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COGFA meeting

Today’s meeting of the Commission on Government Forecasting and Accountability, held in room C-600 of the state’s Michael Bilandic Building, 160 N. LaSalle St., Chicago, will be streamed live through the COGFA website, according to COGFA deputy director Trevor Clatfelter. The meeting begins at noon. The State Journal-Register plans to have a reporter at the meeting.

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A legislative panel Tuesday could allow “open-access” health plans and the Health Alliance and Humana HMOs to serve state employees, retirees and dependents after June 30 — if only temporarily.

The General Assembly’s bipartisan Commission on Government Forecasting and Accountability will meet at noon Tuesday in Chicago to hear options for “ensuring that health–insurance coverage for thousands of people goes uninterrupted,” Sen. Jeffrey Schoenberg, D-Evanston, told The State Journal-Register Monday.

If COGFA reverses a vote it took May 25, new open-access contracts with Personal Care and HealthLink can take effect for fiscal 2012, Schoenberg said Monday.

COGFA also will consider allowing the state to enter into 90-day emergency contracts with the state’s current insurers: Health Alliance, Humana, Personal Care and HealthLink.

Schoenberg, a co-chairman of COGFA, said the meeting was called in the wake of Sangamon County Associate Judge Brian Otwell’s order Friday that bars the state from proceeding with new self-insured OAP contracts with Personal Care and HealthLink.

COGFA voted 8-3 May 25 to prohibit the state from expanding self-insured health plans for state workers. Otwell said Friday that vote essentially nullified the new OAP contracts.

The state took the first steps Monday to appeal Otwell’s order.

Sen. Michael Frerichs, D-Champaign, a COGFA member, said COGFA is unlikely to reverse its May 25 decision. Frerichs was one of the eight lawmakers who voted against expanding self-insured plans.

However, COGFA members probably will give Julie Hamos, director of the Illinois Department of Healthcare and Family Services, the authority to negotiate new short-term contracts with the current vendors, Frerichs said.

It’s unclear whether Personal Care’s short-term contract would involve its HMO or an OAP, he said.

Frerichs said he favors 90-day contracts for the vendors to give the courts more time to weigh in on Otwell’s ruling and for Otwell to take more action on Health Alliance and Humana’s court challenges of the state contract awards.

If court action isn’t complete in 90 days, he said, COGFA could grant more extensions.

Health Alliance and Humana recently lost their bids to continue offering fully insured HMOs to people in the state plan after June 30. Blue Cross and Blue Shield of Illinois received the sole contract for HMO coverage.

The state of Illinois is proceeding with its self-imposed deadline this Friday for state workers and retirees to sign up for a health plan in the new fiscal year. Otwell’s order, however, limits the health plan options to three and removed Personal Care and HealthLink’s OAPs.

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State posts updated information

State officials on Monday posted new health insurance option information online Monday.

The information also is being sent to individuals via email, according to Mike Claffey, spokesman for Healthcare and Family Services.

The online update says people who already have selected Personal Care or HealthLink OAP plans must contact the state and change their choice to either HMO Illinois or Blue Advantage — both Blue Cross plans — by the close of business Friday. If not, they will be automatically enrolled in Cigna’s Quality Care program.

If people who had enrolled in one of the OAPs opt to enroll in one of the Blue Cross HMOs or Quality Care, it’s uncertain whether they will be able to switch to another plan — if any more are offered — later this week or later in the fiscal year.

It’s also unclear whether the state will offer another benefits-choice period in coming months.

The Quality Care plan has significantly higher premiums and out-of-pocket costs compared with the OAP plans and the HMOs. On the other hand, Quality Care includes most doctors and hospitals in the state, including doctors at Springfield Clinic and Southern Illinois University School of Medicine.

If Otwell’s ruling isn’t overturned and the state doesn’t extend current health-insurance contracts or award new ones, Quality Care will be the only option for employees, retirees and dependents in some parts of the state.

The Blue Cross HMOs are available only in 38 counties.

