3-Sided Battle Over SCHIP Looming

One of the first orders of business Congress faces as it returns Sept. 4 will be reconciling two vastly different versions of legislation extending the State Children’s Health Insurance Program as well as actions affecting the Medicare Advantage program.

America’s Health Insurance Plans, which represents the health insurance industry, projects that the House bill would cut the Medicare Advantage program by $157 billion over 10 years.

In television advertisements running in key markets starting last week, AHIP President and CEO Karen Ignagni said, “History has shown that cuts to this Medicare program have a direct impact on seniors’ health security.”

The ads say that 10 years ago, Congress reduced Medicare + Choice (now Medicare Advantage) funding by $22.5 billion over 5 years which resulted in over 1.5 million seniors losing their Medicare health plan.

The ad also says that the much larger cuts contained in the House bill could push approximately 3 million seniors out of Medicare Advantage and that millions more could face higher out-of-pocket costs and lose important health care benefits.

John Greene, vice president of congressional affairs for the National Association of Health Underwriters, said NAHU is “disappointed” that the House bill includes provisions that would limit the ability of seniors to access Medicare Advantage plans and may hinder the services of licensed professional health insurance producers.

“Medicare Advantage may not be the right choice for every senior, but there are many Medicare beneficiaries who are very happily insured under these plans,” he said.

“NAHU also is underscoring the critical role that licensed, professional insurance producers play in helping to make health care happen for millions of Medicare beneficiaries each day,” Greene added.

The House bill also imposes added oversight on health insurer marketing of MA plans, as well as enrollment limits on health insurers who don’t attain savings goals as well as new reporting requirements.

The House bill, H.R. 3162, the Children’s Health and Medicare Protection Act, also includes a provision that would provide funding for a new health care effectiveness research agency.

Michael Kerley, senior vice president, federal government relations for the National Association of Insurance and Financial Advisers, whose Association for Health Insurance Advisors division represents health insurance agents, said that due to this provision, “NAIFA is watching the House SCHIP bill “warily,” partly because of the “fee” connected to it.

He said he believes the provision would impose a $2 per head “fee” or tax on each person currently covered by health insurance after the first 3 years, when the Medicare Trust Fund will absorb the entire cost.

The “fee” will go into a trust fund that will pay for research on the most effective treatments under the Medicare program. The “fee” will be paid by health insurers or employers if the employer’s plan is self insured. “This is a good program, but we are very wary of the ‘fee.’ It’s not in the Senate bill, so we hope it will be dropped in conference,” he said.

The Senate bill is S. 1224, the Children’s Health Insurance Program Reauthorization Act of 2007.

Reconciling differing House and Senate versions of the legislation will be made more difficult because the program expires Sept. 30 and there have been no negotiations over the month-long summer break designed to bridge the vast gap between the two bills.

Adding to the cauldron are two other pieces of news that have occurred since the House and Senate acted on their bills as July turned into August.

First, was the disclosure last week by the U.S. Census Bureau showing the number of Americans without insurance coverage grew in 2006. (See top story on page 7.)

According to the Census Bureau report, the percentage of uninsured Americans rose from 15.3% in 2005 to 15.8% in 2006, equating to an increase in actual uninsureds from 44.8 million to 47 million.

Senate Finance Committee Chairman Max Baucus, D-Mont., reacted to the new report by saying that the report “underscores the need for Congress to come back and act quickly to pass a robust renewal of SCHIP.”