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Alarmed at soaring premiums and profits in the health insurance industry, the Obama administration demanded on Thursday that insurers justify proposed rate increases of more than 10 percent, starting in September.

Kathleen Sebelius, the secretary of health and human services, issued a final rule establishing procedures for federal and state insurance experts to scrutinize premiums. Insurers, she said, will have to justify rate increases in an environment in which they are doing well financially, with profits exceeding the expectations of many Wall Street analysts.

“Health insurance companies have recently reported some of their highest profits in years and are holding record reserves,” Ms. Sebelius said. “Insurers are seeing lower medical costs as people put off care and treatment in a recovering economy, but many insurance companies continue to raise their rates. Often, these increases come without any explanation or justification.”

Federal health officials proposed the 10 percent threshold in December. The insurance industry criticized it as an arbitrary test that could brand a majority of rate increases as presumptively unreasonable. But the administration rejected the criticism and insisted on the 10 percent standard in the final rule, issued Thursday.

Starting in September 2012, the federal government will set a separate threshold for each state, reflecting trends in insurance and health care costs.

In some states like New Hampshire, groups of more than 20 workers have experienced premium increases of around 20 percent this year, while smaller groups have seen increases of 40 percent or more. At the same time, insurance agents say, coverage is shrinking as deductibles have increased and insurers limit the choice of hospitals.

To ensure that “consumers get value for their dollars,” the new health care law required annual reviews of “unreasonable increases in premiums.”

Under the new rule, federal and state officials will review rates in the individual and small-group insurance markets. In effect, the administration said, large employers can take care of themselves, as they are more sophisticated purchasers and have more leverage in negotiating with insurers.

Federal officials acknowledged that they did not have the authority to block rates that were found to be unjustified. But they said many states had such authority, and the federal government is providing $250 million to states to strengthen their capacity. A small number of states, opposed to the federal health care law, have turned down the money.

The new rule says a rate increase is unreasonable if it is excessive, unjustified or “unfairly discriminatory.” An increase is deemed excessive if it is “unreasonably high in relation to the benefits provided.”

Consumer advocates generally welcomed the rule. “The days of insurance companies running roughshod over consumers and jacking up rates whenever they want are over,” said Ethan S. Rome, executive director of Health Care for America Now, a coalition that includes labor unions and civil rights groups.

Insurers said the rule did nothing to address the underlying costs of health care, which they described as the main factor driving up premiums.

“If we believe health care costs are crushing the economy, we ought to have a debate about how to bring costs under control,” said Karen M. Ignagni, president of America’s Health Insurance Plans, a trade group. “Focusing on premiums diverts attention from that debate.”

In many cases, Ms. Ignagni said, rate increases of more than 10 percent may be justified by rising health costs and the tendency of younger, healthier people to drop coverage, forcing up costs for other policyholders.

States will have the primary responsibility for reviewing rate increases. “But if a state does not have the authority or the resources to conduct a review, our department will step in,” said Ms. Sebelius, a former state insurance commissioner in Kansas.

Under the rule, as part of an effective rate review program, states must have “a mechanism for receiving public comments” on proposed rate increases.

Elizabeth P. Sammis, the acting insurance commissioner in Maryland, said this would be a big change. In many cases, she said, consumers learn of premium increases when they receive notices in the mail, and then they call the commissioner’s office to ask, “Why are rates going up?”
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Source: The New York Times

State Rep. Steve Gottwalt, a three-term Republican with 10 years’ experience in the health-care industry, is no fan of last year’s health-care law — or its requirement that states set up insurance exchanges.

But as chairman of the Health and Human Services Reform Committee, he decided he needed to weigh in. Unfortunately, from his standpoint, all the choices are bad.

He is not alone. Although health-care reform may have cost the Democrats control of the House in the midterm elections last year, it is the Republicans in statehouses around the country who are feeling the heat in 2011, and insurance exchanges are at the heart of the controversy. The health-care act — written, voted and signed by Democrats with no Republican help — is the law, and it is up to state legislatures across the country to implement it. And the split between traditional Republicans and the more conservative tea party movement is making the issue even more heated in places like Minnesota.

Insurance exchanges, enabling individuals and small businesses to shop for medical coverage in much the same way that travelers troll the Web looking for bargain airfares, are a cornerstone of last year’s federal health-care law.

Republicans, however, regard it as a likely first step down the road to a government-controlled insurance system.

The law describes in some detail how the exchanges are to be set up, but leaves states considerable leeway in how to structure them. States must have their plans ready by 2013 so the exchanges can begin operation on Jan. 1, 2014. If states do not have their own plans, the federal government will set one up for them.

Gottwalt, who used to negotiate health coverage contracts for provider networks, felt responsible to deal with exchanges. He could have taken the approach recommended by tea party conservatives: repudiate the law, refuse to implement an insurance exchange, hope the Supreme Court rules it unconstitutional or that the Democrats lose the White House and the Senate next year so the Republicans can repeal the law. This strategy is relatively easy to promote in states where legislatures and statehouses are both in Republican hands.