Those counties include Sangamon, Cass, Christian, Greene, Logan, Macoupin, Menard, Montgomery, Morgan and Scott. However, only a limited number of doctors are available, and the list doesn’t include doctors at Springfield Clinic.

Champaign County, where a large number of University of Illinois employees live and work, doesn’t have any Blue Cross HMO doctors.

More than 200,000 people in the state health insurance program are currently enrolled in either HealthLink OAP, Health Alliance HMO or Humana HMO.

The state had expected 140,000 or more people to enroll in the Personal Care and HealthLink OAPs under the new contracts.

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No answers for employees, retirees

Associate Circuit Judge Brian Otwell’s ruling last Friday adds more confusion for people covered by state health-insurance plans, who hadn’t seen major changes in the plans for a decade.

“People are very upset because they don’t know what’s going to happen,” said Dave Urbanek, spokesman for the Teachers’ Retirement System.

TRS canceled a health-insurance benefit fair that had been scheduled for today at the TRS office at 2815 W. Washington St. in Springfield.

In a news release, TRS said the court ruling “has created many open issues for state officials regarding the future of the state’s health insurance programs, and those questions and concerns will not be answered soon with any certainty.”

Urbanek said phone lines to the system have been jammed, but TRS officials don’t know what to tell callers who want to know what to do if they’ve already signed up for an OAP, Urbanek said.

Springfield resident Wanda Collins, a retired teacher in the Springfield school system, said she learned Saturday that Personal Care HMO won’t continue after June 30.

She said she had hoped to sign up for Personal Care’s open-access plan, which includes her regular doctor, but Otwell’s ruling appeared to make the OAP unavailable.

“I’m frustrated about the whole thing,” she said.

Retired Secretary of State manager John Cox, 60, of Springfield, said he and his wife want to remain in HealthLink’s OAP to make sure they can continue to be treated by all of their doctors.

For the benefit of state workers and retirees, state officials should continue to contract with current health plans until the legal disputes are resolved, Cox said.

“It wasn’t the state employees who made the mess,” Cox said.
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Source: The State Journal Register - The Oldest Newspaper in Illinois

Health Alliance Medical Plans asked a judge Monday to block new state health-insurance contracts and continue Health Alliance HMO as an option for state employees, retirees and dependents.

A lawsuit filed by the Urbana-based health insurer says Julie Hamos, director of the Illinois Department of Healthcare and Family Services, is illegally expanding the state’s use of self-insured “open-access” health plans by disregarding a May 25 vote of a bipartisan legislative panel.

The open-access plans, operated by Personal Care and HealthLink, are expected to serve most of the 100,000 people statewide who are scheduled to lose Health Alliance HMO coverage July 1.

Contracts recently awarded by the state dropped Health Alliance HMO, a fully insured health plan, and expanded the state’s use of self-insured plans. The state assumes most of the risk of paying health-care claims in self-insured plans, rather than paying a fixed amount for fully insured plans such as Health Alliance HMO.

Health Alliance asked Circuit Judge John Schmidt for a temporary restraining order to block the new OAP contracts until Health Alliance’s case can receive a full review in court.

If successful, the temporary restraining order could result in Health Alliance HMO and Humana’s HMO being extended for months or years.

Schmidt is expected to rule on the TRO within a few days.

A spokesman said the state will fight the suit.

“We are absolutely confident in the process of awarding and contracting with these vendors as well as their ability to offer quality health care at a price that will save the state money,” said Mike Claffey, spokesman for Healthcare and Family Services.

The state says the new contracts will save state government more than $1 billion over the next decade.

Several lawmakers on the Commission on Government Forecasting and Accountability have said they doubt those estimates. COGFA voted 8-2 to stop the state from continuing to contract with self-insured open-access plans.

Gov Pat Quinn’s office responded by saying COGFA lacks the power to thwart the OAP contracts.

