insurers and hospitals somehow must agree on a system that pays for the quality of care provided.

There is a good chance the fight between Blue Cross and Texas Health is not a bluff. Examples from around the country show that hospitals and insurers are willing to part ways.

But people with knowledge of such negotiations are optimistic a deal will be reached before the contract expires.

“I would say the trend is that at the end, the providers and plans do reach an agreement, sometimes very late in the process,” Grealy said.

Failing to cooperate

Instead of cooperating, the region’s largest insurer and hospital system are taking jabs at each other.

Blue Cross says Texas Health is demanding an additional $120 million over three years to cover cost increases. The insurer has declined to say how much it is currently paying Texas Health.

The insurer says it contributes $178 million to Texas Health’s annual profits. It also says the hospital system makes a 30 percent profit margin from Blue Cross members.

“This kind of runaway spending on medical care is one of the main causes of higher health insurance premiums for our members,” Blue Cross said in a recent letter to members.

For its part, Texas Health says Blue Cross wants to pay its millions upfront in a lump sum. Instead, Texas Health wants its money reimbursed traditionally, after a claim is filed. The hospital system also points to the insurer’s accumulated wealth.

“Blue Cross Blue Shield of Texas is sitting with about $7 billion in reserves. And they don’t provide any patient care,” said Wendell Watson, spokesman for Texas Health. “In fact for many of their customers – the self-insured ones – they don’t do much more than manage the paperwork on claims.”

Both are nonprofit companies. Texas Health had $2 billion in assets at the end of 2008, according to its latest financial reports.

The power struggle between insurers and hospitals has intensified in recent years as hospital consolidations created mega-health systems. These companies, emboldened with leverage, began going head-to-head with insurance companies for better rates.

“As we’ve grown we’ve gained a larger network of providers that provide care in a variety of settings,” said Barclay Berdan, Texas Health’s vice president for system alignment. “We get some economies of scale because of that.”

Blue Cross’ vice president for network management, Shannon Stansbury, said the company negotiates with smaller health providers across the state every day. Blue Cross has contracts with more than 400 hospitals in the state.

“In general they don’t get as public as this has gotten,” Stansbury said.

Blue Cross’ contracts with other North Texas hospital companies are not up for renewal at this time. Stansbury said if no agreement is reached with Texas Health Insurance, he’s confident members will find other suitable options nearby.

Patients and physicians are caught in the middle. If no agreement is reached, patients already in one of Texas Health’s 24 hospitals will continue with in-network status until discharged. Women past their 24th week of pregnancy will continue to have in-network status until delivery and immediate postpartum care.

Lutz fears she might not find a doctor if she switches to Medicare since fewer doctors these days are accepting new Medicare patients.

She has had cancer since November 2008. She often collapses on the couch from fatigue. The chemotherapy shortens her breath. It raises her heart rate. She is worried.

“It’s like living with a time bomb,” Lutz said. “You don’t know when it’s going to blow up.”

Physicians’ struggle

Physicians are as helpless as their patients in these negotiations. For example, the eight physicians of HealthCore Physicians Group in North Dallas, which is affiliated with Texas Health Resources, have sent letters to their patients encouraging them to contact Blue Cross.

“I am very concerned that this issue may not be resolved before the current contract ends,” the letter reads. “I am encouraging all my Blue Cross patients to take an active role in this matter.”

Other physicians have stopped accepting insurance altogether. They say they have grown frustrated with unfavorable contracts and slow payments.

Sixteen percent of doctors in a national survey of 2,400 doctors plan to switch to a cash-only practice in the next three years, according to Irving-based health care research group Merritt Hawkins.

“It was a great emotional struggle to break free from the bonds of Blue Cross,” said Dr. Cyrus Peikari, a Dallas primary care doctor who switched to a cash-only practice three months ago. “And our patients made personal sacrifices to stay with us.”

Lutz said both Texas Health and Blue Cross are being selfish. She’s spent a lifetime traveling the globe as a social worker. Now, she is steering all her activist passion toward helping other seniors in her situation. She’s repeatedly left messages with both companies urging them to reach an agreement.

