LEG REG REVIEW is a periodic newsletter produced by PHILLIPS ASSOCIATES, a professional lobbying and consultant firm located near the State Capitol. It contains news on the legislative and regulatory scene in Pennsylvania that may be of interest to the Insurance and Business Communities. It is a free member benefit for those who are members of the Pennsylvania Association of Health Underwriters (PAHU) or Manufacturers Association of South Central PA (MASCPA). Subscription information may be obtained by contacting PHILLIPS ASSOCIATES at 717/728-1217 FAX 717/728-1164 or e-mail to email@example.com. Please email firstname.lastname@example.org supplying both your name and e-mail address if you wish to be removed from this list.
PRESIDENT ATTEMPTS TO REGAIN HEALTH CARE MOMENTUM
Now that President Obama has attempted to reverse the slide in momentum behind his health reform ideas via his September 9 speech to Congress, the legislative branch is poised to take up consideration of the House Tri-Committee bill HR 3200, the Committee on Health Education Labor & Pension Committee (HELP bill) and the Senate Finance Committee. Reaction was immediate with supporters and opponents lining up for what will be a fierce debate in Congress this fall. A Sept. 12 e-mail from BarackObama.com boasts that 450,000 separate emails were sent to Congress in the 48 hours following the President’s address. In Pennsylvania, the Pennsylvania Association of Health Underwriters (PAHU) issued a statement to newspapers in PA which said in part,
The President’s oratory can not hide the fact that he wants this Nation to go down a path where the Federal Government replaces the private sector health insurance system over time. His assertion that the public option is only a dose of competition to private insurers is misleading. He says that the government will not force you into the public plan but he chose his words carefully. It won’t force you but when the government sets the rules that are preferential to the public option and makes the government plan cheaper, there is no real competition. There is only a slippery slope toward a government – run health plan that will explode in cost and result in increased taxes and/or premiums for both businesses and consumers that will make our present health insurance premiums look like a summer picnic. His plan for health care is social engineering plain and simple.
PENNSYLVANIA BUDGET NEWS
When leaders of three of the four PA legislative caucuses lined up on 9/11 to support a draft Budget for the Commonwealth, hope built that an end to the impasse was in sight. Now, prospects are cloudy given Governor Rendell’s threat to veto the bill because he says that the funding stream is inadequate. The consensus proposal would delay phasing out of the Capital Stock & Franchise Tax and increase cigarette taxes. It would not increase the Personal Income Tax, tax natural gas extraction (Marcellus deposit), or eliminate exemptions from the state sales tax…all things the Governor had advocated. Of interest to the insurance industry is the news that Governor Rendell’s proposed two-percent assessment on Managed Care Organizations (goal = $400 million) is not in the agreed-to Budget, at least not at this point. By the time you read this, a fluid situation may have begun to gel but at least for right now, an agreement is still much further along than it was a week ago.
U.S. HOUSE PASSES SURPLUS LINES REFORM
The U.S. House of Representatives passed HR 2571, the Non-admitted and Reinsurance Reform Act of 2009, to bring about changes in the way the Excess & Surplus Lines market is regulated across state lines. It does not supplant state regulation but to clarify ground rules. For example, a surplus lines case may cross state lines for a larger corporation. Question is which state’s system of collecting the surplus lines premium tax governs the transaction. (HR 2571 says the insured’s home state.) Similar legislation has passed the House twice before. PA Rep. Paul Kanjorski is one of the bill’s 22 sponsors. Of note is that Pennsylvania’s own surplus line reform, SB 493 (Stack-D-Phila.) is poised to pass the state Senate after having passed the Senate Banking & Insurance Committee while HB 1415 (Boyle-D-Montgomery/Phila.) has already passed the House.
SUMMARY OF FEDERAL HEALTH LEGISLATION
Following is a cursory summary with the appropriate disclaimer that it is impossible to encapsulate 1,100 page bills in this way. For more comparisons, please go to www.pahu.org or www.kff.org . The three bills are the House Tri-Committee bill (HR 3200), the Senate Health Education Labor & Pensions Committee (HELP), and the Senate Finance Committee. The library of Congress www.thomas.gov is also a primary resource.
What all three have in common:
- Prohibit medical underwriting
- No pre-existing conditions
- Creation of some sort of Health Insurance Exchanges (HELP calls it a Gateway)
- Federal setting of benefits for health insurance plans
- No lifetime limits on benefits
- Tax credits (versions differ)
- Mandate for Individuals to have insurance (penalties differ)
- Expansion of Medicaid eligibility
- Efforts to eliminate health disparities for certain ethnic populations
- Medicare prescriptions negotiated (HR 3200); mandated Rx discounting (Finance)
Things in HR 3200 or HELP not necessarily found in Senate Finance Committee
- Public option
- Elimination of over the counter remedies for H S A eligible list (HR 3200 only)
- Employers pay 72.5% (HR 3200) or 60% (HELP) of total premium
- Dependent age to 26 (PA already has it at age 30)
- Establish a long-term care insurance program (CLASS) which, although not mandatory, requires the employee to opt-out of a payroll tax
- Employer mandate
- Medical loss ratio (HR 3200 says that HHS will decide; HELP says it must be disclosed)
Things in the Senate Finance Committee BILL not found in HR 3200 or HELP
- Health care choice compacts (purchase of small group across state lines)
- Employers not explicitly required to offer health insurance although pay or play still applies
- Health Care Cooperatives with federal loans to help start-up (or planning grants) and Co-ops would have to meet state solvency requirements (HR 3200 has some Co-Op planning grants)
- State requirement to have premium assistance program as alternative to Medicaid similar to PA’s HIPP
- Increase in Medicare payments to health providers
- Increase in H S A withdrawal for non-eligible expenses increased from 10% to 20%; make definition of H S A, FSA, HRA qualified medical expenses consistent with itemized deduction except for OTC with prescription
- 35% excise tax on insurers and administrators for ‘high-end’ plans for premiums above $8,000 individuals and $21,000 for family
- State risk pool funding increased
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