But Minnesota is a divided state. Conservatives played a prominent role in toppling the Democrats’ majority in the legislature last year, but Democrat Mark Dayton, who supports President Obama, won the governorship, succeeding term-limited Gov. Tim Pawlenty, now a Republican presidential candidate. Pawlenty opposed the health-care law. Dayton has embraced it.

If the Supreme Court leaves the health law in place, Dayton might offer his own insurance exchange proposal, or, failing that, Minnesota would get the one-size-fits-all federal template.

Gottwalt finds this last possibility particularly abhorrent, so he chose a third option. He wrote a Republican exchange bill that tries to temper the government’s role. He said he hoped the bill would be taken seriously by Dayton and not used as “the beginning of Obamacare.” Minnesota “should implement an exchange and define it for ourselves,” he said. “I could not absolve myself if I did nothing.”

He filed the bill in mid-February. And it has sat in limbo ever since. The bill has few co-sponsors, and some of those who signed on at the beginning have abandoned it.

“We would just be setting them [the Obama administration] up with the vehicle that will put Obamacare in place in 2014,” first-term Republican Kathy Lohmer said of Gottwalt’s bill. “A significant number of Republicans will not support it.”

With the current legislative session scheduled to end May 23, the legislature’s Republican leadership is beset from all sides. Commerce Commissioner Michael J. Rothman, the lead negotiator for Dayton, said a health insurance exchange is “a top priority” of the administration, which is trying to determine whether lawmakers have “the political will” to produce a bill. So far they do not.

Business groups want an exchange to avoid the federally imposed plan. The legislative leadership is sympathetic to this view, but worries that conservatives will gin up so much grass-roots opposition that the GOP will lose its majorities next year.

“The showdown is that Republican opponents of the law can only block [the exchange], which is their second-least-favorite outcome,” said Yale political scientist Jacob Hacker, a health-care expert who supports changes to the health-care system. “But in doing so, they risk government intervention, which is their least favorite.”

Although Dayton has not proposed his own Minnesota plan, Rep. Erin Murphy, of the Democratic-Farmer-Labor Party, as the Democrats here are known, has filed what she calls a “robust” exchange bill. It sets up a state agency to administer the exchange with a governor-appointed board of directors. In addition to private insurers, the exchange “shall offer at least one public plan” sponsored by the state, the bill says. Republicans loathe this “public option.” The bill has had no hearing.

Gottwalt’s plan, with input from the health insurance industry, private business and some conservative stakeholders, envisions a nonprofit, government-affiliated “corporation” within the framework of the health-care law. The board of directors would elect its own members and would operate independently, although the state commerce commissioner would regulate the exchange. The plan makes no mention of a public option.

It is unclear how the rejectionist strategy will play among voters, but pressure is mounting to do something because both parties regard Minnesota as a leader in health-care innovation.

Only six states have enacted health insurance exchanges, and two of these (Massachusetts and Utah) predated passage of the health-care law.

“We have been able to support creative health-care ideas over the years, and we should design a health-care exchange that best fits Minnesota’s needs,” noted Tom Hesse, chief lobbyist for the Minnesota Chamber of Commerce. “If we don’t design an exchange in Minnesota, we will get what Minnesota really doesn’t need — a federally imposed plan.”
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Source: The Washington Post

In a new effort to increase access to health care for poor people, the Obama administration is proposing a rule that would make it much more difficult for states to cut Medicaid payments to doctors and hospitals.

The rule could also put pressure on some states to increase Medicaid payment rates, which are typically lower than what Medicare and commercial insurance pay.

Federal officials said Monday that the rule was needed to fulfill the promise of federal law, which says Medicaid recipients should have access to health care at least to the same extent as the general population.

“We have a responsibility to ensure sufficient beneficiary access to covered services,” the administration said in issuing the proposal, to be published Friday in the Federal Register.

In many parts of the country, Medicaid recipients have difficulty finding doctors who will take them because Medicaid payment rates are so low.

Faced with huge financial problems, many states have frozen or reduced Medicaid payments to health care providers, and governors of both parties have proposed additional cuts this year. Medicaid recipients and health care providers have sued state officials to block such cuts, and one case, from California, is pending in the United States Supreme Court.

“Tight state budgets, coupled with increased demand for services during the recession, have led many states to propose reductions in Medicaid provider payments, without clear federal guidance on how to assure access,” said Cindy Mann, the federal official in charge of Medicaid.

The new rule provides that guidance, but several state officials expressed concerns.

Dennis G. Smith, secretary of the Wisconsin Department of Health Services, described the proposal as “a federal power grab.”

“The administration talks about flexibility and working with states, but continues to take actions such as this that are contrary to the partnership,” Mr. Smith said. “Putting states in jeopardy, by inventing a new meaning for a longstanding statutory provision, is another example of how distant and disconnected the administration is from what is happening across the country.”

Medicaid is financed jointly by the federal government and the states. Even before the recent recession, it was one of the fastest-growing items in most state budgets.

Douglas Porter, the Medicaid director in Washington State, said: “The intent of the proposed regulation is reasonable. But the administration has gone overboard, creating a system of access review that is far too complex, elaborate and burdensome.”