“How many graves are they willing to dance on to make a profit?” she asked.

SOURCE

Blue Cross Blue Shield of Texas

If the state slashes Medicaid payments to doctors, they may stop serving the neediest patients. Where will they go?

In an era of overcrowded emergency departments, Tomball Regional Medical Center’s emergency room has become an efficiency leader, a model of how to quickly stabilize patients, move them to hospital beds and keep the waiting room manageable.

Hospital officials are worried that the good times are about to end.

The officials fear the ER will be the recipient of a crush of Medicaid patients suddenly seeking primary care or preventable emergency care, the result of the 2011 Texas Legislature slashing reimbursement rates.

Reducing rates is expected to cause many more health care providers to stop accepting Medicaid patients.

“If the Legislature slashes Medicaid rates, those patients are going to be left without a health-care home and they’re going to come to the ER,” said Dr. Glen Blaschke, the Tomball hospital’s medical director of emergency services. “It’ll totally overwhelm us. It’ll cause problems for everyone. It’ll be depressing.”

Texas hospitals are bracing for the likelihood.

With a state budget shortfall estimated as high as $27 billion for the upcoming two-year cycle, legislators are targeting Medicaid, which accounts for a quarter of the total state budget.

The Legislature is proposing a reimbursement rate cut and other Medicaid cost-savings initiatives that could reduce hospitals’ payments by as much as 33 percent.

That would do serious damage to a formula funding system that now reimburses hospitals 89 cents on the dollar for Medicaid care. And those numbers don’t reflect a 2 percent reimbursement cut the state instituted in the past six months.

A growing population

The anticipated cut also would come amid a swelling Texas Medicaid population. The ranks have grown 12 percent a year in recent years, mostly the result of people losing their jobs, and insurance, due to the recession.

Plus, in 2014, the federal health-care reform law will make an additional 2 million Texans eligible for the program.

A 33 percent cut would be particularly hard on some rural hospitals that treat a large percentage of Medicaid patients. Texas Hospital Association officials tell of one hospital in the Panhandle that anticipates it will stop delivering babies and one in East Texas looking at closing its maternity services and outpatient clinic for poor people.

They also predict a few hospitals wouldn’t survive such reimbursement cuts.

If the outlook isn’t as bleak in greater Houston — its Texas Medical Center and suburban hospitals have a better mix of payment sources, larger financial cushions and more doctors to pick up the slack when doctors drop out — its hospitals nevertheless are projecting tough times ahead.

Tomball Regional is representative of the concern.

A standard community hospital — founded in 1976, it staffs 220 beds and performs most procedures except transplants — it’s exploring how to absorb the coming ER influx and where to make cuts that should be significant even though Medicaid enrollees constitute a relatively small minority of its patients.

Lynn LeBouef, the hospital’s president and chief executive officer, estimates the proposed legislative cuts would cost the hospital about $6 million in state and federal money and strain an already tight budget. The hospital’s operating margins run about 1.5 to 2 percent.

He says the most likely casualty will be personnel.

Higher premiums

“Our highest costs and our most controllable costs are salary,” said LeBouef, a 33-year veteran at the hospital, a nonprofit not affiliated with a system or supported by taxes. “It’s not like we can negotiate new electricity rates.”

LeBouef acknowledged the possibility that reduced Medicaid reimbursement rates will result in higher health insurance premiums.

Analysts expect hospitals to pressure private insurers for better rates to recoup money lost on Medicaid patients treated at the emergency room and written off as bad debt. Insurers eventually pass on their cost increases through higher premiums and co-payments.

The proposed Medicaid legislative cuts only amount to 10 percent for doctors, but their exodus seems inevitable, given that primary-care physicians are currently reimbursed just 50 cents on the dollar. The percentage of Texas doctors accepting new Medicaid patients is 42, down from 67 percent a decade ago, and Texas Medical Association leaders say the number likely will drop to single figures if rates drop significantly again.

Short-run savings

Blaschke says the effect at emergency departments will be huge: Doctors not trained in the treatment of chronic illness suddenly will have to manage people with conditions such as hypertension or diabetes; quality of life and life expectancy will be reduced; and ERs will be overrun with patients, delaying care to those who need it most quickly.

