The new health law mandates that states adhere to several changes, including setting up high-risk health insurance pools by June. Jackie Judd and Noam Levey discuss where efforts now stand.
JACKIE JUDD: Good day. I am Jackie Judd with Health on the Hill. One of the first significant tests of the health care overhaul bill is fast approaching. Here to discuss that and other issues is Noam Levey of the Los Angeles Times. Welcome. We are glad to have you. So, the new law mandated that by mid-June, high risk pools be implemented at the federal level and/or at the state level, $5 billion in the bill to help people with serious illnesses who are not already covered. Where do the efforts stand?
NOAM LEVEY: Well, the bill requires the states to set up these high risk pools and then for the federal government to step in if the states do not do that.
JACKIE JUDD: If they choose not to.
NOAM LEVEY: Right, so the hope is each state will go forward and do this. Many states, as you probably know, already have high risk pools in operation, but the Health and Human Services Department is in the process of trying to develop regulations about how those high risk pools would interact with existing state pools, trying to figure out the eligibility rules and deal with some states that may decide that they do not want to do this. We have already heard from one, the state of Georgia has said they are not interested in participating, so the federal government is going to have to figure out a way to backstop behind states like Georgia.
JACKIE JUDD: Late last week, HHS Secretary, Kathleen Sebelius, spoke in Chicago at the Association of Health Care Journalists’ meeting. What did she say about some of the challenges that face her and her department?
NOAM LEVEY: Well, she acknowledged that there is an enormous amount to be done. I mean, broadly speaking, I went and counted this the other day and in the bill the words “secretary shall” appear 1,051 times. Now that is not just for Sebelius, it is also for the treasury secretary and the labor secretary, but she has acknowledged that they have an enormous amount to do. There is a sort of set of deadlines going forward. You mentioned obviously the high risk pools, that is one of the first things, and states have to actually report back I think by the end of this week whether they are going to participate, but the secretary has a lot of work to do.
JACKIE JUDD: Now, in terms of the consumer who may be eligible for the high risk pools, what are the thresholds for people that have to be met to get in?
NOAM LEVEY: Well, the important one is that the legislation requires that some will be without insurance for six months before they sign up for these high risk pools, which is going to potentially be complicated for some people if they are in, they have just lost a job, or maybe they are in the existing high risk pool in a state but the premiums are higher there. Many of these high risk pools have very high premiums for people. We don’t know where the premiums are going to be for these new high risk pools that are set up by the government, so that is going to be an issue for consumers.
JACKIE JUDD: Okay. Let’s move over to Capitol Hill. There is a move among some Senate Democrats to already add some legislation to the health care overhaul bill to allow government regulators to have a say in raising insurance premiums. Where does that stand?
NOAM LEVEY: Well, you may recall that when President Obama sort of weighed his final push for the health care bill, he proposed that —
JACKIE JUDD: The Federal Regulatory Board.
NOAM LEVEY: Yes, and also sort of setting a floor for states to give them the ability to block premium increases. That did not make it in the bill, so what was left in the health care bill was actually quite arguably weak. There is a requirement in the bill that insurance companies will have to meet certain minimum, what are called medical loss ratios, that have to spend a minimum amount of their premium revenues on medical claims. What the effort underway now would do would sort of strengthen the ability of state regulators – and again if the states do not do it, allow the federal government to step in – to review any premium increases and not just publicize them or require insurance companies to explain them, which is what the bill currently does, but actually give insurance regulators the ability to block them. Now, the challenge of course is there is not a lot of time on the Hill between now and November. There is some concern Republicans are quite reluctant to further expand regulatory authority for government. So, Senator Dianne Feinstein in the Senate is working with the Senate Majority Leader and other Senior Democrats in the Senate to figure out if they can attach this provision which is relatively small to some other larger piece of legislation, maybe the financial regulatory reform bill that is going forward, maybe some other vehicle.
JACKIE JUDD: You mentioned the midterm elections in November, is the goal of Feinstein and other Democrats who support this to get it done, if it can be done at all, by then?
NOAM LEVEY: Yes, it is, for a number of reasons. I think a lot of consumer groups as well as I guess potentially more importantly on the Hill, Democrats who are facing re-election are quite concerned that if insurance companies raise premiums dramatically between now and November or going forward, a lot of Americans will sort of look at the health care bill and look at what has happened and say wait a minute, I though we went through this whole exercise of passing a big bill so that I would not have to pay more money. So, I think they want to try to get something in place to protect consumers and to protect themselves.
JACKIE JUDD: Okay and late last week a report came out that could also provide some political fodder for the Republicans in particular – a report from the HHS actuary, analyzing the health care overhaul bill. It had some analyses in there that the Republicans could rightly point to and say look, we told you so.
NOAM LEVEY: It did, although it also had quite a lot of analysis in there that conforms pretty clearly to what we knew about the bill beforehand, and I think you are right to put it in the political context because I think the discussion of that report was more of a political artifact than it was a policy one. The actuary, which is this independent agency within HHS, went through the bill and looked at a number of different potential impacts of the bill: what it would cost, how many people it would insure, and potentially its impact on Medicare. Now, you mentioned the fodder for opponents, the actuary concluded that the total spending on health care in this country would go up over the next ten years as a result of the bill. Now, President Obama and other Democrats who are arguing for the bill said that one of the main reasons was to control costs, so how do you reconcile those two?
JACKIE JUDD: The actuary did not include the changes to the tax laws.
NOAM LEVEY: That is right.
JACKIE JUDD: So that could change the bottom line.
NOAM LEVEY: Well, it could change the bottom line but the fundamental fact that when you insure 33 plus million more people and the Federal government provides additional aid for Medicaid and premium subsidies that there would be more spending was not a surprise to anyone, but it did underscore, I think, the challenge, which is that if you are going to insure a lot more people, you are going to spend more money on health care and then you really have to look elsewhere if you want to try to restrain that growth by making the system more efficient. That is the big challenge.
JACKIE JUDD: But you were right to point out there is something in that report for both sides, isn’t there? I mean the fact that of course it is going to insure 33 to 35 million more people.
NOAM LEVEY: It is going to insure more people and there was companion report, which got significantly less attention, that the actuary released that mentioned that Medicare solvency would be extended another 12 years as a result of the bill. The main trust fund in Medicare was originally projected to start running in the red in 2017. Actuaries concluded that in part because of the savings in the bill to Medicare, as well as they did take into effect a new Medicare tax on high income people, that those two factors would in fact extend the life of Medicare and even reduce premiums for beneficiaries. So that, as you mentioned, there is a little for both sides, I think.
JACKIE JUDD: Right and even on that point, the flip side of that is that the actuary said that some hospitals could be in jeopardy because of the reduction.
NOAM LEVEY: That is right. And it is also worth noting that the actuaries raised the concern that has been raised by a number of independent people that cutting Medicare going forward is always a political challenge for lawmakers and there is a question about whether they will have the fortitude to actually do that going forward.
JACKIE JUDD: Never a very clear cut.
NOAM LEVEY: No.
JACKIE JUDD: Thank you very much, Noam Levey, of the Los Angeles Times.
NOAM LEVEY: Thank you.
JACKIE JUDD: Good to have you here, and nice to have you here, too. This is Jackie Judd and this has been Health on the Hill.