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State PPACA Reform News: Wash. State, Penn. Advance Reforms

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As the High Court peppers law professors with Constitutional queries concerning the healthcare reform law this week, the states march on with their progress, to some degree.

A health exchange enabling the law has just passed the Washington State legislature, with a partial veto of a requirement that certain provisions be self-sustaining, and a removal of restrictions on the authority of the Washington Health Benefit Exchange.   

The Engrossed Second Substitute House Bill 2319 passed the Legislature on March 3, and was signed by the governor March 23. The bill further defines the state-based health insurance exchange required by the federal government under the new health care law.

Washington Insurance Commissioner Mike Kreidler co-requested the bill with Democratic Governor Christine Gregoire. 

Gregoire vetoed  Sec. 26: “If at any time the exchange is no longer self-sustaining as defined by the operations of the exchange it shall be suspended.”

The Association of Washington Business (AWB) had formally requested section vetoes of the bill, specifically sections 6 and 7, alleging there would be more restrictive requirements than were necessary, including a section on market rules and finding fault with large group plans’ necessary conformance to actuarial tiers the federal law intended  for individual and small coverage. See : //  

With all the risk levelers inn place, the Exchange acts to protect against adverse selection, the group said.  The additional market rules in the legislation could easily result in “fewer choices and higher costs for consumers in the external market if some carriers choose to withdraw from Washington rather than being forced to participate in markets beyond their tolerance for risk,” the AWB had stated in a letter to Gov. Gregoire.

“Unfortunately, in our estimation, this measure falls woefully short of the positive attributes that could have been brought forward,” wrote AWB President Don Brunell in his letter to Gov. Gregoire. “Instead, it poses a significant threat to the viability of existing health plans and if left as is, will disrupt health coverage for thousands of people in our state,” he wrote.

The new law  establishes new market rules for plans sold inside and outside of the Exchange, creates a process for certifying qualified health plans authorized to offer coverage in the Exchange and establishes ratings  for qualified health plans, as summarized by is the bill, as passed by the state legislature: //

It also creates a process for identifying state-mandated benefits that would result in federally imposed costs to the state if enforced requires the Health Care Authority to report to the Legislature on the federal Basic Health Option and specifies operational parameters should the Legislature determine to proceed with the option. It establishes federal reinsurance and risk adjustment programs and allows the Washington State Health Insurance Pool (WSHIP) to administer the programs by contract. It requires the WSHIP to make findings regarding continued operation after January 1, 2014. 

In other state news, the law giving the Pennsylvania Insurance Department authority to review and disapprove rate increases in the small group health insurance market took effect on March 21. 

It expands the department’s ability to review proposed rate increases of 10% or more for small group health plans issued in Pennsylvania so that the U.S. Department of Health and Human Services (HHS) will have no longer have  a role in reviewing rates, as it did when it intervened last fall.

In November, the first health insurer identified by the HHS as charging too excessive a rate was Everence Insurance. HHS went after the Goshen, Indiana-based insurer, a ministry of Mennonite Church USA, for charging small businesses in Pennsylvania what HHS described as being “unreasonably high premium increases.”

Then, in January, health insurance rate hikes in five states were deemed “unreasonable” in an HHS finding, this time targeting Trustmark Life Insurance Co.’s premium increases.

HHS had alleged that Trustmark Life Insurance Company, a division of Trustmark Cos., in Lakeforest, Ill., has proposed “unreasonable” health insurance premium increases in Alabama, Arizona, Pennsylvania, Virginia, and Wyoming.  

Before the law went in to effect, the Pennsylvania Department was one of 10 states with limited rate review authority in the commercial small group market. Rate requests outside the department’s scope were defaulting to the federal government for review. The department maintains full authority to review rates for individual products.