Health Alliance claims in the lawsuit that the state’s decision to award HMO contracts to Blue Cross and Blue Shield of Illinois — and turn down Health Alliance’s bid — was “arbitrary and unreasonable.”

The lawsuit creates more uncertainty for state workers and others who depend on the state’s health plans.

A bill recently passed by the General Assembly would extend the current health-plan contracts for another two years. Quinn hasn’t said whether he will sign or veto the measure.

And the American Federation of State, County and Municipal Employees has filed a grievance seeking to extend the benefit-choice period. AFSCME has advised its members to wait until closer to June 17 to make their health-plan choices.

Meanwhile, Springfield Clinic and Memorial Health System doctors have changed from Tier 2 of HealthLink’s OAP to Tier 1, which provides HMO-like benefits and carries fewer out-of-pocket charges for state-insured patients.

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Health Alliance: No savings

Health Alliance disagrees with state officials and consultants who say new health-insurance contracts will save state government $102 million a year and more than $1 billion over the next decade.

Health Alliance’s calculations show the state’s health-care costs will rise by more than $50 million a year as a result of the state’s decision to drop Health Alliance HMO from the options.

Chief executive officer Jeff Ingrum points to a March report from the state that says the self-insured, “open-access” plan operated by HealthLink costs the state 22 percent more than the HMOs serving state employees, retirees and dependents.

The estimated average cost per participant in Health Alliance HMO and in HMOs operated by Humana, Personal Care and Blue Cross/Blue Shield of Illinois was $5,341 in the current fiscal year, according to the General Assembly’s Commission on Government Forecasting & Accountability.

The average cost was $6,534 for participants in the open-access plan operated by HealthLink, according to the COGFA report.

“Moving to the OAPs — moving away from the HMO — is just a bad deal,” said Jane Hayes, Health Alliance’s vice president of corporate communications.

But Todd Swim, a partner at Mercer Health & Benefits, the state’s consultant, said open-access plans aren’t inherently more expensive. The current OAP plan is more expensive for the state because it tends to attract older and sicker patients, Swim said.

Under the new contracts, healthier people will join the OAPs, Swim said.

Ingrum said his analysis indicates Health Alliance HMO and HealthLink OAP have about the same percentage of members who are early retirees and people 65 or older — groups that tend to incur more health-care costs.
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Source: The State Journal Register - The Oldest Newspaper in Illinois

Almost 30,000 state employees, retirees and dependents in the Springfield area who are losing Health Alliance HMO coverage will be able to retain HMO-like benefits and continue to use Springfield Clinic doctors through HealthLink’s “open-access plan” starting July 1.

Springfield Clinic announced Thursday that its doctors will become “Tier 1” providers through HealthLink’s OAP. Until now, the clinic’s doctors were in HealthLink’s Tier 2 in the state health-insurance plan.

The Tier 2 benefit requires patients to pay more out-of-pocket costs than Tier 1.

A state official said the Springfield Clinic announcement is great news for state workers, but a lawsuit that Health Alliance plans to file to temporarily block the new health-insurance contracts could create more uncertainty for workers.

Health Alliance to sue

Jeff Ingrum, chief executive officer of Health Alliance, said the company will ask a Sangamon County judge to decide within a few days whether to suspend the state’s health-plan selection period, scheduled to end June 17.

Ingrum said the lawsuit will ask that existing contracts between the state and insurors, including Health Alliance HMO, be continued until a judge can rule on Health Alliance’s claim that it was treated unfairly when state officials dropped Health Alliance from the state’s managed-care options.

“Somebody needs to get at the truth somehow,” Ingrum said. “I don’t know how you arrive at the result they arrived at when their underlying documents clearly indicate they should have come to a different result than they did.”

Brie Callahan, a spokeswoman for Gov. Pat Quinn, said Health Alliance officials were treated fairly.

“They knew exactly what their bid would be judged on,” she said. “Their bid was ultimately too high.”

State officials took pains to adhere to the contract procurement process approved by the Illinois General Assembly, Callahan said.

