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Kaiser Daily Health Policy Report
State Audit Finds Blue Cross Blue Shield of Michigan Showing 'Symptoms of Financial Malaise'
Missouri Senior Prescription Plan Heads to Conference Committee
Uninsured Percentage, Personal Wealth and Medicaid Thresholds Were Determining Factors in CHIP Expansions, Study Finds
Arizona Program that Provides 'Life-Sustaining' Medical Treatments to Undocumented Immigrants Set To Run Out of Funds Oct. 1
North Carolina Mental Health Reform Legislation Fails to Pass State House
As After Pearl Harbor, Terrorist Attacks Likely to Slow Health Policy Legislation, CQ's Goldreich Says
Capitol Hill Watch
Norwood Says He Will Continue Patients' Rights Push, But Most Say National Security Will Trump Domestic Issues
[Sep 17, 2001]
Rep. Charlie Norwood (R-Ga.) said Sept. 14 that work on a patients' bill of rights -- versions of which have passed both houses of Congress but have not reached a House-Senate conference -- should continue despite last week's terrorist attacks, CongressDaily reports. "We do a great disservice to Americans if we get off track because of this incident," he said, adding that for Congress to abandon its agenda is "just what [the terrorists] want." Norwood has spent the past two weeks attempting to "mend fences" with his "longtime allies" after he reached an agreement with President Bush to get a bill through the House without consulting them (Rovner, CongressDaily, 9/14). Under the House bill, passed last month, patients could sue health plans in state court under a new set of federal rules that would cap non-economic damage awards at $1.5 million (Kaiser Daily Health Policy Report, 8/3). Norwood said that he had "apologized for the process" by which the deal was struck, which "outraged" other backers of a patients' rights bill. Last week he said that he would "support some changes" to the House-passed bill and that he has been involved in discussions designed to "strik[e] a deal" before the conference committee meets in order to smooth the way for a compromise between the House and Senate (CongressDaily, 9/14). The Senate bill, passed in June, would allow patients to sue HMOs in state court for denial of benefits or quality of care issues and in federal court for non-quality of care issues, with damages awarded in federal court capped at $5 million and no caps in state courts (Kaiser Daily Health Policy Report, 8/16). Rep. Robert Andrews (D-N.J.) said he agreed with Norwood that Congress should move forward with its domestic agenda, adding that the terrorist attacks could "actually help smooth over the big disagreements" between the House- and Senate-passed bills. "Partisan disagreement on any topic is unseemly right now," he said (CongressDaily, 9/14). National Security Focus
However, many lawmakers said that domestic issues, including patients' rights and a Medicare prescription drug benefit, will likely take a back seat to national security issues in the wake of last week's attacks, USA Today reports. "We are literally scrambling minute by minute, day by day. Lots of issues like health care ... are going to have to be put on the side burner," House Minority Leader Richard Gephardt (D-Mo.) said (Welch, USA Today, 9/17). Referring to patients' rights and a Medicare drug benefit, Georgetown University government professor Stephen Wayne said, "I think those issues get pushed backed into next year. This is just not the time to raise these other partisan issues" (Bloomberg, 9/14). Political commentator Stuart Rothenberg said, "Bush is now the 'national leader,' and that lessens the chance of anything passing Congress that he doesn't want. And everything he wants is war-related. There's no way for Democrats to bring up stuff at a time when we're going to be burying people, and that could take many weeks" (Polman, Philadelphia Inquirer, 9/16).
Health Care Marketplace
State Audit Finds Blue Cross Blue Shield of Michigan Showing 'Symptoms of Financial Malaise'
[Sep 17, 2001]
Blue Cross Blue Shield of Michigan, the state's largest not-for-profit health insurer, is showing "symptoms of financial malaise" that could "threaten" the future of the company, according to an audit conducted by the Michigan Office of Financial and Insurance Services. Although the insurer is "safe and entitled to public confidence," state OFIS Commissioner Frank Fitzgerald said that the audit found "some disturbing trends" at BCBSM, the Detroit Free Press reports. BCBSM has lost more than $400 million in the small group market, and Blue Care Network, BCBSM's HMO, lost $134.3 million from 1998 to 2000 and $18.2 million this year. In addition, the audit found that BCBSM's administrative services contract business, which represents half of the insurer's premium revenue, has "not been as lucrative as it should be" and that BCBSM has "inadequate" technology systems, which would cost more than $300 million to upgrade (Norris, Detroit Free Press, 9/15). The audit also found that BCBSM, with a 1.8% return rate on investments as a percentage of the firm's total assets, has not received an "adequate return" (Durbin, AP/Detroit News, 9/15). The Michigan OFIS conducts an audit of BCBSM every three years, but with BCBSM urging state lawmakers to modify a 1979 state law that regulates the company, Gov. John Engler (R) asked for a more "comprehensive" audit this year (Detroit Free Press, 9/15). Under the law, BCBSM must provide health care "at a reasonable cost" and "accept anyone" who applies for health insurance. Modify the Law?
