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 xenobun@aol.com.  Please email jtrout2792@aol.com supplying both your name and e-mail address if you wish to be removed from this list.

BUDGET BATTLE MOVES TO SENATE

By a 109-92 vote, the PA House passed a $27.3 billion budget (House Bill 1485) May 24 and sent it to the Senate.  Although the vote was along party lines with Republicans voting for (except for two Phila. Republicans), Senate passage may take more time as parties impacted by the Corbett Budget advocate their causes to Senators.  HB 1485 already softened the blow to education funding by taking a slice out of the Department of Public Welfare budget to restore some of the original Corbett cuts.  One variable that may factor into the Senate’s consideration is the higher than expected tax revenue which some legislators say should be tapped to make up for lost ground. April brought in $3.299 billion, $272.9 million more than expected.  Year to date revenues are $505 million more than anticipated.  Better than expected April revenues came from Corporate Net Income Tax (4.6% better), Sales & Use Tax (2.1% better), Personal Income Tax (2.5% better), and Inheritance Tax (3.0% better).  Real Estate Transfer Tax revenues however were 14.5% less than anticipated year to date based on the hesitant recovery in the housing market.  Text of HB 1485 is found at www.legis.state.pa.us and always make sure you reference the latest Printer’s Number (1880).

LOTS OF LEGISLATIVE NEWS…

• House Bill 1055 regulating Professional Employer Organizations (PEOs) sponsored by Rep. Mark Mustio (R-Allegheny) was approved by the House 198-0.
• Unemployment Compensation reform bill Senate Bill 1030 (Gordner-R-Columbia) was approved by the Senate 50-0.   Another more aggressive UC reform bill, HB 916 (Perry-R-York),  remains on the House calendar.
• Linda Kelly was approved 50-0 by the Senate as Attorney General.
• On May 24, the House Insurance Committee moved HB 424 (Godshall) which reforms the state’s Public Adjuster Law.
• The Senate voted 40-9 for SB 9 (Scarnati-R-Jefferson) to prevent illegals from obtaining state benefits.
• The House Aging and Older Adult Services Committee moved two bills.  First was House Resolution 106 (Causer-R-McKean) directing the Legislative Budget & Finance Committee to study the future viability of the Lottery as primary funder for older adult services.  Second was House Bill 511 (Hennessey-R-Chester) governing in-network community pharmacies and expressly prohibiting health insurance carriers from requiring use of mail order pharmacy programs.

INSURANCE DEPARTMENT OFFICIALS NAMED

Appointed by Insurance Commissioner Michael Consedine were: Yen Lucas who returns to the Department, now as Chief Counsel;  NEPA’s Matthew O’Donnell as Policy Director; and Kim Rankin who was formerly with Lancaster’s Educators Mutual as Director, Bureau of Company Licensing and Financial Analysis.  Rounding out the list is the promotion of Franca D’Agostino as Special Projects Director who will be working on various PPACA implementation issues and programs.  Unlike the others, D’Agostino comes from inside the Department, having recently been instrumental in setting up the PA risk pool program run by the Insurance Department.

FIRST EXCHANGE HEARING HELD

The House Insurance Committee heard testimony May 25 from NAIC Washington, DC staff on Patient Protection Affordable Care Act (PPACA) Exchanges. Among other things, states have optimum flexibility in establishing producer licensing requirements re marketing of Exchanges although PPACA puts an emphasis on web-based consumer direction.  States also have flexibility re credentialing of Navigators.  According to the NAIC presenter, insurance agents and brokers may also be Navigators as long as they do not receive income from insurance companies.  This hearing is the first of several. Others will examine the MA and UT models.  Several questions involved the tight deadline states are under (1/1/2013) in meeting the HHS deadline to establish Exchanges or lose state regulatory authority.

POLITICS, POLITICS…

A number of state legislators fared well in the 2011 Primary season.  If successful in November, they will vacate their seats in the General Assembly and special elections would presumably follow.

• Rep. Josh Shapiro (D-Montgomery) won the Democratic nomination for Montco Commissioner
• Rep. Doug Reichely (R-Lehigh) won the GOP nod for Judge of Court of Common Pleas
• Rep. Chelsea Wagner (D-Allegheny) is the Democratic nominee for Allegheny County Controller.
• Former House Speaker Dennis O’Brien (R-Phila.) is running for Philadelphia City Council.
• A Democratic nominee for Phila. City Council is Rep. Kenyatta Johnson.

REGULATORY UPDATE

• Effective January 1, 2012, Joint Underwriting Association (JUA) rates will decline by 3.3% unless the Department rules otherwise by July 1, 2011. JUA is the medical malpractice market of last resort.  This drop in premium may be a reflection of fewer medical malpractice lawsuits which dropped to 1,491 in 2010 from 2009’s 1,533.
• The Insurance Department published the Export List in the PA Bulletin (www.pabulletin.com Vol. 41, No. 19).  This is the list of coverages deemed unavailable in the standard market and so do not need the required three declinations before surplus lines licensees enter the Excess & Surplus Lines market.
• The Independent Regulatory Review Commission (IRRC) issued comments on proposed State Board of Pharmacy Regulation 16A-5423 which establishes the Cancer Drug Repository Program (Cancer Drug Bank). It allows for donated unused cancer drugs (for example by someone who died) to be used by financially needy patients.  Text of comments are available in May 21 PA Bulletin (www.pabulletin.com).  The agency must consider these comments when issuing the final regulation. The window for public comment closed April 11.
• Tobacco Use Prevention & Cessation Advisory Committee will hold a public meeting in Harrisburg June 8.  Details: Judy Ochs 717/783-6514

INDUSTRY NOTES

• Offering 12 insurance CE credits, the 10^th Annual Workers’ Compensation Conference sponsored by the Department of Labor & Industry will be held June 1-2, 2011 in Hershey.  Details: 888/455-7437
• According to State Farm, PA is ranked sixth in terms of dog bite claims for 2010 (155 claims at $3.9 million) per Insurance Journal.   State Farm had $90 million paid out in 2010 as the result of 3,500 claims nationwide.  Aggregate 2009 claims data for all companies was $412 million.
• The 2011 Long-Term Care Insurance Sourcebook has been published. Produced by the American Association for LTC Insurance (AALTCI), it is promoted by AALTCI as being “a compendium of new research…and latest and most relevant information regarding LTC planning and insurance products”.  This assertion could not be verified since AALTCI declined to share either text or a summary with Leg Reg Review.  Details: 818/597-3227
• Winning recognition by Travelers as one of 19 outstanding personal lines agents nationally is Devon, PA agent Michael Hoffman of the Trident Insurance Agency.