The New York Times: Obama Administration Rolls Out Standards for Health Insurance Marketplaces

July 11, 2011


WASHINGTON — In a big step to carry out the new health care law, the Obama administration unveiled standards on Monday for insurance marketplaces that will allow individuals, families and small businesses in every state to shop for insurance, compare prices and benefits and buy coverage.

Kathleen Sebelius, the secretary of health and human services, said the insurance exchanges, the centerpiece of the new law, “will offer Americans competition, choice and clout.”

In theory, the exchanges will pool insurance risks and premiums so that individuals and small businesses will have “the same purchasing power as big businesses,” Ms. Sebelius said.

Issuance of the proposed rules shows how President Obama is moving inexorably to carry out his health care overhaul, despite attacks on the new law in Congress and the courts, where more than two dozen states are challenging the constitutionality of a requirement for most Americans to carry insurance.

In principle, liberals and conservatives support the exchanges, which they see as a way to increase the purchasing power of individuals and small businesses, but they disagree on how the exchanges should be configured. The regulations issued Monday, which provide a fair amount of latitude to states, were welcomed by consumer groups, patient advocates and some business lobbyists.

But they may not satisfy liberals who argue that the exchanges should tightly regulate insurance and contract with selected health plans that offer the best deals. And they may not satisfy conservatives who want the exchanges to be wide open to any insurers that want to participate and meet minimum federal standards.

Every state will have an exchange by Jan. 1, 2014. Federal officials will assess states’ “operational readiness” as of Jan. 1, 2013, and will run the exchange in any state that is unable or unwilling to do so.

Many states have been pondering how to proceed, and the regulations will provide guidance. The National Conference of State Legislatures says 12 states have enacted laws to establish exchanges. Bills failed in nine states and are pending in 11 others, the organization said.

The Congressional Budget Office predicts that by 2019, about 24 million people will have insurance through exchanges, with four-fifths of them getting federal subsidies that average $6,400 a year per person. People with incomes up to four times the poverty level (about $89,000 a year for a family of four) will be eligible for subsidies to make insurance more affordable.

Each state exchange will certify “qualified health plans,” provide the public with “standardized comparative information” on costs and benefits, and rate each plan based on the quality and price of care. In addition, the exchange will help people determine if they are eligible for Medicaid or the Children’s Health Insurance Program, or for federal tax credits to subsidize the purchase of private insurance.

Federal officials said they would issue a separate rule later this year specifying the “essential health benefits” that must be offered by all health plans.

Trumpeting the advent of the exchanges, the administration said Monday that they would “give Americans the same insurance choices as members of Congress.” However, in response to questions after a news conference on Monday, health officials acknowledged that this claim was not necessarily correct.

A small employer will be able to pick “a level of coverage” for its employees. A higher level will pay more of the consumer’s medical costs. Under the law, members of Congress must generally get their coverage through an exchange. But a small business could legally choose a level of coverage lower than those offered to federal employees, including members of Congress.

Under the rules, an employer may allow employees to choose any health plan at a given level of coverage. But an exchange may also allow an employer to limit its workers to one or two health plans — far fewer than the number available to members of Congress and other federal workers.

With some states like Florida balking at the new law, federal officials went out of their way Monday to strike a conciliatory note, promising to be flexible. If a state is not ready by January 2013, Ms. Sebelius said, it still might qualify for “conditional approval” if it was on track to operate an exchange by January 2014. In addition, federal officials said, a state could set up and operate its own exchange in 2015 or later years if it is not ready in 2104.

USA Today: Medicaid payments go under the knife

 By Phil Galewitz, Kaiser Health News 

July 6, 2011 

To curb rising Medicaid costs, about a dozen states are starting a new budget year by reducing payments to doctors, hospitals and other health care providers that treat the poor.

Some health care experts say the cuts, most of which went into effect July 1 or will later this month, could add to a shortage of physicians and other providers participating in Medicaid.

“Further depressing payment rates can only worsen the situation,” says Sara Rosenbaum, chair of the health policy department at George Washington University. She says some states cutting rates — such as South Carolina— already have severe Medicaid physician shortages.

Insurers and employers have their own concerns about the payment cuts. They say trimming the rates will prompt providers to raise their prices for patients who have private insurance.

“It’s always a concern that when providers get less from Medicaid, that they will shift the costs to private insurance so families and employers pay more,” says Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, an industry group.

Besides South Carolina, other states reducing Medicaid payments to physicians this month are Colorado, Nebraska, Oregon and South Dakota. Arizona, which cut rates in April, will impose another cut in October. States reducing payments to hospitals include Colorado, Connecticut, Florida, Nebraska, New Hampshire, North Carolina, Oregon, Pennsylvania, South Carolina, Texas, Virginia and Washington. New York cut hospital payment rates in April.

In March, California approved a 10% Medicaid cut to doctors and hospitals, but those reductions are pending because of an existing lawsuit.