Bruce D. Greenstein, secretary of the Louisiana Department of Health and Hospitals, said: “The proposal leaves too much discretion with the federal government. It does not clearly enunciate the criteria to be used in measuring access to care.”

The new initiative comes as federal and state officials prepare for a huge expansion of Medicaid eligibility, scheduled to occur in 2014 under the new health care law.

About half of the 34 million uninsured people who are expected to gain coverage under the law will get it through Medicaid.

The proposed rule generally prevents states from cutting Medicaid payments to providers unless they can show that Medicaid recipients will have “sufficient access” to care after the cuts.

Regardless of whether they want to cut payment rates, states must continually monitor Medicaid recipients’ access to care and develop plans to fix any problems they discover, the rule says.

Under the rule, states must measure and document access to “each covered benefit” at least once every five years. Data from such reviews could provide doctors, hospitals and nursing homes with powerful new tools to lobby for higher reimbursement.

States set Medicaid payment rates within broad federal guidelines. Federal law has long said that states must “enlist enough providers” to make sure Medicaid recipients have access to care equivalent to that of other people in the area.

Under presidents of both parties, federal officials have often disregarded this requirement, approving cuts in Medicaid payment rates that discouraged doctors from accepting Medicaid patients.

In an effort to rein in costs, states have increasingly turned to health maintenance organizations and other types of managed care. The new rule does not apply to managed care. But the Obama administration said it was “considering future proposals” to guarantee access to care for Medicaid recipients in such private health plans.

Under the proposal being issued this week, “beneficiary access must be considered in setting and adjusting” Medicaid payments to doctors, dentists, psychologists, hospitals, clinics, pharmacies, nursing homes and suppliers of medical equipment.

States must consult Medicaid recipients because, the rule says, their experience is “the most important indicator of whether access is sufficient.” Federal officials suggested that states survey Medicaid recipients to see how much difficulty they had in scheduling doctor’s appointments.

In addition, the rule says, states should compare Medicaid payment rates with the amounts paid by Medicare or commercial insurers, with providers’ costs or with their customary charges. Another important factor, it said, is the number and percentage of doctors who accept new Medicaid patients.
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Source: The New York Times

House Republicans say their budget proposal would make Medicare work just like the health insurance that covers federal employees, including members of Congress. But a close examination shows the two plans are very different, and the differences help explain why the Republican plan has set off a political uproar.

Under the federal employees’ health plan, which covers eight million people, the government pays a fixed share of premiums. So the federal contribution generally keeps pace with rising premiums, which in turn reflect rising health costs.

No such guarantee exists under the Republicans’ plan to transform Medicare, approved by the House on April 15 as part of a budget blueprint to cut federal spending and deficits.

Medicare and the budget will be high on the agenda when Congress reconvenes Monday after a two-week recess in which Republicans were barraged with complaints from constituents alarmed about the possible erosion of Medicare benefits.

Under the House Republican proposal, starting in 2022 new Medicare beneficiaries would receive coverage through private insurance plans, and Medicare would subsidize the cost.

The federal payment for a typical 65-year-old would be set at $8,000 a year in 2022, about the same as what Medicare is expected to spend under current law.

In later years, the federal payment would be increased to reflect the age of a beneficiary and general inflation, measured by the Consumer Price Index. But health costs and insurance premiums have, for years, been rising faster than consumer prices in general.

So, the Congressional Budget Office says, under the Republican plan, Medicare would pay a shrinking share of beneficiaries’ total health costs, and seniors would pay a growing share. For a typical 65-year-old, that share would be 68 percent in 2030, more than twice what it would be under current law, the budget office said.

Today, Medicare is an open-ended entitlement. It does not have a fixed budget, though Congress has defined the benefits and prescribed payment rates for doctors and hospitals.

House Republicans have repeatedly likened their proposal to the Federal Employees Health Benefits Program, in which most lawmakers are enrolled.

“We want to prevent Medicare from going bankrupt,” said Representative Paul D. Ryan of Wisconsin, chairman of the House Budget Committee and the lead advocate for the budget proposal. “We want a system that’s sustainable. We want a system that’s solvent and that people can rely upon: guaranteed coverage options just like we have in Congress. That’s what we are proposing.”

Beginning in 2022, Mr. Ryan said, “new Medicare beneficiaries would be enrolled in the same kind of health care program that members of Congress enjoy.”

Under their proposal, House Republicans say, Medicare would subsidize private health plans offered to beneficiaries, just as the federal government helps pay premiums for private health plans offered to its employees.

But Representative Chris Van Hollen of Maryland, the senior Democrat on the House Budget Committee, said the similarities ended there.

“We keep hearing that Republicans are offering seniors exactly what members of Congress get,” Mr. Van Hollen said. “It simply is not true.”

Under the federal employee program, the government’s share of premiums is set at 72 percent of the average premium for all plans, but it cannot exceed 75 percent of the premium for any particular plan.

The health care handbook for federal employees explains, “This formula is known as the ‘fair share’ formula because it will maintain a consistent level of government contributions, as a percentage of total program costs, regardless of which health plan enrollees elect.”

