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.

COMMISSIONER TESTIFIES ON LEAN FY 2012-13 BUDGET

Insurance Commissioner Mike Consedine testified before the Senate Appropriations Committee February 14 on the Administration’s Budget proposal for the fiscal year beginning in July. But the real focus of the hearing was on Highmark versus UPMC and on the Health Insurance Exchanges mandated by the Patient Protection Affordable Care Act (PPACA).  When Senator Robert Mensch (R-Montgomery) asked why we shouldn’t wait until after the courts have ruled on PPACA’s constitutionality, Consedine likened the situation to Hurricane Irene last year.  Even if Pennsylvania did not know the path of the storm, it still had to plan and prepare.  Likewise, (he said) Pennsylvania does not know if the January 1, 2013 mandate to the states to establish an Exchange or have it imposed by HHS will come to be but we have to prepare for it nonetheless.  Senator Larry Farnese (D-Phila.) took exception to comparing PPACA to an impending catastrophe.  The Commissioner also said that the Administration Exchange legislation would have a sunset if PPACA were invalidated and that planning is underway per the Department’s efforts to obtain a $30-plus million grant from HHS to develop the backroom systems necessary to operate Exchanges.

Another issue that received attention was a proposal (SB 1339) raised by Minority Appropriations Committee Chair Vincent Hughes (D-Phila.) to double auto limits.  Senator Hughes cited the higher cost of accidents and the human harm it causes versus the limits that were set by Act 6 in 1990.  The Commissioner said that the Department opposes changes in limits because they will ad to the cost of insurance that may be hard for some to bear in these economic times and that the result will be more uninsured motorists (and hence, more claims that have to be paid by carriers without hope of recouping their losses through premiums).

OCA HEARING

The House Insurance Committee February 15 hearing on House Bill 717 (Matzie-D-Beaver) establishing an Office of Consumer Advocate for Health Insurance (OCA) went beyond particulars of the specific legislation to center generally on how the Commonwealth can best help educate and advocate for health insurance consumers.  Most supporters and opponents agreed to the need to adequately support the Department’s efforts in Consumer Services where 15,000 complaints are dealt with yearly despite having a shrunken budget and staff.  The PA Health Law Project and others supporting OCA however felt that agency fragmentation between Insurance, DPW and Health leaves consumers confused.  OCA would give them one place to go to in order to advance their concerns, even to represent them before the Insurance Department itself.  Opponents such as the Insurance Federation of PA and Capital Blue Cross said that an OCA would hasten confusion and would run out of money quickly if assumptions of funding were based on PPACA.  The Pennsylvania Association of Health Underwriters (PAHU) stressed that the Insurance Department has been hit hard in successive Administrations and that general operating budget was cut from 23 million to 18 million in five years and that the job complement had drastically decreased with another 20 jobs lost for the new fiscal year.  In addition, there are no more regional Insurance Department offices and the Department does not even fund a switchboard or operator.  PAHU urged legislators to take money from the $43 million in fees revenue generated by the Department each year and dedicate some of it to fund the Department’s operations instead of establishing an OCA.

POLITICAL NOTES

• Rep. John Hornaman (D-Erie) has decided not to seek re-election.
• Despite reapportionment woes, the primary filings are in. If you want to see whose running, please use the link below.  Of particular interest is that licensed insurance producer and current House member Mark Mustio is seeking the southwest PA seat held by retiring John Pippy (R-Allegheny). Another item of interest is that Insurance Committee member Nick Kotik (D-Allegheny) is standing for re-election now that it appears that the 2001 district lines will be in effect this election year pending court action to the contrary.  With the new district lines, he would have been pitted against fellow Democrat Joe Preston and there was some question as to his decision. If you know of an agent running for the General Assembly, please contact xenobun@aol.com.

http://www.dos.state.pa.us/portal/server.pt/community/department_of_state/12405

INSURANCE COMMITTEE HEARS DENTAL MED MAL TESTIMONY

On February 9 the House Insurance Committee held a hearing on Senate Bill 388 (Vance-R-Cumberland) that would require dentists to carry medical malpractice insurance.  Although the PA Dental Association and others are in favor of the requirement, there was some concern raised about what levels of coverage should be mandated.