The payment cuts, which require federal approval, are part of a larger effort by states to reduce the cost of Medicaid, typically the largest- or second-largest expenditure after education. In some states, dental services and other optional benefits have gone under the knife. And many states are requiring enrollees to sign up for private Medicaid managed care plans.

Medicaid, a joint state-federal health care program, serves more than 50 million low-income and disabled people. Under the 2010 health care law, more than 16 million additional people will become eligible starting in 2014, with the federal government picking up most of the cost.

To entice more physicians to accept Medicaid patients, the law raises rates for primary care doctors in 2013 and 2014 to match those paid by Medicare, the health care program for seniors. States on average currently pay Medicaid providers about 72% of what Medicare pays.

Federal-state Medicaid costs were $366 billion in fiscal 2009. The federal stimulus package gave states $100 billion to help pay their share, but that funding ended June 30, and “states are struggling,” says Laura Tobler, a policy analyst at the National Conference of State Legislatures. The health law bars states from restricting eligibility for the program.

Nearly half of the states cut provider payments in the fiscal year that ended in June, according to the National Association of State Budget Officers.

Contributing: Kaiser Health News is an independent news service of the Kaiser Family Foundation, a non-partisan health care policy organization. It is not affiliated with Kaiser Permanente.

Los Angeles Times: Gov. Jerry Brown signs ‘honest but painful’ budget,0,1204898.story

The $129-billion package slashes funds for state commissions and higher education while relying on a $4-billion windfall in revenue.

By Shane Goldmacher, Los Angeles Times

July 1, 2011

Reporting from Sacramento — Gov. Jerry Brown on Thursday signed California’s second on-time, balanced budget in a decade — one that will sharply curb the services the state offers and that relies on a windfall of revenue.

Unlike his predecessor, Brown used his line-item veto power relatively sparingly, dashing $270 million in spending, mostly from railway projects. He also reduced money for state commissions on higher education and women, eliminated funding for a data system to track teacher performance and further trimmed court spending.

The governor enacted the $129-billion package, with a general fund of $86-billion, in his Capitol office with little fanfare. “This is an honest but painful budget,” he said in a statement.

The signing, attended by the Legislature’s two Democratic leaders, also marked the official concession that Brown had failed to deliver a bipartisan spending plan. The same partisanship that had entangled his two predecessors also ensnared Brown, despite all the “experience, knowledge and know-how” he boasted of on the campaign trail last year.

Democratic lawmakers passed the package earlier this week, using a new voter-approved law that allowed them to do so with a simple majority vote. They bridged the final $4 billion that remained of a more than $25-billion deficit by assuming that an equivalent amount of unanticipated money will land in state coffers. Tax revenue has far outpaced projections so far this year.

If the extra money fails to materialize, the state will chop deeper into social services, prisons, universities and courts, and possibly cut up to seven days off the school year.

Already, the plan contains severe cuts, including reductions of about 23% to public universities, raising the price of medical care for the poor, closing senior centers and cutting welfare grants and cash aid for the elderly and disabled. Seventy state parks are slated for closure, community college fees are on the rise and mental health programs will be trimmed heavily.

“We gave our pound of flesh at the office,” Senate President Pro Tem Darrell Steinberg (D-Sacramento) said Thursday.

Brown took even more. He carved more than $234 million out of transportation bond money, saying some projects did not mesh well enough with the state’s nascent high-speed rail project.

The Los Angeles County Metropolitan Transportation Authority will lose $5.7 million, and Metrolink will forfeit about $35.2 million as a result, the governor’s finance department said. That will delay a program to seal off rail corridors to pedestrians and motor vehicles, Metrolink officials said.

Courts, which have already absorbed $350 million in budget reductions that the state’s chief justice has said threaten California’s justice system, were subjected to an additional $22.8 million cut. Financial officials said that money was unnecessary because the program it would have paid for was no longer planned.

Brown completely eliminated the California Postsecondary Education Commission, saving $1.9 million. For nearly four decades, the panel has coordinated planning between California’s three branches of higher education — the California State University and University of California systems and the community colleges. In his veto message, Brown called the commission ineffective.

The governor also axed $2.1 million in federal money for a data system known as CalTIDES, intended to track teacher performance. He maintained funding for a student database, known as CalPADS. In May, he had proposed suspending money for both.

“It’s unfortunate that it sounds like we’re one step forward, one step back,” said Bill Lucia, president of the education advocacy group EdVoice. The organization pushes for the use of more data to make education policy.

Brown slashed more than 40% from the budget of the Commission on the Status of Women to save $200,000; he had previously proposed abolishing it.

The governor’s budget director, Ana Matosantos, blamed Republican resistance to taxes for many of the latest cutbacks.

Though the budget is signed, the fight is not over. Brown, Democrats and their allies have indicated they will now begin to plot which taxes to seek through a ballot initiative next year, saying California’s financial well-being cannot be restored until more revenue is on the books.