Despite a potential lawsuit by Health Alliance and a grievance filed this week by the American Federation of State, County and Municipal Employees, Callahan said, “We’re going to keep moving forward.”

Callahan wouldn’t say whether Quinn plans to sign or veto Senate Bill 178, which would extend the state’s current health-plan contracts for another two years.

The AFSCME grievance says state officials failed to show that employees would have “continued access, on substantially similar terms and conditions” to their health-care providers, AFSCME Council 31 spokesman Anders Lindall said.

The grievance seeks to extend the benefit-choice period or extend the Health Alliance contract into the new fiscal year, Lindall said.

However, he called Springfield Clinic’s announcement a step in the right direction to ensure state workers have continued access to their doctors.

Continuity of care

A news release from the clinic said its move to Tier 1 status for state workers “comes in response to recent changes to the health-insurance plans available to State of Illinois employees, which has affected more than 100,000 downstate workers and dependents.”

Springfield Clinic was the largest group of local physicians in the state’s Health Alliance HMO plan. Employees would have faced the choice of losing their Springfield Clinic doctors or paying higher out-of-pocket costs to keep them under Tier 2 of HealthLink OAP.

If state employees now enroll in HealthLink OAP, they can “expect full continuity of coverage and continuity of care from their current plan,” the Springfield Clinic news release says.

“The transition to the Tier 1 Open Access Plan should be absolutely seamless,” said Mark Kuhn, the clinic’s chief administrative officer.

The monthly premium for HealthLink OAP is the same as state workers have paid for Health Alliance HMO coverage. Monthly premiums for dependents under HealthLink OAP are a few dollars higher than the dependent premiums under Health Alliance.

“We are incredibly grateful for the outpouring of support we’ve received from our state of Illinois patients,” Kuhn said. “It was evident that they did not want to change doctors, and we certainly didn’t want to lose them as patients, so we looked for a solution that would preserve those important patient-provider relationships.”

In addition to the current benefit-choice period, state officials have pledged to offer an additional enrollment period sometime before the end of December.

Memorial Physician Services also added to Tier 1

Memorial Physician Services doctors will be Tier 1 providers for state employees who join the HealthLink open-access plan, Memorial Health System officials said Thursday.

Memorial doctors previously served state employees, retirees and dependents in Tiers 2 and 3 of the OAP, Memorial spokesman Michael Leathers said.

Memorial doctors also are considered “in-network” for Blue Advantage HMO, HMO Illinois and the Quality Care Health Plan.

Memorial Physician Services has 57 doctors in 14 locations in Springfield, Chatham, Jacksonville, Petersburg and Lincoln.

“We want state employees who have trusted us for care to be able to choose their new health-insurance plan with confidence,” said Travis Dowell, vice president of Memorial Physician Services.
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Source: The State Journal Register - The Oldest Newspaper in Illinois

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

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

Judge Henry Hudson, via Associated Press

Judge Henry E. Hudson, who invalidated part of the federal health care law this month.

The legal challenge to the Obama health care act has invigorated a dispute as old as the Constitution about the framers’ most nettlesome grant of power, which gives Congress treacherously broad authority to pass laws “necessary and proper” to carrying out its assigned responsibilities.

The cases, which are presumed to be headed to the Supreme Court, center on whether Congress’s power to regulate interstate commerce is so expansive that it can require citizens to buy health insurance. But as the litigation advances, the “necessary and proper” clause is taking on greater prominence in briefs and oral arguments, with the Obama administration asserting that it shelters the insurance mandate and state officials arguing that it buries it.

Because the facts are novel — the courts have never addressed whether Americans can be penalized for not buying something — each side has managed to glean what it wants from the Supreme Court’s most recent guidance.

A spirited debate broke out in legal blogs this month after Judge Henry E. Hudson of Federal District Court in Richmond, Va., invalidated the insurance requirement in part by rejecting the administration’s necessary-and-proper defense. As that case and others move into the appellate courts, scholars are submitting friend-of-the-court briefs that focus on the meaning of necessary and proper.