BSBSM Senior Vice President Richard Cole said the problems reported in the audit highlight the company's "unique status" as the state's "insurer of last resort," adding that modifying the 1979 law "would allow the company to better respond to the market" (AP/Detroit News, 9/15). He said that the law prevents the company from adjusting small group coverage based on age, a practice used by for-profit insurers, which leaves BCBSM with a "disproportionate number" of older enrollees who often use more health care services. "We want to be competitive. So let's level the playing field with the commercial insurance companies," Cole said (Detroit Free Press, 9/15). Engler, concerned by the findings in the audit, said that he would ask the state Legislature to provide Fitzgerald with "broader oversight" over BCBSM. He also expressed concern that BCBSM may "substantially" raise health insurance premiums (AP/Detroit News, 9/15). "The financial warnings in the audit are disturbing news to me and to every Michigan family," he said (Detroit Free Press, 9/15).
Prescription Drugs
Missouri Senior Prescription Plan Heads to Conference Committee
[Sep 17, 2001]
Missouri lawmakers will hold a conference committee to resolve differences between state House and Senate versions of a bill that would create a prescription drug plan for state seniors, CongressDaily/AM reports. Differences in the plan include enrollment periods, a state Senate provision to end the program in 2005 unless it is renewed and the size of a Medicaid expansion required by law. After a "daylong debate" on Sept. 13, the state Senate voted to appropriate $15 million to expand Medicaid, which then sent the bill to conference (CongressDaily/AM, 9/17). Seniors in two income "categories" would be covered under the plan. Individuals earning $12,000 or less and couples with incomes of $17,000 or less would compose the first group, and singles earning $17,000 or less and couples with incomes of $23,000 or less would compose the second group. Seniors in the lower income bracket would pay a $25 annual enrollment fee and a $250 deductible, while those in the higher income bracket would pay a $35 enrollment fee and a $500 deductible. Once seniors contribute the deductible, the state would pay 60% of their remaining drug costs. The bill would also repeal a $200 tax credit for those over age 65. The drug benefit has been estimated by some state officials to cost $100 million annually (Kaiser Daily Health Policy Report, 9/14).
Children's Health
Uninsured Percentage, Personal Wealth and Medicaid Thresholds Were Determining Factors in CHIP Expansions, Study Finds
[Sep 17, 2001]
States with a higher percentage of uninsured children and a greater per capita personal income, along with lower income eligibility thresholds for children under Medicaid prior to the enactment of the Children's Health Insurance Program, had greater program eligibility limit differentials between Medicaid and CHIP than other states, according to a new study in the American Journal of Public Health. Using several sources of data, Frank Ullman of the Sapelo Research Group and Ian Hill of the Urban Institute evaluated the CHIP participation of all 50 states and the District of Columbia by comparing public health insurance eligibility limits for children ages 0 to 19 years in June 1997 -- a month before Congress enacted the program -- and in June 2000. They concluded that the "average state" raised its eligibility threshold from 121% of the federal poverty level under Medicaid to 206% under CHIP during that period. The study also found that three variables were statistically significant in predicting greater threshold increases; specifically, a "$1,000 increase in a state's per capita income was associated with a 3.75 percentage point increase" in CHIP eligibility levels, and states whose Medicaid income limits were in the bottom fifth were projected to raise their income thresholds by an average of 94 percentage points, while those in the top fifth were projected to raise theirs by 63 percentage points. The study also determined that changes in the amount of federal matching funds relative to Medicaid and the political affiliation of state legislatures and governors did not have a significant effect on income eligibility levels. 'Catching Up' With Other States
In the discussion of their findings, Ullman and Hill write that most states CHIP income limits "hover around the median" of 200% FPL. This means that CHIP eligibility levels "across states" are "more similar than they were in states' preexisting Medicaid programs." The range of income thresholds, however, is greater under CHIP because "some states, such as New Jersey at 350% FPL, have significantly expanded coverage beyond the thresholds of other states." The authors add that the finding that states with lower income limits under Medicaid increased their thresholds more under CHIP "suggests that ... states with previously low levels of coverage may be 'catching up' to those with historically more generous programs" (Ullman/Hill, "Eligibility Under State Children's Health Insurance Programs," September 2001). The full study is available online.
