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Packed Agenda For Health Insurers

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The health insurance industry will enter 2007 with strong momentum, as it faces the challenge of dealing with a Democratic Congress that has made no secret of its desire to have the government intervene more directly in healthcare policies and budgets. That’s because the industry is coming off a huge victory by winning a provision in last-minute legislation passed by Congress Dec. 9 that substantively improves the attractiveness of Health Savings Accounts to consumers, according to officials of several industry trade groups.

Looking ahead to the new Congress, the industry’s immediate problem will be dealing with demands by Democrats for a stronger federal role in the pricing of Part D, the Medicare prescription drug program.

Democrats say eliminating language in the legislation creating the prescription drug program that bars the government from setting prices for patients participating in the program will be part of their plan for “100 hours” of action, tackling such issues as rolling back tax subsidies to the energy industry, reforming lobbying rules, raising the minimum wage, promoting stem cell research and making college education more accessible.

Further down the road, the new Congress must extend the State Children’s Health Insurance Program, which expires this year.

John C. Greene, vice president of congressional affairs for the National Association of Health Underwriters, adds that the Democrats “will dust off some issues from the past,” such as proposals for genetic non-discrimination, mental health parity and a patients’ bill of rights.

“All of these come up over and over again in the new-member profile of Democrats,” he says. He predicts the Democrats will write their own health information technology bill and the current bill will be dropped. The new bill will call for greater funding, but with more strings attached, he adds.

“One of the big strings will be greater privacy protection,” Greene says. “With that will probably come some private right of action, which gives consumers access to the courts to sue in the case of some breach of privacy.”

Greene notes that Sen. Hillary Clinton, D-N.Y., has indicated on a number of occasions that the Health Insurance Portability and Accountability Act privacy rules are not effective when measured by the number of cases the Office of Civil Rights is prosecuting in terms of fines and penalties. “She thinks a more appropriate measure of success will be the amount of fines levied, the number of court cases and, perhaps, other enforcement options,” Greene says.

Another issue on the table deals with calls made by Rep. John Dingell, D-Mich., chairman of the Energy and Commerce Committee, about “leveling the playing field between the Medicare Advantage plan and the traditional fee for service,” according to officials at NAHU.

And the new leadership of oversight panels in both the House and the Senate have vowed sustained hearings on the prescription drug program under Medicare, specifically, the peculiarity in the Medicare benefit law–the so-called ‘donut hole’–that causes a gap in available coverage.

Democrats also plan oversight hearings designed to pressure the administration to impose guidelines on marketing of programs under the Medicare Part D prescription drug program so that the programs are transparent and easy to understand, and so the Center for Medicare and Medicaid remains neutral on whether those enrolled in the program should join Medicare Advantage or conventional fee-for-service programs.

Regarding the critical issue of keeping the government out of setting prescription drug prices under Medicare during the so-called first “100 hours,” Karen Ignagni, president and CEO of America’s Health Insurance Plans, is optimistic.

“I think the outlook is very good,” Ignagni says. “I think members of Congress have heard from seniors at the grassroots level telling them that the program is working for them. Ultimately, members of Congress are not going to change the benefit structure.”

She argues that the current program, based on products offered by health insurers, “has defied all expectations.”

“Indeed, it has beaten expectations,” she says. “The government had an estimate at the time the bill was passed of what premiums would cost–a premium of $38 a month. Instead, 3 years after that, the number is $24. That almost never happens.”

“The other thing is that there is savings of about $1,200 per person as a result of this program, which is very interesting.” Ignagni says. “A savings of $1,200 per individual means that premiums are lower than expected and the benefits are greater. That rarely happens.”

Another concern is potential cutbacks under Democratic scrutiny of the Medicare Advantage program.

“We don’t think there will be a cutback in the program as occurred in the late 1990s,” she says, adding that she anticipates “a great deal of rhetoric, but in the end members of Congress will listen to what is working for their constituents.”

Congress on Dec. 9 passed a stopgap measure funding the SCHIP until May, when lawmakers hope they can complete work on reauthorization of the program, said to be a priority for both Democrats and Republicans.

“The whole issue of expanding access to healthcare to all Americans is a very, very big priority to us, a very high priority,” Ignagni says.

“The AHIP board issued a proposal designed to expand access to health insurance coverage for all Americans Nov. 13, and we have a very specific strategy that we are using to advance that proposal–a very active strategy.”

The program would expand eligibility for public programs, enable all consumers to purchase health insurance with pre-tax dollars, provide financial assistance to help working families afford coverage and encourage states to develop and implement access proposals.

Mohit Ghose, an AHIP spokesman, notes that reauthorization of SCHIP is a key part of AHIP’s plan. “As you can see from our proposal, we will have a very clear position that all children under 200% of the federal poverty level should be covered under any SCHIP reauthorization,” Ghose says.

“Everything will be affected by pay-go’s, the proposed Democratic program that would require all new government programs to have specific funding. But what is important to recognize here is that according to our data, a strong majority of Americans support actions outlined in our access proposal to have all children covered in 3 years and to provide access to coverage to all adults within 10 years.”

Regarding other priorities of the health insurance industry in the new Congress, Ignagni says AHIP will continue to work on an above-the-line deduction for LTC premiums.

She also points that the language in the omnibus tax extender bill dealing with HSAs constitutes a small victory in this area, because the legislation allows contributions to the program to be increased and funds in the program can be used to pay for LTC premiums, pointing out that these are tax-free contributions.

The provision as passed also increases the contribution limits for all individuals, eliminates contribution penalties for mid-year enrollees and allows consumers to convert existing health reimbursement arrangements and flexible spending arrangements into HSAs.

“If you want consumers to prepare for long term care, they need to develop a long-term strategy,” Ignagni says. “With higher contribution limits that are indexed to inflation, HSAs will offer new opportunities for consumers to plan for LTC expenses.”

Ignagni says AHIP “is also working very effectively with our members” on the rollout of the LTC Partnership program, a provision in deficit reduction law passed in February.

AHIP “will also be very active on the issue of cost containment and quality improvement, and we’re going to have some specific proposals along those lines in the first quarter of 2007,” Ignagni says.

In the disability area, “AHIP is working with the Social Security Administration to advance private/public partnerships to get people back to work.” AHIP is also working on so-called “Medigap” issues and “doing a great deal of research on Medigap and the important role it is playing for families.”