Some forecast that by the time it gets to the Supreme Court, a case that seemed to be about the commerce clause may be fought largely on necessary-and-proper grounds.

“I think it’s going to be crucial,” said Randy E. Barnett, a Georgetown law professor who recently filed a brief, in the United States Court of Appeals for the Sixth Circuit, that assails the insurance mandate with a necessary-and-proper argument. “The necessary-and-proper clause is always lurking in these commerce clause cases.”

The necessary-and-proper clause sits at the end of Article I, Section 8, after 17 paragraphs that enumerate the powers delegated to Congress, ranging from the establishment of post offices to the declaration of war. It conveys authority “to make all laws which shall be necessary and proper for carrying into execution the foregoing powers.”

The clause’s potential to concentrate power in the national government — it became known as the “sweeping power” — caused consternation among anti-federalists during ratification. And the Supreme Court has struggled since to define its limits, in decisions from McCulloch v. Maryland in 1819 to United States v. Comstock last May.

The next refinement could well come when the Supreme Court considers the health care law, probably two years down the road. Three Federal District Court judges thus far have ruled on the merits of the case, with two upholding the insurance mandate and Judge Hudson invalidating it (but not blocking it pending appeal). A fourth judge is expected to rule next year.

The Justice Department, which represents the Obama administration, argues that the insurance requirement is constitutional under the commerce clause and allowed under the necessary-and-proper clause as a rational means to an appropriate end. It points to a series of Supreme Court precedents that interpret those provisions as allowing the regulation of “activities that substantially affect interstate commerce.”

The act of not obtaining health insurance, the federal government’s lawyers contend, is effectively a decision to pay later rather than up front in a market that consumers cannot avoid. Such decisions, they say, have a substantial impact on the market because many of the uninsured cannot afford their care and shift costs to governments, hospitals and the privately insured.

Furthermore, the lawyers argue, the insurance mandate is essential — both necessary and proper — to making other changes work, particularly prohibitions on discrimination by insurers against those with pre-existing medical conditions.

“We’re not talking about downstream effects,” Ian H. Gershengorn, a Justice Department lawyer, told Judge Hudson at an October hearing. “We’re talking about the very thing that enforces insurance companies to comply with the regulations.”

The judge, however, agreed with Virginia’s attorney general that the necessary-and-proper clause could not prop up an otherwise unconstitutional provision. Virginia argued, and the judge agreed, that the insurance requirement, by regulating inactivity rather than activity, exceeds the limits of the commerce clause.

“The necessary-and-proper clause does not provide a safe sanctuary,” Judge Hudson wrote, because it “may only be constitutionally deployed when tethered to a lawful exercise of an enumerated power.”

That prompted online rebuttals from a number of legal scholars who argued that Judge Hudson’s misreading would render the necessary-and-proper clause meaningless.

“It reads the necessary-and-proper power out of the Constitution,” Andrew Koppelman, a Northwestern University law professor, wrote on the legal blog Balkinization, “because it won’t allow it to add anything to the enumerated powers.”

The Supreme Court’s seminal instruction came from Chief Justice John Marshall in McCulloch v. Maryland, which upheld Congress’s right to incorporate a national bank. While the court found that the necessary-and-proper clause granted Congress broad authority, Marshall set outer limits by writing, “Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consistent with the letter and spirit of the Constitution, are constitutional.”

The Supreme Court, under Chief Justice John G. Roberts Jr., affirmed the scope of Congress’s authority 191 years later in the Comstock case, which upheld the federal government’s ability to detain sexual predators beyond their prison release dates. Writing for the court, Justice Stephen G. Breyer pointed out that the Constitution did not explicitly grant Congress the power to criminalize conduct or imprison offenders, but that the necessary-and-proper clause made each possible.

The court laid out five “considerations” to help determine whether a statute was in fact necessary and proper. Lawyers in the health care cases differ over whether those considerations constitute a test, and if so whether the insurance requirement would pass.