In practice, the government pays three-fourths of the premium for relatively inexpensive health plans and about two-thirds of the premium for those that cost more than the average.

The maximum annual government contribution this year is $10,503 for family coverage.

An example shows how the formula works. For family coverage under the most popular plan — the standard option offered by Blue Cross and Blue Shield — the total annual premium is $15,682 this year. The government pays $10,503 (67 percent) and the federal worker pays the rest, $5,179.

For family coverage under the cheaper Blue Cross basic option, the total premium is $12,744; the government pays $9,558 (75 percent) and the employee pays $3,186.

Even so, Conor Sweeney, a spokesman for Mr. Ryan, insisted that the comparison to the federal employees’ plan was valid. “The model, the structure, the approach is inarguably similar: the government pays a share of the individual’s premiums” in both the employee program and the House Republicans’ Medicare proposal.

If Democrats showed any interest in this approach, lawmakers could still negotiate the amount of the federal payment to private health plans, and how to adjust it from year to year, Mr. Sweeney said. Earlier versions of Mr. Ryan’s Medicare proposal, he added, would have allowed the federal contribution to grow at a somewhat higher rate than assumed in the House budget blueprint.
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Source: The New York Times

William Brunner says Health Alliance has paid about $375,000 for a liver transplant he received in 2008 and related medical costs since then.

“That health insurance has been fantastic,” said Brunner, 60, a Springfield resident who retired nine years ago as a painter for the Illinois Department of Corrections.

He is concerned, however, that he will lose access to the generous, comprehensive health plan — and he is not alone.

Thousands of state employees, retirees and their dependents in central Illinois have been angered and worried by the prospect of losing Health Alliance HMO coverage and having to join other plans that could require them to pay more to keep their doctors or force them to get new ones.

“This has just kind of put me in shock,” Brunner said. “I really would like to stay with Springfield Clinic.”

The worries voiced by Brunner and others may be premature, according to an analyst from a bipartisan legislative oversight group.

But for almost 115,000 downstate residents, the uncertainty began this month when state officials awarded HMO contracts — potentially lasting 10 years — to Chicago-based Blue Cross and Blue Shield of Illinois.

In doing so, the state dropped HMOs offered by Humana and Health Alliance, effective July 1.

Health Alliance and Humana have protested the contract awards and asked to be included among the health-plan options for state workers. Matt Brown, a chief procurement officer for the state, is expected to rule on the protests in the next few weeks, but the controversy could delay the scheduled May 1-May 30 open-enrollment period for state workers.

Savings disputed

Urbana-based Health Alliance covers 99,000 downstate residents through the state contract, including 28,000 in the Springfield area, 1,900 in the Peoria area and 3,400 in Macomb.

Health Alliance, which many state workers and retirees use to obtain care from Springfield Clinic doctors, has covered state employees for more than 30 years, and Health Alliance withstood a threatened cancellation of its state contract in 2004.

Humana covers 15,600 people, primarily in the Bloomington, Peoria and Rockford areas.

Through online petitions, emails and phone calls, thousands of people have contacted the offices of lawmakers such as state Reps. Raymond Poe, R-Springfield, and Rich Brauer, R-Petersburg, as part of an effort to get Gov. Pat Quinn to reconsider the changes in health-plan options.

“I don’t want to lose the coverage I have,” Brunner said.

Margy Robb, a Springfield resident and state employee, said she doubts the state’s contention that the new contracts would save $102 million in fiscal 2012 and more than $1 billion over the next 10 years.

“What a ripoff,” said Robb, 57. “I don’t want to go someplace else. Springfield Clinic has great doctors.”

Health Alliance officials call the projected savings “smoke and mirrors.”

The Illinois Department of Healthcare and Family Services, a state agency controlled by the governor, denied an Illinois Freedom of Information Act request from The State Journal-Register seeking a consulting report that state officials used in evaluating the potential savings.

The two Blue Cross HMOs in the new state contract — HMO Illinois and Blue Advantage — have a smaller network of doctors in the Springfield area than Health Alliance provides, and there are no Springfield Clinic doctors in the current Blue Cross HMO networks.

In the Champaign-Urbana area, where Health Alliance covers 32,500 people through the state contract, Blue Cross has no doctors in its HMOs.

‘Open-access plan’

Springfield Clinic doctors, however, do serve state employees covered by another managed-care plan — HealthLink’s “open-access plan,” which was continued in the new contract.

HealthLink’s monthly premium for one person in fiscal 2012 will be the same amount as the premium charged for Blue Cross’ HMOs. But the HealthLink premiums for dependents are slightly higher than the Health Alliance premiums in the current fiscal year, and it’s uncertain whether the open-access plan premiums for dependents in fiscal 2012 will be higher than Blue Cross HMO premiums.

Springfield Clinic doctors, as well as Carle Foundation Hospital in Urbana doctors, are available through HealthLink’s “Tier 2” benefits. Carle doctors also will be part of the Tier 2 open-access plan to be operated by Personal Care.

But people who switch from Health Alliance to the Tier 2 open-access option will face higher out-of-pocket costs in the form of deductibles and co-payments.

Health Alliance has estimated that out-of-pocket costs could, at most, triple, for Health Alliance members who switch.