Blaschke also emphasizes that such treatment will incur huge bills, for patients who could be treated more inexpensively by a primary care doctor and for those who wait until their condition requires emergency treatment, such as amputation or dialysis. The latter group often will go from the ER to rehab or nursing homes, at even greater Medicaid expense.

“It really makes no sense,” says Blaschke. “There might be savings in the short run, but in the long run, it’s only going to cost the state more.”

SOURCE

Texas Health Insurance

A Texas hospital is under fire for allegedly telling a surgical patient she had to leave the hospital immediately because she was an illegal immigrant.

Maria Sanchez, 24, told the Houston Chronicle that she had been at John Sealy Hospital — part of the University of Texas Medical system — for six days when a doctor told her on Jan. 12 that she should go to Mexico to have surgery on her growing spinal tumor. The hospital discharged her that day, the paper reported.

Sanchez’s husband, Luis Aguillon, a legal U.S. resident, told the paper his wife is now getting medical care in Houston. But the couple’s case is sparking a nationwide ethics debate.

A former surgeon in the University of Texas medical system who reviewed Sanchez’s medical records told the Chronicle that even though Sanchez, who’d already lost use of her right hand, would likely worsen as she waited for surgery, her discharge wasn’t that unusual.

“This is a practice that takes place at other hospitals,” said Dr. Bill Nealon, now at Vanderbilt University Medical Center in Nashville, Tenn.

The Federation for American Immigration Reform says that’s because it’s perfectly reasonable for a state to refuse to provide health care to a non-resident unless it’s an immediately life-threatening situation.

“We all know there’s a finite amount of money available to provide needed health care to people in this country…it doesn’t appear that in this case it’s a matter of life and death right this minute,” Ira Mehlman, the groups media director, told FoxNews.com.

Mehlman says without that immediate danger, states have every right to consider whether taxpayers should pay for an illegal immigrant’s health care or whether that person should seek care in their home country — even if that person is married to a legal resident.

“Very often illegal aliens have relatives who are legal residents, very often citizen kids. The fact that her husband is a legal resident does not change the fact that she is an illegal alien,” he said.

Arthur Caplan, Chair of the Department of Medical Ethics and Director of the Center for Bioethics at the University of Pennsylvania, agrees.

“The need to stabilize people who are immediately at risk of dying is clear cut — whatever country they’re from, whatever their insurance status. Beyond that, each hospital makes its own decision of what it will do and how it will distribute its charity,” he told FoxNews.com.

Caplan says that decision normally hinges on the stance that “charity begins at home.”

“I think that is the ethically responsible stance, you should care for people in your neighborhood, in your area, and ultimately in your nation first,” he said. “… And they have to come ahead of people that are in the country illegally.”

But Immigration Attorney Francisco Hernandez says Sanchez’s he would argue Sanchez’s condition was emergent.

“I disagree that she was stable as there was an obvious risk of loss of limb, this trumps all of the rules. She should have been treated to include the surgery by the accepting surgeon who agreed to provide her care,” Hernandez told FoxNews.com.

Immigration Attorney and Former Federal Prosecutor Michael Wildes agrees, saying the hospital could be liable for any harm that came to Sanchez as result of the tumor after leaving the hospital.

“Any skilled lawyer would be able to show a timeline and any action that would be taken that would disturb this spinal tumor that would lead to death or injury would be actionable against that facility,” he told FoxNews.com.

Caplan also says that once a hospital accepts a patient it must provide them with information on where else they can seek care, which can include their home country, if they are discharged prematurely.

Whether the hospital fulfilled that obligation is unclear.

Aguillon told the Chronicle he received no other referral beyond Sanchez’s discharge order, which stated she was to follow-up, “with PCP (primary care physician) in one week, NS (neurosurgery) as scheduled in Mexico.”

John Sealy Hospital said in a statement that HIPAA rules and regulations prohibit it from discussing the medical records of individuals but that providing the best medical care to patients is its highest priority.