Each side has also found encouragement in Justice Antonin Scalia’s concurring opinion in the last significant commerce clause case. In Gonzales v. Raich in 2005, the majority found that the clause allowed the government to prosecute the possession of medical marijuana. Justice Scalia, while agreeing, wrote that the case should have hung on the necessary-and-proper clause.

Congress can regulate “even noneconomic local activity if that regulation is a necessary part of a more general regulation of interstate commerce,” he wrote.

That might provide solace to the administration, except that Justice Scalia used the words “activity” or “activities” 42 times in his ruling. The court has never been asked whether inactivity should receive the same blessing.

Source: The New York Times

The percentage of Americans struggling below the poverty line in 2009 was the highest it has been in 15 years, the Census Bureau reported Thursday, and interviews with poverty experts and aid groups said the increase appeared to be continuing this year.

With the country in its worst economic crisis since the Great Depression, four million additional Americans found themselves in poverty in 2009, with the total reaching 44 million, or one in seven residents. Millions more were surviving only because of expanded unemployment insurance and other assistance.

And the numbers could have climbed higher: One way embattled Americans have gotten by is sharing homes with siblings, parents or even nonrelatives, sometimes resulting in overused couches and frayed nerves but holding down the rise in the national poverty rate, according to the report.

The share of residents in poverty climbed to 14.3 percent in 2009, the highest level recorded since 1994. The rise was steepest for children, with one in five affected, the bureau said.

The report provides the most detailed picture yet of the impact of the recession and unemployment on incomes, especially at the bottom of the scale. It also indicated that the temporary increases in aid provided in last year’s stimulus bill eased the burdens on millions of families.

For a single adult in 2009, the poverty line was $10,830 in pretax cash income; for a family of four, $22,050.

Given the depth of the recession, some economists had expected an even larger jump in the poor.

“A lot of people would have been worse off if they didn’t have someone to move in with,” said Timothy M. Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin.

Dr. Smeeding said that in a typical case, a struggling family, like a mother and children who would be in poverty on their own, stays with more prosperous parents or other relatives.

The Census study found an 11.6 percent increase in the number of such multifamily households over the last two years. Included in that number was James Davis, 22, of Chicago, who lost his job as a package handler for Fed Ex in February 2009. As he ran out of money, he and his 2-year-old daughter moved in with his mother about a year ago, avoiding destitution while he searched for work.

“I couldn’t afford rent,” he said.

Danise Sanders, 31, and her three children have been sleeping in the living room of her mother and sister’s one-bedroom apartment in San Pablo, Calif., for the last month, with no end in sight. They doubled up after the bank foreclosed on her landlord, forcing her to move.

“It’s getting harder,” said Ms. Sanders, who makes a low income as a mail clerk. “We’re all pitching in for rent and bills.”

There are strong signs that the high poverty numbers have continued into 2010 and are probably still rising, some experts said, as the recovery sputters and unemployment remains near 10 percent.

“Historically, it takes time for poverty to recover after unemployment starts to go down,” said LaDonna Pavetti, a welfare expert at the Center on Budget and Policy Priorities, a liberal-leaning research group in Washington.

Dr. Smeeding said it seemed almost certain that poverty would further rise this year. He noted that the increase in unemployment and poverty had been concentrated among young adults without college educations and their children, and that these people remained at the end of the line in their search for work.

One indirect sign of continuing hardship is the rise in food stamp recipients, who now include nearly one in seven adults and an even greater share of the nation’s children. While other factors as well as declining incomes have driven the rise, by mid-2010 the number of recipients had reached 41.3 million, compared with 39 million at the beginning of the year.

Food banks, too, report swelling demand.

“We’re seeing more younger people coming in that not only don’t have any food, but nowhere to stay,” said Marla Goodwin, director of Jeremiah’s Food Pantry in East St. Louis, Ill. The pantry was open one day a month when it opened in 2008 but expanded this year to five days a month.