Health Alliance sketched out a scenario in which a family of four with “typical health-care costs in a year” would pay up to $2,351 more in annual out-of-pocket costs — more than double what they would pay as Health Alliance members — if the family were covered through a Tier 2 “open-access plan.”

The cost was figured based on one hospital stay, an ER visit, nine primary care visits, three laboratory and X-ray service charges, three preventive visits and one specialist visit, according to Health Alliance.

Doctors in limbo

State officials have declined to respond to critics of the new contracts while the protests by Health Alliance and Humana are pending.

If the contracts aren’t changed and Health Alliance remains excluded, Blue Cross could diffuse some of the criticism by approaching doctors in Champaign-Urbana and Springfield, including those at Springfield Clinic, and attempt to get more doctors to join its HMO networks.

But Health Alliance believes such a tactic would amount to “a manipulation of the procurement process and a tortuous interference with contract relationships,” according to a Health Alliance news release.

Springfield Clinic’s doctors, as well as those affiliated with Carle, are contractually prohibited from joining another HMO, Health Alliance spokeswoman Jane Hayes said.

Mark Kuhn, chief administrative officer at Springfield Clinic, said he is unsure whether clinic doctors would, in fact, be prohibited from joining a Blue Cross HMO. But he said the administrative hurdles Springfield Clinic would have to clear before being able to provide services through Blue Cross’ HMOs wouldn’t be simple.

In any case, Kuhn said, “We are in support of Health Alliance’s protest, given some of the inconsistencies that are becoming apparent in the procurement process and the assumed savings.”

More competition

Springfield Clinic would have a financial incentive to avoid losing Health Alliance patients, said Dan Long, executive director of the Illinois General Assembly’s bipartisan Commission on Government Forecasting and Accountability.

Long, speaking from his Springfield office, said, “There’s going to be a really competitive environment in the local medical community here.”

Health Alliance contracts — from the state and other employers — cover almost 20 percent of Springfield Clinic patients. More than half of the clinic’s Health Alliance patients are insured through the state, Kuhn said.

If Springfield Clinic’s 230 doctors don’t become part of the Blue Cross HMOs, they could negotiate with HealthLink to become providers in “Tier 1” of the open-access plan, Long said. That way, he said, out-of-pocket costs for using Springfield Clinic doctors would be reduced and similar to costs under Health Alliance.

Kuhn said he hasn’t looked into that possibility for retaining patients, but Hayes, the Health Alliance spokeswoman, said such an option could result in reduced savings for the state.

Health Alliance believes that the state’s projected savings hinge on all downstate members of state HMOs joining one of the Blue Cross HMOs and not entering an open-access plan, Hayes said.

Springfield physician Craig Backs, as chairman of the Illinois State Medical Society’s board of trustees, sent a letter to Quinn last week questioning the newly selected plans’ “untested ability to contract broadly with downstate physicians” and suggesting that the result would be a “disruption in patient care.”

Backs wrote that the state has provided insufficient data to support the new contracts’ expected cost savings. He asked Quinn to rethink the contracts and “offer as many plans as possible” to state workers.

Big loss for company

The stakes are high for Health Alliance. The company employs about 600 people and reported more than $1 billion in annual revenues in 2010 — 89 percent of the money spent on health care, according to documents filed with the Illinois Department of Insurance. The company posted $22.8 million in profits that year, representing a 2.3 percent profit margin that Hayes said is “pretty thin” compared with other industries.

The 99,093 people covered through the state represent 29 percent of Health Alliance’s total 340,000 members, and Health Alliance receives about $444 million in annual premiums through the state contract, Hayes said.

“It wouldn’t be easy for us” to lose the contract, she said, but the insurer wouldn’t go out of business as a result.

Springfield resident Molly Darling, 33, like other state employees interviewed by the SJ-R, said she didn’t know whether she would end up paying more to keep her doctors if she had to switch from Health Alliance. But Darling, a secretary at the State Board of Education and single mother of two children, said, “This is a huge blow for our health-care plans that we thought were so stable.”

Brunner, the retired painter, paid only about $3,100 out of his own pocket for his liver transplant at Barnes-Jewish Hospital in St. Louis. He said he dreads the thought of potentially setting up communications between his St. Louis specialists and a new primary care doctor in Springfield.

Health Alliance continues to cover monthly blood tests to check Brunner’s liver function. The HMO also covers visits with Dr. Daniel Lanzotti, Brunner’s primary-care physician at Springfield Clinic, who understands Brunner’s complex medical history.

Helen Franklin, 53, an auditor for the Illinois Department of Revenue, said she enjoys the convenience of Springfield Clinic’s Prompt Care locations when she and her husband, Dan, 55, a State Lottery employee, are in Springfield during the week. They live in Bethany, in Moultrie County, on the weekends and depend on Carle doctors in Mattoon to help keep Dan’s diabetes under control.

“There was never a problem with Health Alliance,” Helen Franklin said, adding that she hasn’t tried to look into options.