All patients with emergent, life-threatening conditions “are provided with treatment until they are stable and admitted, or are transferred to another hospital,” the statement read. “Neither the initial medical screening nor life-saving treatment is impeded by inquiries about the individual’s method of payment or insurance status.”

In non-emergency situations, the hospital says patients are financially screened, but “the timing at which the screening occurs may differ depending upon the patient’s medical condition when admitted. In cases of financial hardship, patients are referred to several potential sources of financial assistance.”

Aguillon said after his wife’s discharge the couple visited at least five hospitals and three clinics before finally moving to Houston, where she qualified for care and is now being treated at Ben Taub General Hospital .

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Texas Health Insurance

State social services czar Tom Suehs says the Legislature should work on reducing Texas’ nation-leading share of its people lacking texas health insurance, no matter what the federal courts decide about the federal health care overhaul.

Testifying at a Senate Nominations Committee hearing, where he was unanimously endorsed to serve a full two-year term, Suehs said policymakers should look at possibly establishing a state health insurance exchange for small employers and at “what’s best for Texas,” notwithstanding a huge legal fight over the federal law.

“What we should be debating is how we implement coverage in this state, regardless of the federal changes,” said Suehs (seated in middle of 3 diners in agency photo above, after serving lunch to state eligibility workers in San Antonio last summer). “We have 6.5 million uninsured individuals in this state. … People in this state get health care [but] it’s not always provided in the most economical fashion,” he added, referring to indigent care in hospital emergency rooms.

On other issues, Suehs discussed Medicaid and possible closure of “state schools” for the mentally disabled.

AUSTIN — Upholding a legal challenge from Texas and 25 other states, a federal judge in Florida declared President Barack Obama’s landmark healthcare law unconstitutional Monday, saying Congress overstepped its power by requiring Americans to buy health insurance.

The ruling by U.S. District Judge Roger Vinson was the latest in a series of conflicting legal opinions that will ultimately be resolved in the U.S. Supreme Court, legal experts said. The law has also been declared unconstitutional by a federal court in Virginia, whereas courts in Florida and Michigan have upheld it.

Accepting a fundamental claim in the states’ lawsuit, Vinson said Congress “exceeded the bounds of its authority” by requiring Americans to have insurance by 2014. He also ruled that the “individual mandate” could not be stripped out to make the statute constitutional, thus voiding the entire law.

“Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void,” Vinson wrote in his 78-page ruling. “This has been a difficult decision to reach, and I am aware that it will have indeterminable implications.”

Gov. Rick Perry and other Republican leaders have derisively labeled the law as “ObamaCare,” saying it would have a devastating financial impact when its requirements are implemented in Texas. The Lone Star State entered the legal challenge in March 2010 when Texas Attorney General Greg Abbott joined other states in the Florida-based lawsuit.

“Today’s ruling represents a victory in the ongoing effort to end federal intrusion into the lives of every American through this one-size-fits-all approach to healthcare reform,” Perry said. Abbott hailed the ruling as “great day for liberty and the vitality of the U.S. Constitution.”

Abbott said the individual mandate would mark the first time in history that the government would force Americans to enter into contracts and purchase services from private companies or face a penalty.

Vinson ruled that the mandate “is neither within the letter or the spirit of the Constitution.”

The next step is an appeal before the Atlanta-based 11th U.S. Circuit Court of Appeals, Abbott said.

But legal experts say the ultimate outcome will be decided by the Supreme Court in what could likely be a historic ruling on healthcare and Congress’ powers under the Constitution’s Commerce Clause.

Texas supporters of the Patient Protection and Affordable Health Care Act say it would benefit as many as 6.1 million Texans who have little or no texas health insurance. Twenty-five percent of Texas’ population does not have health insurance, the highest percentage among the states.

“It’s disconcerting that [Attorney] General Abbott is actively working to dismantle a law that will improve the health coverage that Texans already had and help countless others purchase insurance,” said state Rep. Garnet Coleman, D-Houston.. “This court case is nothing but a political sideshow.”

White House officials said that they don’t think the opinion will slow down implementation of the law, and that it’s far from the last word on the legal battle.

