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Health Insurers See Limited Legislative Initiatives Next Year

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The health insurance industry is limiting its legislative objectives for 2008 and anticipating a lengthy campaign season as it looks forward to a new president in 2009.

In general, surveys indicate that the cost of health care will decline for the 5th straight year, with prescription drug costs continuing to decline “dramatically,” while Standard & Poor’s outlook for the U.S. managed care industry foresees slower growth, eroding margins, “politics and yet more politics.”

At the same time, while S&P believes that a new president in 2009 will make an effort to create a public/private partnership aimed at developing universal health care, its analysts warn that the U.S. government has shown itself to be a fickle partner.

“No one knows what, or even if, universal coverage will happen under the next president, but the industry seems prepared to support some form of long-term partnership with the government despite the inherent pricing and regulatory risks,” S&P said in its outlook for 2008.

The 2008 Segal health plan cost trend survey forecasts continued declines in trends next year, marking the 5th consecutive year of declining medical trends. And, although a growing number of health plans project single-digit trends for 2008, health plan costs trends are still significantly above general inflation, the survey says.

In terms of legislation, the National Association of Health Underwriters says it is limiting its legislative objectives for 2008 because of the anticipated short legislative calendar.

At the same time, officials of America’s Health Insurance Plans say they will continue their focus on bills relating to improving access to coverage, like the State Children’s Health Insurance Plan and other Medicare issues that may arise.

It also cited its new initiative for “sweeping reforms in the individual market,” including its decision to work closely with states on an external review of rescissions, which involve refusal of coverage based on misstatements in applications.

Mohit Ghose, an AHIP spokesman, said the trade group will also “continue to take its positive message on Medicare Advantage to Capitol Hill,” citing the fact the program now has 9 million beneficiaries “who have better benefits and lower out-of-pocket costs” through the program.

Given the very small window, as stated by John Greene, NAHU’s vice president for congressional affairs, NAHU sees an opportunity to enact legislation allowing long-term-care products to be sold through cafeteria plans.

Greene also sees bipartisan support developing for S. 1753, wellness legislation introduced in the Senate by Sen. Tom Harkin, D-Iowa.

He noted that a strong effort was made to pass legislation dealing with genetic discrimination this year, but the effort failed, and the bill “needs further work.”

AHIP’s Ghose said the trade group will continue to lobby strongly for that legislation. “We continue to believe that people should rest assured that they will not be discriminated against on the basis of their genetic information.”

At the same time, “the healthcare industry must be ensured that the developing medical science and the appropriate uses of genetic information to improve the quality of care are not hampered,” he said.

Greene said legislation providing parity for mental health needs “is in a very delicate state,” with negotiators “close to an agreement,” which could occur in January.

Ghose said there is broad agreement on the mental health parity bill in the Senate, and the Senate bill is supported by a broad coalition of advocacy groups, employers, physicians and health plans.

In Greene’s view, legislation providing guidance on use of genetic information is “less farther along and is therefore unlikely to be accomplished next year.”

Regarding LTC, Greene says bills supporting sale of LTC products through cafeteria plans has bipartisan support in both the House and Senate, and has been projected as having a relatively small cost. The cost, he said, “is sufficiently small enough in a pay-go environment to find money in the federal government budget to offset it.”

Harkin’s wellness bill provides a tax credit to employers who provide wellness programs to their employees. “What the business community likes about this bill is that they find wellness programs work, and they get at the roots of the cost-drivers to health care,” Greene said. “If you get at the cost-drivers, then you can expand access to health care, because if insurance doesn’t cost as much, then access isn’t as great an issue.”

He said the cost of the legislation has not been determined by the Congressional Budget Office as yet, but Harkin expects to have a projected cost by the end of the year.

The Segal survey shows strong support from employers for wellness programs.

Edward Kaplan, Segal’s national health practice leader, said that the “most successful plan sponsors are examining detailed claims data to determine what diseases, conditions, facilities and treatments are driving cost increases.”

Then, Kaplan said, “they are using integrated data mining to develop targeted intervention strategies to identify gaps in needed treatment for participants, poor quality health care delivery to participants and ways they can improve the health and health care consumption of their participants and reduce health trends to manageable levels.”

Greene expects the State Children’s Health Insurance Plan to get the same level of funding as it currently has through the end of the Bush administration. But, he said, both Democrats and Republicans “have a motivation to expand the program, and it will be an issue for the next president.”

He said the industry “will play defense on Medicare Advantage, noting that Congress this year is only expected to fund the current level of payments for physicians for six months, and that Congress must address Medicare next year because the program trustees’ report has said for two consecutive years that the program has financial problems.

The Democrats already have some ideas, and doctors will seek a permanent solution to their money problems, Greene said.

“The question is how far do Democrats try to go?” Greene said “They can’t overreach too far, because the calendar is too short and they still need Republican support.”

He said that if they want to make changes, “these changes will have to be narrow.” Democrats could demand further cuts in Medicare Advantage programs, he said, “but these are unlikely to get very far because they need Republican support.”


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