Coverage and Access
Arizona Program that Provides 'Life-Sustaining' Medical Treatments to Undocumented Immigrants Set To Run Out of Funds Oct. 1
[Sep 17, 2001]
During a special Sept. 24 legislative session convened by Arizona Gov. Jane Hull (R), state lawmakers will discuss the fate of the State Emergency Services program, which provides free dialysis, chemotherapy and other "life-sustaining" medical treatments to about 200 undocumented immigrants per year, the Arizona Daily Star reports. The Arizona Health Care Cost Containment System, the state's Medicaid program, can no longer pay the $20 million annually to run the program because the federal government "backed out of an agreement with the state to help pay the health care of undocumented people who aren't covered by Medicaid." AHCCCS spokesperson Frank Lopez said the change happened after voters last November passed Proposition 204, which expanded Medicaid eligibility (Innes, Arizona Daily Star, 9/17). The measure requires the state to spend money from the national tobacco settlement to expand AHCCCS eligibility: The state now covers individuals whose eligibility is categorically linked to Medicaid (such as parents of Medicaid-enrolled children) up to 100% of the federal poverty level, or about $17,050 per year for a family of four, and those whose eligibility is not linked to Medicaid (such as single male adults and women who are not pregnant) up to 100% of poverty as well. The previous limit was 34% of poverty, or $6,000 per year for a family of four, for both groups (Kaiser Daily Health Policy Report, 7/9). The Daily Star reports that because Proposition 204 "constituted a change to a federal program -- Medicaid -- it also subjected local health programs to federal approval." Continuing the Program
For the program to continue, legislators must approve a law to extend it, Francie Noyes, a Hull spokesperson, said. "The program goes away Oct. 1. The governor cannot wave a magic wand and continue a program that legally has ceased to exist. It's almost a technicality, but it's an important technicality in keeping the program going." Noyes said Hull believes the program could use money Arizona receives for having a "disproportionate" number of poor people in its health care programs. State Sen. Ramon Valadez (D) said that Hull "hasn't left us with a lot of alternatives," adding, "The plain and simple truth is that people's lives are at stake and we have to deal with it." Dr. Sam James, a University of Arizona Health Sciences Center nephrologist, said, "It's getting a little desperate now because time is going by. I think lawmakers ought to be compassionate. These are people. People are people, and we need to make a decision about helping illegal aliens" (Arizona Daily Star, 9/17).
Behavioral Health
North Carolina Mental Health Reform Legislation Fails to Pass State House
[Sep 17, 2001]
North Carolina's House of Representatives last week failed to pass the Senate version of a bill set to "overhaul" the state's mental health programs, the AP/Charlotte Observer reports. By a vote of 63-47, the state House rejected the bill because it "dropped a House provision requiring General Assembly approval" before officials would be able to close "any of the state's" mental retardation centers. The Observer reports that the state's mental health programs have been "troubled by mismanagement, aging facilities and limited resources." The state House-passed version (HB 381) would require that 39 local mental health programs be cut to 20 over the next six years, with "more control" going to county managers and commissioners (AP/Charlotte Observer, 9/13). The House-passed bill also contains an amendment that would require the state to distribute funding equally to all local programs. Currently, the state gives some programs "special appropriations" (Kaiser Daily Health Policy Report, 7/27). The vote now moves the bill into negotiations between both state House and state Senate members (AP/Charlotte Observer, 9/13).
Opinion
As After Pearl Harbor, Terrorist Attacks Likely to Slow Health Policy Legislation, CQ's Goldreich Says
[Sep 17, 2001]
In this week's "Congressional Quarterly Audio Report," senior reporter Samuel Goldreich discusses the impact of last week's terrorist attacks on several health policy issues. Examining current spending, Goldreich says lawmakers' decision to draw money from the Medicare and Social Security surpluses to support the general budget as the nation gears up to battle terrorism won't hurt Medicare benefits, at least in the short term. He explains that "Congress simply returned to the age-old practice of disposing of surplus funds from whatever their source and writing IOU bonds to cover future benefit checks for Medicare and Social Security." But at some point, lawmakers will have to revisit the "lockbox issue" so that paying off those IOUs doesn't ultimately overwhelm the budget. Goldreich adds that even if Congress, consumed with national security matters, fails to pass this year's appropriations bills by a Sept. 30 deadline, lawmakers will likely pass a continuing resolution to keep government agencies operating, meaning Medicare and Medicaid payments would not be disrupted. Guns vs. Butter
Looking ahead, Goldreich says that Congress is unlikely to move this year on any of the health policy issues drawing attention before the attacks, such as patients' rights, stem cell research funding and a Medicare prescription drug benefit. A planned Sept. 21 hearing by the House Energy and Commerce Committee's health and oversight subcommittees on problems with Medicare drug reimbursement may raise some questions about the program's ability to add a more comprehensive drug benefit, but lawmakers will probably not have enough time to delve much further into the issue this year. While Congress managed to "do both guns and butter" during the Vietnam war -- spending on both defense and "Great Society" programs such as Medicare -- lawmakers today are more reluctant to be "tagged with squandering taxpayer money just when they [have] finally put an end to decades of ever-increasing deficits." A better parallel, Goldreich says, is to the impact on domestic programs following the attack on Pearl Harbor. Goldreich notes, "I looked up what [else] was happening the week of that first day of infamy in 1941 and found that the five-year-old Social Security Administration was lobbying for a massive expansion of benefits to include disability coverage. That passed, of course, but not until 1954." Drawing comparisons, Goldreich says that "it might take a few more years" for Congress to pass substantial Medicare reforms. Goldreich's full report can be heard online ("Congressional Quarterly Audio Report," 9/17).
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