The suit was filed minutes after Obama signed the bill into law, achieving one of his biggest domestic goals. after an acrimonious debate. In Texas, opponents said the law would double state healthcare costs and deepen state budget problems while supporters said it was desperately needed to extend the reach of insurance converge in the nation’s second-largest state.

The Texas Health and Human Services Commission has predicted that 2 million more people will sign up for Medicaid and the Children’s Health Insurance Program because of the new federal law.

Political leaders and lawmakers from Washington to Austin predictably broke along party lines in reacting to the ruling. Rep. Michael Burgess, R-Lewisville, and Republican Sens. Kay Bailey Hutchison and John Cornyn praised the decision and vowed to step up efforts to repeal the law.

“This fight is far from over, and I know Texas will keep fighting this battle,” said Burgess, a doctor.

House Democratic Leader Nancy Pelosi, D-Calif., called the ruling “one of many” and said opponents of the bill are “using every means to undermine patients’ rights.”

State lawmakers have proposed reducing entitlement, but health care experts warn maneuver could backfire.

Even if you don’t rely on Medicaid, Texas lawmakers’ proposed cuts in the health care program could cost you money.

Cutting Medicaid could have outcomes beyond fewer services for the poor, several local officials in the health care industry said.

Notably, taxpayers in Central Texas could end up with increased local taxes and higher insurance premiums, according to several Central Texas health care professionals.

Tom Banning, the CEO for the Texas Academy of Family Physicians, said the proposed cuts don’t equate to savings. Rather, there is simply a shuffling of expenses.

“This has the potential to be the biggest cost shift to local governments that Texas has ever seen,” Banning said.

The two largest hospital groups in Austin echoed those concerns.

Jesus Garza, an executive vice president and the chief operating officer at the Seton Family of Hospitals , said the money would have to be found elsewhere when cuts in the state and federally funded Medicaid program result in undue strains on hospital systems.

“It drives up the cost of care,” Garza said.

Mark Clayton, a senior vice president at St. David’s HealthCare , said cuts in Medicaid would end up being absorbed, in part, by insured people and taxpayers.

Medicaid — along with other publicly funded programs, including the education and prison systems — will be cut as the Republican-led Legislature tries to make good on its promise to tame the unwieldy budget and a shortfall of up to $27 billion without raising taxes.

Reducing money to Medicaid — as outlined in early versions of the state Senate and House budget proposals — comes at a time when the Medicaid rolls are expected to grow by 16 million people nationally as the federal health care overhaul gets into full swing by 2014.

Earlier this month, state lawmakers proposed slashing the spending on Medicaid and the Children’s Health Insurance Program, the entitlement programs that serve 3.4 million of the poorest, sickest and youngest Texans.

Many of the cuts are expected to come largely through a reduction in reimbursement rates to doctors, hospitals and other health care providers.

But the total effect, which would include the loss of federal matching funds, would be about $14 billion.

The worry is that the cuts will lead to fewer doctors taking patients with Medicaid because the reimbursement rate is too low, meaning health care professionals get paid less than they would if the patients were on Medicare or had private insurance.

The doctors will be forced to limit or stop taking Medicaid patients, health professionals said. With more patients coming in and fewer doctors expected to take Medicaid, more pressure would be put on local health clinics.

Though the clinics might be able to pick up some of the slack, they certainly cannot handle all of it, said José E. Camacho, the executive director of the Texas Association of Community Health Centers.

“I fear that we do not have the full capacity to take on anyone who walks through the door,” Camacho said.

And even if patients can get in, they should expect longer waits, he said.

Christie Garbe, a spokeswoman for Central Health , the Travis County health care district, added that reductions in Medicaid could put increased pressure on the publicly supported safety net, which includes dozens of community health centers and clinics that serve Travis residents.

Central Health, which is funded by local property taxes, could be forced to raise taxes to pay for any increase in traffic at area clinics, warned the Texas Hospital Association.

Garbe couldn’t say if tax increases are imminent, but she said Central Health would feel the strain on the system.

“There will be additional pressure to find resources” on a system that is already “stretched thin,” she said.

Garbe and others agreed on what would happen next: If people cannot get into community health centers, they’ll turn to emergency rooms — the most expensive way to treat sick and injured people.