And Texas food banks said they distributed 14 percent more food in the second quarter of 2010 than in the same period last year.

The Census report showed increases in poverty for whites, blacks and Hispanic Americans, with historic disparities continuing. The poverty rate for non-Hispanic whites was 9.4 percent, for blacks 25.8 percent and for Hispanics 25.3 percent. The rate for Asians was unchanged at 12.5 percent.

The median income of all households stayed roughly the same from 2008 to 2009. It had fallen sharply the year before, as the recession gained steam and remains well below the levels of the late 1990s — a sign of the stagnating prospects for the middle class.

The decline in incomes in 2008 had been greater than expected, and when the two recession years are considered together, the decline since 2007 was 4.2 percent, said Lawrence Katz, an economist at Harvard. Gains achieved earlier in the decade were wiped out, and median family incomes in 2009 were 5 percent lower than in 1999.

“This is the first time in memory that an entire decade has produced essentially no economic growth for the typical American household,” Mr. Katz said.

The number of United States residents without health insurance climbed to 51 million in 2009, from 46 million in 2008, the Census said. Their ranks are expected to shrink in coming years as the health care overhaul adopted by Congress in March begins to take effect.

Government benefits like food stamps and tax credits, which can provide hundreds or even thousands of dollars in extra income, are not included in calculating whether a family’s income falls above or below the poverty line.

But rises in the cost of housing, medical care or energy and the large regional differences in the cost of living are not taken into account either.

If food-stamp benefits and low-income tax credits were included as income, close to 8 million of those labeled as poor in the report would instead be just above the poverty line, the Census report estimated. At the same time, a person who starts a job and receives the earned income tax credit could have new work-related expenses like transportation and child care. Unemployment benefits, which are considered cash income and included in the calculations, helped keep 3 million families above the line last year, the report said, with temporary extensions and higher payments helping all the more.

The poverty line is a flawed measure, experts agree, but it remains the best consistent long-term gauge of need available, and its ups and downs reflect genuine trends.

The federal government will issue an alternate calculation next year that will include important noncash and after-tax income and also account for regional differences in the cost of living.

But it will continue to calculate the rate in the old way as well, in part because eligibility for many programs, from Medicaid to free school lunches, is linked to the longstanding poverty line.
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Source: The New York Times

A new federally funded health insurance program for people with pre-existing conditions will begin accepting applicants today.

Enrollment in the Illinois Pre-Existing Condition Insurance Plan starts at 10 a.m. The program, part of federal health-care reform, is open to Illinois residents with chronic conditions who have been uninsured for at least six months. Illinois will receive $196 million from the federal government to provide coverage until Jan. 1, 2014, the date insurers will no longer be allowed to deny coverage based on a pre-existing condition.

State officials estimate that 4,000 to 6,000 people will receive insurance through the temporary high-risk pool.

Coverage starts Sept. 1. The plan will be administered by Urbana-based Health Alliance Medical Plans. To apply, call (877) 210-9167 or visit Insurance.Illinois.gov/IPXP.
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Source: The Chicago Sun-Times

Gov. Pat Quinn based his recent order requiring 2,700 non-union state workers to take 24 unpaid days off — a move expected to save $18 million this fiscal year — on fears that Congress won’t extend a federal boost in Medicaid payments beyond December.

If the enhanced Medicaid payments are allowed to expire, however, the resulting loss of $750 million in federal funding would have a much broader effect on the state, according to advocates for hospitals, doctors and people with developmental disabilities.

Hospitals might have to lay off employees and pay vendors late, Medicaid patients would have a harder time finding doctors, and programs for the developmentally disabled would face further cutbacks, they said.

Other state programs would be pinched as well, creating an even bigger hole in the state budget, said Howard Peters, the Illinois Hospital Association’s senior vice president for government affairs.

“This is a really important issue for the state of Illinois,” Peters said.

In a written statement, officials from the Quinn administration said the impact on the state budget would be “severe.”

Congressional inaction

Peters said the increased federal funding needs to be extended at least through June 2011.