“We’re kind of scared to do that,” she said.
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Source: The State Journal Register - The Oldest Newspaper in Illinois

President Obama on Tuesday made the first of what are likely to be many road-trips to pitch his case for a more “balanced” debt-reduction plan than House Republicans have passed, one that includes tax increases for the wealthy, cuts the military and preserves Medicare and Medicaid.

Mr. Obama drew applause from his mostly youthful audience at a community college here in casting the choices ahead as a trade-off between the Bush-era tax cuts for high income, including his own, and spending for programs like seniors’ health care, Head Start or for the disabled.

He said those tax rates benefiting the wealthy, which he agreed to extend through 2012 in a deal with Republicans last December, must end after that — “especially when we know that the only way to pay for these tax cuts for the wealthiest Americans is by asking seniors to pay thousands of dollars more for their health care, or cutting children out of Head Start, or doing away with health insurance for millions of Americans on Medicaid.”

“It’s not a trade-off that I think most Americans think is fair, no matter what party you belong to,” Mr. Obama said. “That’s not who we are as a country. We’re better than that.”

The trade-off is not as simple as that. While ending the Bush tax cuts on high income would save nearly $1 trillion over a decade, the projected growth in Medicare and Medicaid is greater. But Mr. Obama’s contrast with the far-reaching budget passed in the House last week captures the debate over national priorities that has begun between the two parties, and is likely to extend through the 2012 elections.

In traveling to the Northern Virginia Community College campus, Mr. Obama did not have to travel far from Washington for the first town-hall-style event since he outlined his vision for the nation’s fiscal future in a speech last Wednesday, and urged Republicans to join him in a compromise plan to slice $4 trillion from projected annual deficits in 10 to 12 years. On Wednesday, he will travel to California and Nevada through Friday, combining speeches on the debt with fund-raising for his party.

As in last week’s speech, Mr. Obama on Tuesday mixed his calls for bipartisan agreement on the budget with a pointed critique of the House Republicans’ package.

But when Mr. Obama took a question from a history professor asking him to encourage the bipartisan efforts of the so-called Gang of Six, three Democratic and three Republican senators who are negotiation their own package of spending cuts and tax increases, the president reiterated his points about the need for a balanced approach without mentioning the senators – even though one is a popular Democrat from Virginia, Mark Warner.

The Republican budget would reduce deficits – more than $4 trillion in a decade and far more in coming years — largely with reductions to projected spending in government health programs, by turning Medicare into a voucher program for future generations of seniors and making Medicaid a block grant for states at lower-than-projected costs. It would cut taxes for individuals and corporations far below Bush-era rates and spare the Pentagon.

“Finding savings in our domestic spending only gets you so far. We’re also going to have to find savings in places like the defense budget,” Mr. Obama said, drawing the first burst of applause from the college students — a target audience for the president’s re-election hopes.

He added, “And I know this is near and dear to your hearts — we’re not going to reduce our deficit by cutting education and eliminating college scholarships. In a world where our students face stiff competition from students from other countries, why would we make it harder for you to compete?”

Even after that statement, when Mr. Obama took questions a student asked whether education spending would be slashed in the coming deficit-reduction efforts. He said no, that it should be increased.

Citing the non-partisan Congressional Budget Office, Mr. Obama said that under the House Republicans’ proposals for remaking Medicare, “seniors would end up paying twice as much for their health care as they are currently, at least twice as much” because the voucher amount would not keep up with inflation in health costs.

“I’m not going to sign up for that,” Mr. Obama vowed. “Having said that, we are going to have to reform Medicare and our entire health-care system in order to improve quality for the amount of money that we spend.”

The president proposed to build on the cost-saving provisions of his health-care law enacted last year, which will require fundamental changes for insurance companies, hospitals, doctors and drug-makers.

To a middle-aged questioner who expressed doubt that Social Security would survive to her retirement, Mr. Obama said that while the program’s costs are not the big factor behind projected federal deficits that the health-care programs are, “we do have to stabilize Social Security’s finances” for the long term.

Unlike with the complex health-care system, he said, “we can do that with some relatively modest changes.” But “politically, it’s hard to do,” Mr. Obama acknowledged. And the one fix he offered – his longstanding proposal to raise the cap on income that is subject to Social Security payroll taxes – is strongly opposed by Republicans.

In a statement released soon after the president’s remarks, Representative Eric Cantor, Republican of Virginia and the House majority leader, called the president’s plan “a direct assault on job creation and innovation that could throw our economy in reverse.”
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Source: The New York Times

Thousands of state employees in central Illinois will have to change their health insurance coverage next month after the state said it is dropping two popular HMOs.

The Health Alliance and Humana insurance programs will no longer be part of the state’s health program after June 30.

That means that 115,000 state employees, their dependents and retirees enrolled in those plans will have to select another insurance plan during open enrollment in May.

The state will award contracts to administer insurance to two plans operated through BlueCross BlueShield: BCBS HMO Illinois and BCBS Blue Advantage. HMO Illinois already has nearly 70,000 state members, mostly in the Chicago area.

The state will also offer an Open Access Plan that will be administered by HealthLink OAP and PersonalCare OAP. Those two plans currently have about 85,000 enrollees. The state also will continue to provide the higher priced Quality Care Health Plan.