“What we would see is the exact reverse of what we’re trying to do, and that’s cut costs,” Camacho said.

But the pressure on clinics and emergency rooms is only part of the potential problem, he said.

Central Health can raise taxes, but hospital administrators said their systems would have to turn somewhere else to make up for the jump in uncompensated care costs.

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Texas Health Insurance

Justice Roger Vinson of the U.S. District Court in Pensacola ruled today that the primary mechanism used by the health reform legislation to achieve universal insurance coverage–the individual mandate–is illegal. If his ruling stands it would void the 2,700 page, $938 billion health reform bill passed last year.

“Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void. This has been a difficult decision to reach, and I am aware that it will have indeterminable implications,” Vinson writes.

With this ruling, and a similar one in December by Judge Henry Hudson in Virginia, it’s likely that the U.S. Supreme Court will be the final arbiter of whether ObamaCare stands. Two other lawsuits–one in Michigan and one in Virgina–were thrown out by other federal district judges last year who ruled the constitutional challenge lacked merit.

Most analysts were expecting a ruling in favor of the 26 states hoping to overturn the bill. Vinson,in an earlier ruling , suggested that the federal fine for not buying insurance is more of a penalty than a tax. If it’s a penalty, the legislation relies on a broad interpretation of federal regulatory powers. If it’s a tax, as the Department of Justice’s lawyers argued, it’s much more difficult to make a constitutional objection.

In today’s ruling Vinson considered two arguments made by Florida Attorney General Bill McCollum, the lead plaintiff on the lawsuit. The first was the legislation forces states to expand Medicaid in a way that’s unaffordable. Vinson quickly dispatches that legal theory, pointing out that Medicaid is and always has been a voluntary program.

The second argument revolves around the individual mandate. The health reform legislation makes it illegal for insurers to discriminate against patients regardless of their health. With that change there’s a risk that only sick people would buy insurance and healthy people would wait or be priced out of the market. To address that problem, the bill forces everyone who does not have insurance to buy it. The combination of “guaranteed issue” and the “individual mandate” is the beating heart of the health bill.

While the new rules banning medical underwriting are popular, the individual mandate has bred resentment. The bill’s authors never anticipated the mandate would become a ripe target for legal challenges.

The argument that’s had the most traction is based on the limitations of the Commerce Clause of the Constitution. The Commerce Clause explicitly allows the federal government regulate interstate commerce. But it also has been used to justify federal laws that affect other kinds of economic activity. The question raised by the lawsuit against the health reform bill is whether refusing to buy insurance constitutes interstate commerce. In his ruling Vinson says that in the past the Commerce Clause has been used to regulate activities like growing marijuana or navigating a waterway, but not used to force someone to do something they weren’t already doing. “It would be a radical departure from existing case law to hold that Congress can regulate inactivity under the Commerce Clause,” he writes.

Vinson rejects the administration’s argument that the health care market is unique since nobody can truly opt out–and that not buying insurance is in itself an economic activity since the cost of care then falls on others. Vinson mocks this argument, writing: “Everyone must participate in the food market… under this logic, Congress could [mandate] that every adult purchase and consume wheat bread daily.” If they didn’t buy wheat bread they might have a bad diet which would put a strain on the health care system, he writes.

Later he offers another analogy: “Congress could require that everyone above a certain income threshold buy a General Motors automobile — now partially government-owned — because those who do not buy GM cars (or those who buy foreign cars) are adversely impacting commerce and a taxpayer-subsidized business.” Vinson concludes: “The individual mandate exceeds Congress’ commerce power, as it is understood, defined, and applied in the existing Supreme Court case law.”

The next step is likely for the case to be heard in front of the Supreme Court. That would likely put the onus for keeping or voiding the bill on Justice Anthony Kennedy, the current court’s swing vote. It’s unlikely that the case would move quickly enough that it would be heard this year. Yet since the bill’s main elements–the mandate, the new insurance regulations, and the exchanges–don’t kick in until 2014, there’s plenty of time for a high court review to seriously impact the implementation of the new laws.

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Texas Health Insurance