“I certainly wouldn’t encourage anyone to wait around on this issue for the economy to bail us out,” he said.

Congress is feeling pressure from Illinois and 29 other states that have enacted budgets that count on the Medicaid funding continuing through June 2011.

The extension was included in President Barack Obama’s budget proposal, but Congress has failed to pass it. The U.S. House and Senate are scheduled to begin their summer recess in the next week and a half and return to Washington, D.C., in September.

Meanwhile, Illinois and other states with fiscal years that began July 1 are enacting or considering budget cuts in response to Congress’ inaction by Congress.

62 vs. 50 percent

Funded by both the federal and state governments, Medicaid pays for health insurance that covers 2.6 million low- and moderate-income Illinoisans. Medicaid dollars also support programs for people with developmental disabilities and mental illness.

The federal stimulus package passed by Congress after Obama was sworn into office boosted the federal Medicaid matching rate, which varies by state, retroactive to October 2008.

The federal government used to pay half of Illinois’ Medicaid costs. Because of the stimulus, the federal government now covers 62 percent of Medicaid costs in Illinois.

About one-third of Medicaid dollars pay for hospital services, and the enhanced percentage has allowed Illinois to reduce its Medicaid payment cycle, Peters said.

Hospitals that used to be paid 180 to 200 days after submitting Medicaid bills to the state now are paid within about 30 days, he said.

Low, slow payments

If the extra federal dollars go away, hospitals would see delays in payments, and that could lead to more borrowing by hospitals, tighter budgets and layoffs, Peters said.

“Keep in mind that when Medicaid pays providers, those dollars turn immediately into economic opportunity at the community level,” he said.

Doctors who already put up with meager payments for many Medicaid services probably would accept fewer Medicaid patients if the payment cycle lengthens, said Dr. Steven Malkin of Arlington Heights, president of the Illinois State Medical Society.

Peters said Illinois deserves a permanently higher Medicaid match from the feds. He noted that Illinois provides 4.5 percent of the nation’s total Medicaid-funded services, but receives only 3.3 percent of matching federal Medicaid dollars.

Party split

Opposition to a proposed extension of the enhanced federal Medicaid match is concentrated among Republicans worried about adding to the federal deficit, according to Illinois Hospital Association spokesman Danny Chun.

U.S. Rep. Aaron Schock, R-Peoria, opposes the extension of the enhanced Medicaid percentage, Schock aide Dave Natonski said.

He said the federal economic stimulus, which originally boosted Medicaid reimbursements to states, was a “short-term sugar high that created artificial and unsustainable expectations regarding government spending.”

U.S. Rep. Phil Hare, D-Rock Island, believes it’s hypocritical for Republicans who backed tax cuts for the wealthiest Americans during the administration of President George W. Bush to become “penny pinchers” when it comes to programs to help the poor, Hare aide Tim Schlittner said.

Steve Tomaszewski, spokesman for U.S. Rep. John Shimkus, R-Collinsville, said Shimkus would consider supporting the enhanced Medicaid extension if it wouldn’t be paid for with deficit spending. Supporters of the extension haven’t identified a revenue source to pay for it.

“If the … extension is important, it should be important enough to pay for,” Tomaszewski said.

Both of Illinois’ U.S. senators — Democrats Dick Durbin of Springfield and Roland Burris of Chicago — support continuation of increased federal Medicaid funding.

Statement from the Quinn administration

“The fiscal 2011 budget was based on the continuation of the FMAP (federal medical assistance percentage). The loss of FMAP would have a severe impact on our state as well as other states that included this funding in their budgets. …

“We are already struggling with how to survive the loss of a billion dollars of educational stabilization funds. It is vital that FMAP is extended so that states can provide the health-care services, as well as other human-service and educational programs on which so many residents have come to rely. …

“We have mobilized an advocacy group in Washington, D.C., to help work with us on this issue.”
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Source: The State Journal Register - The Oldest Newspaper in Illinois