The Department of Healthcare and Family Services, which administers state worker health plans, said the health insurance contracts were put out for bid, and the new contracts will save the state $102 million in the next budget year. Over the next 10 years, the state expects to save $1 billion on employee health costs.

“Through these plans, we are able to realize a significant savings for taxpayers and improve our state’s fiscal health,” DHFS Director Julie Hamos said in a statement. “At the end of a thorough evaluation of the bids we received, we are confident that the managed care plans selected will provide the quality health care that members of the state group insurance system expect to receive, as well as significant savings.”

Open enrollment for state workers begins May 1 and runs through May 31. Information about plans and enrollment materials will be available at www.benefitschoice.il.gov beginning May 1.

Some employees might have to find new physicians in order to enroll in the new HMO. Other employees might have to choose a different health plan in order to continue seeing the same doctor.

State officials also said more doctors could decide to participate in the HMOs that will be offered by the state after July 1.

Health Alliance, the largest HMO covering state workers in Springfield, has held a contract with the state for 30 years. The administration of former Gov. Rod Blagojevich tried to drop Health Alliance in 2004. The move ignited a firestorm of protest, and Blagojevich backed off the idea.

Although the state says it will save money from the new contracts, employees won’t see that savings in their pockets. Premiums are set in state labor contracts and will not immediately change.

A spokesman for the American Federation of State, County and Municipal Employees said negotiations will begin later this year on a new labor agreement, and health care premiums will be part of those talks.

AFSCME spokesman Anders Lindall said the union will monitor developments with the insurance contracts.

“We will be working to see that access to care and continuity to care for our members is preserved,” Lindall said. “In every case possible, we want to ensure our members can remain with their physicians.”

At the same time, Lindall said, the union recognizes the state has the right to rebid insurance contracts and is obligated to select the lowest bidder.

“The state has changed health plans before,” he said.
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Source: The State Journal Register - The Oldest Newspaper in Illinois

Illinois forged ahead with implementing the nation’s new health care law Wednesday with support from its Democratic governor.

Submitted by a council Gov. Pat Quinn appointed, the plan proposes new reins on health insurance companies and an online marketplace where people could shop for insurance.

“In Illinois, we do not see the (Affordable Care Act) as an alternative or distraction to the urgent need for jobs and economic growth,” Quinn said in written testimony submitted to a congressional committee Tuesday. “We see the law as a vital part of our economic recovery.”

While the federal government would cover about 95 percent of the cost for people who would be newly entitled to Medicaid in 2014, states would pay the remainder and the federal share eventually would drop to 90 percent.

Some Republican-led states have refused to implement the law after a federal judge in Florida sided with a lawsuit by 26 attorneys general who argued it was unconstitutional. (Several other judges have upheld the law, and the final decision is expected to be made by the U.S. Supreme Court.)

Other states are going beyond what the law requires. Minnesota is expanding Medicaid early, three years ahead of the law’s requirement. And Vermont is exploring a single-payer health care system — a strategy Congress rejected.

The law, enacted almost a year ago, has been lucrative for Illinois, bringing in nearly $290 million to state agencies, non-profits, nursing schools and hospitals. Wednesday’s recommendations were made by a panel made up of the heads of Illinois agencies that will be involved with its implementation.

The panel’s report estimates more than 1 million uninsured Illinois residents will get health coverage by 2014.

Of those, 500,000 to 800,000 will be covered under the state’s Medicaid program with mostly federal funding. Another 200,000 to 300,000 will buy coverage through the online health insurance exchange, with premiums subsidized by the federal government.

The Web-based exchange would be a quasi-governmental entity selling insurance products to both individuals and small employers. Like a Travelocity for health insurance, the exchange would make it easier to comparison shop.

“Consumers will be able to make those choices in 15 to 20 minutes sitting at home, on a computer,” said Illinois Insurance Director Michael McRaith.

The report also recommends giving state regulators authority to approve or deny health insurance rate increases and to force insurers to spend 80 to 85 cents of every premium dollar on providing health care.

The council held public meetings around the state and received more than 100 comments before releasing its recommendations.
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Source: The State Journal Register - The Oldest Newspaper in Illinois

Seeking to appease disgruntled governors, President Obama announced Monday that he supported amending the 2010 health care law to allow states to opt out of its most burdensome requirements three years earlier than currently permitted.

In remarks to the National Governors Association, Mr. Obama said he backed legislation that would enable states to request federal permission to withdraw from the law’s mandates in 2014 rather than in 2017 as long as they could prove that they could find other ways to cover as many people as the original law would and at the same cost. The earlier date is when many of the act’s central provisions take effect, including requirements that most individuals obtain health insurance and that employers of a certain size offer coverage to workers or pay a penalty.

“I think that’s a reasonable proposal; I support it,” Mr. Obama told the governors, who were gathered in the State Dining Room of the White House.

“It will give you flexibility more quickly while still guaranteeing the American people reform.”

The announcement is the first time Mr. Obama has called for changing a central component of his signature health care law, although he has backed removing a specific tax provision that both parties regard as onerous on business. The shift comes as the law is under fierce attack in the courts and from Republicans on Capitol Hill and in statehouses around the country.