REGULATORY NOTES

• Pennsylvania updated its regulatory agenda, something that it is required to do periodically.  For the first time in years, the Insurance Department does not list any pending regulations.  Other agencies do:

-          Department of Aging is promulgating regulations by June 2012 regarding the long-Term Care Ombudsman in order to reach compliance with national standards.  (Bob McNamara 717/772-3688)

-          Labor & Industry has 14 proposed rules dealing with various labor standards issues but none with Workers’ Compensation.

• Maryland Insurance Administration (MIA) issued a caution to Maryland insurance producers to the effect that someone had a web site up that offered to help producers renew their licenses.  According to MIA, using the .exe file would cause computer damage.  The MIA web site is www.mdinsurance.state.md.us. Details: Vivian Laxton 410/468-2007
• In case you missed it, PA Bulletin Vol. 42, No. 2 ran a list of the Qualified Unlicensed Reinsurers. www.pabulletin.com .
• The Insurance Department is seeking comments from the industry as to what types of coverage should be put on the export list.  That list includes coverages where the Department has determined that a diligent search is NOT required and that the Surplus & Excess Lines market may be accessed without checking with standard carriers first.  Deadline for written comments is March 4. Details: Cressinda Bybee cbybee@pa.gov.
• The MCARE office in Rosemont is now closed.  Communications go to: MCARE Bureau of Claims Administration, 30 North Third St., 8^th floor, Harrisburg, PA 17101.  717/783-3770.
• BrickStreet Mutual Insurance Company filed an application to acquire control of PennCommonwealth Casualty Insurance Company, a stock casualty company based in PA.
• The Insurance Department’s bid to liquidate First Sealord Surety Insurance Co. was accepted by Commonwealth Court.  NOTE: Surety products are NOT covered by the PA Insurance Guaranty Association (PIGA).

FLOOD MARKET NOTE: National Flood Insurance Program (NFIP) still has two Webinars remaining for February.  They will be held Feb. 28 and 29, Basic Agent Parts I and II.

http://www.fema.gov/business/nfip/a_wshop.shtm

I- DATES:  March 22 Philly I Day; April 12 Reading I-Day; April 26 Pittsburgh I Day and May 2 Central PA I Day

Tags: 7th Issue February 20, GPAHU, LEG REG REVIEW 2012, Legislative Review, NAHU, PAHU, Phillips Associates, Vince Phillips

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.

PENNSYLVANIA BUDGET ISSUE

Governor Tom Corbett proposed “a budget grounded in difficult realities but framed in the optimism that we are solving our problems” on February 7.  In all, the Budget flat lines spending at $27.14 billion.  State workforce trimming continues with 647 employees lost, mostly due to attrition, compared to 1,500 last year.  Although the cuts were not as draconian as in the current fiscal year, most programs and departments were ‘trimmed’ with certain exceptions. Corrections Department for example was kept at $1.867 billion.  Education actually saw a modest $329 million increase to $9.923 billion despite some programs losing dollars (Libraries -5%; community colleges -3.8%).  Subsidies to Penn State, Pitt, and Temple took sizeable hits of 28.2%, 30% and 30% respectively.  Business received both ups and downs.  The phase-out of the Capital Stock & Franchise Tax continued but several key DCED programs lost ground as did Job Training Programs within the Department of Education.

The Rainy Day Fund is depleted with a balance of only $61,000.  The Corbett Budget does not anticipate any replenishment of the Fund for FY 2012-13.

Details on the Budget proposal may be obtained from http://www.portal.state.pa.us/portal/server.pt/community/current_and_proposed_commonwealth_budgets/4566 .  Of particular value is the Power Point on that page to walk one through the budget changes.

Following are areas of interest to the Insurance Community:

ATTORNEY GENERAL

-          Attorney General’s Office funding for General Government Operations decreased 5% to $1.865 million.  This funds the efforts of the AG to combat insurance fraud.

AGRICULTURE

-          Crop Insurance Premium Subsidy Program which had funding eliminated last year remains at zero dollars.  This also costs PA Federal matching dollars.

ENVIRONMENTAL PROTECTION

-          Mine Subsidence Insurance is funded by a special fund administered by the Department of Environmental Protection (DEP).  It receives premiums and pays claims.  Per 2002 legislation, it is marketed by insurance agents who do receive a first year commission.  For FY 2012-13, it anticipates $6.861 million in premiums and interest received and claims and administration costs at $5.622 million.

HEALTH

-          PA Health Care Cost Containment Council (PHC4) loses its independent status and is absorbed under the jurisdiction of the Department of Health

-          Patient Safety Trust Fund was established by MCARE’s Act 13 of 2002 for the purpose of independent review of medical facilities which will result in ensuring patient safety and reducing medical errors.  Administered by the Department of Health, it expects to see its balance increase in FY 2012-13 to $7.181 million, up from $5.121 million.

INSURANCE

-          Insurance Department takes a three-percent cut in General Government Operations at $17.947 million and loses 20 job slots.  This does not include MCARE which is funded by assessments from health care providers or CHIP which is a separate program administered by the Insurance Department.

-          CHIP program funding increases to $101.6 million but CHIP Administration is cut by $1.167 million.

-          The Medicare Availability & Reduction of Error (MCARE) Fund was established by Act 13 of 2002 and is administered by the Insurance Department as a middle tier of medical malpractice insurance funded by annual assessments to health care providers.  It expects to take in $205.7 million in receipts and spend $190.341 million in medical malpractice claims and administration.  NOTE: This picture may change should the state lose its appeal from a decision requiring repayment to MCARE of $801 million that was diverted to the General Fund under former Governor Rendell.

-          Underground Storage Tank Indemnification Fund (USTIF), an insurance program administered by the Insurance Department is expected to receive $63.9 million in receipts from gasoline taxes, tank capacity fees, and investments but is estimated to spend $80.5 million.

-           

LABOR & INDUSTRY/WORKERS’ COMPENSATION

-          L&I funding decreases by only 1.7% to $70.5 million but it will lose 31 positions.

-          State Workers’ Insurance Fund (SWIF) is not part of the General Fund.  As the WC insurer of last resort, it is expected to take in $ 325 million in premiums and interest but spend $ 328.3 million.

-          Workers’ Compensation Funds appear to be in decent fiscal condition. The WC Security Fund (payment of benefits to individuals who are insured by an insolvent carrier) is expected to have $625 million at the end of the 2012-13 FY, up from $614.364 million.  The WC Supersedeas Fund (reimburses insurers for payments made by them to WC claimants who are later determined to be ineligible) expects to have $1.845 million at the end of the 2012-13 FY, up from $1.090 million.  The third WC Fund, the WC Administration Fund which finances L&I’s administration of the Workers’ Compensation Act is expected to decrease slightly with $87.851 million at the end of 2012-13 versus the $90.9 million for FY 2011-12.

PUBLIC WELFARE

Medicaid spending or “the insurance entitlement program” provides benefits to 12% of PA’s population and is a major part of the Department of Public Welfare budget which in turn comprises 38.8% of the total state budget of $27.14 billion.  Long-term care is a huge part of the DPW budget.

-          DPW State-funded share of LTC under Medicaid is $741.484 million.  It compares with an additional $2.034 billion coming from the Federal Government for this purpose.

-          Tobacco Settlement supplies $161.765 million towards Medicaid LTC.

-          $88 million comes from DPW’s line item for long-term care managed care.

-          Medicaid transportation is funded at $74.8 million state and $71.926 million Federal, some of which may fund those receiving long-term care services under Medicaid.

OTHER BUDGET ITEMS TO NOTE…Insurance Liquidation Fund invests assets of insolvent carriers so as to pay claims and is expected to have a balance of $66.784 million at the end of FY 2012-13, up from $68.349 million…The independent Insurance Fraud Prevention Authority (IFPA) is funded by the insurance companies at $12 million…The Tobacco Settlement Fund (also called Master Agreement) would redirect monies spent on health research to help fund the state’s share of Medicaid spending for long-term care…Cooperative Extension and Penn State’s Agricultural Research $47 million programs would, under Corbett’s proposal, be funded by the gambling-generated Horse Race Development Fund.  For some reason, some of the equine interests are unhappy about this idea.

NON-BUDGET ITEM…Yes, there is other news.  The U.S. House voted 267-159 to repeal the CLASS Act, part of President Obama’s Patient Protection Affordable Care Act.  PA Republicans voted for repeal while Democratic Representatives voted against.  Details: www.thomas.gov  Look up HR1173.

Tags: 6th Issue February 13, GPAHU, LEG REG REVIEW 2012, Legislative Review, NAHU, PAHU, Phillips Associates, Vince Phillips