The bipartisan amendment that Mr. Obama is now embracing was first proposed in November, eight months after enactment of the Affordable Care Act, by Senators Ron Wyden, Democrat of Oregon, and Scott Brown, Republican of Massachusetts. Senator Mary L. Landrieu of Louisiana, a Democrat, is now a co-sponsor.

The legislation would allow states to opt out earlier from various requirements if they could demonstrate that other methods would allow them to cover as many people, with insurance that is as comprehensive and affordable, as provided by the new law. The changes also must not increase the federal deficit.

If states can meet those standards, they can ask to circumvent minimum benefit levels, structural requirements for insurance exchanges and the mandates that most individuals obtain coverage and that employers provide it. Washington would then help finance a state’s individualized health care system with federal money that would otherwise be spent there on insurance subsidies and tax credits.

“It seemed to make sense that rather than have states invest in a system that may not be best for them, you change the date to 2014 from 2017 and give them the flexibility to design it,” said one of several administration officials who requested anonymity because they were not authorized to speak publicly before the president. “But it’s clear that states must do a number of things to qualify for a waiver.”

Mr. Obama’s positioning follows the post-election approach to the politics of health care that he outlined in his State of the Union address in January.

Responding to the Republican takeover of the House, and of many governors’ offices, the president made clear that he would fight those seeking to repeal the law but that he was open to changes that would improve it, including removing the onerous tax provision. The Senate has already approved the tax change, and the House is expected to follow.

“Instead of refighting the battles of the last two years,” Mr. Obama urged Congress, “let’s fix what needs fixing and let’s move forward.”

Public opinion polls generally show that the country remains divided over the health care act, which seeks to insure 32 million Americans by requiring coverage and offering subsidies to make it affordable. But the polls show that only a minority favors repealing the entire act, as the Republican-led House voted to do earlier this year.

In the courts, federal district judges have issued contradictory opinions that are now under appeal. The Supreme Court is ultimately expected to decide whether Congress’s constitutional authority is broad enough that it can require citizens to purchase a commercial product like health insurance.

In a nod to November’s results, the administration has worked diligently to create the image of a president who is willing to listen to Republicans — and the agitated voters who empowered them. Flexibility has become a White House watchword in putting the health care act into effect. The administration has made a series of announcements intended to encourage states to shape the law to their individual needs, even if the possible effect is to reduce the breadth of coverage in some places.

Monday’s announcement may not quiet the cries of Republican governors who are seeking immediate relief from requirements in the law that prohibit states from lowering eligibility for Medicaid until 2014. That is when the law calls for a significant expansion of the joint state and federal health insurance program to include low-income childless adults. Governors of both parties also are chafing at the added cost of the Medicaid expansion, as states will begin to pay a fractional share of the expense in 2016.

In January, 29 Republican governors asked Mr. Obama and Congressional leaders to eliminate the eligibility restriction. Kathleen Sebelius, the secretary of health and human services, responded by outlining provisions already in the law that provide states with flexibility, and by helping them identify permissible ways to reduce Medicaid benefits.

This month, Ms. Sebelius sent a letter to Gov. Jan Brewer of Arizona, a Republican, to inform her that an expiring waiver meant Arizona would not need federal permission to eliminate a Medicaid program that currently covers 250,000 childless adults. On Friday, she informed states that they could raise premiums for Medicaid enrollees without running afoul of the federal eligibility requirements.

The administration officials said the so-called state innovation waivers in the Wyden-Brown bill might allow a state to experiment with ways to entice people to obtain insurance rather than requiring them to buy policies. It also might allow interested states to establish a single-payer system in which the government is the sole insurer. Gov. Peter Shumlin, a newly elected Democrat in Vermont, is pursuing such a proposal.

The officials said Congressional bill writers picked the 2017 date after the Congressional Budget Office said it would take three years of experience to determine how much a state should receive in unrestricted block grants if it opted out of aspects of the law. Otherwise, the budget analysts advised last year, the legislation’s 10-year cost estimate would be about $4 billion higher because Washington would probably have to make higher-than-needed payments to states.

The administration officials said they had not yet discussed where to find an additional $4 billion, but described it as “not a lot of money” when compared with the estimated $1 trillion, 10-year cost of the law. They said they had not yet consulted with Congressional leaders to map a strategy for enacting the amendment.
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Source: The New York Times

A health insurance provider has agreed to pay $25 million over allegations it improperly denied benefits to Illinois customers.

Blue Cross Blue Shield of Illinois was accused of denying nursing care for children and others.

Officials say the company used stricter, undisclosed guidelines to decide what would be approved and also told policyholders that children were not covered for private duty nursing.

Attorney General Lisa Madigan said Thursday the company’s actions cost state and federal government nearly $12 million in Medicaid expenses.

Blue Cross Blue Shield isn’t admitting any misconduct, but it will pay Illinois $14.25 million and the U.S. Treasury $9.5 million.

It will also pay $1.25 million to consumers who were denied coverage and were not able to get Medicaid.
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Source: The State Journal Register - The Oldest Newspaper in Illinois