Making it Simpler: Reinventing Individual Health Insurance

KISS, as a business imperative, is cited so often it’s passed beyond cliché to become background noise. Keep It Simple Stupid, however, is more of an illusive ideal than a comfortable accomplishment for most businesses. The individual health insurance industry is no exception – yet it needs to be.

 

Consumers buying medical coverage for themselves and their families lack the support network larger enterprises have. They (hopefully) are working with an independent insurance agent who understands their needs and knows the way through the maze of getting coverage, fixing billing problems or getting claims paid. But there’s no human resources department in the living room or colleagues to call upon for help in the kitchen. Worse, for those without an agent, there’s often no one to call for help than the carrier itself.

 

This isn’t necessarily a bad thing. Many people working in carriers’ membership service departments are quite good – once you get past the dreaded phone system. (I just dealt with a customer service rep at the health plan for my small business who solved the problem in one phone call – and was nice about it to boot).

 

The thing is, however, if you need to call for help, then something isn’t working right. Getting health insurance shouldn’t be complicated. Neither should understanding bills or explanations of benefits (EOBs). And doctors and hospitals shouldn’t have to devote so much resources and time into their interactions with health plans.

 

If Google can make searching the web clean and simple, if Apple can make a cell phone/music player/ PDA elegant and straightforward, if Visa and Mastercard can present payment histories in a relatively easy to understand manner, if Southwest can make booking a flight a breeze, then certainly health plans could simplify their processes.

 

A place to start would be with the products themselves. Each carrier describes their benefits in their own terms. Surely there’s a best practice for this kind of thing, but every carrier has its own unique and often idiosyncratic method. The result: agents (and their clients) devote hours to creating their own apples-to-apples comparisons.

 

There are the conspiracy theorists out there who believe this is done to make it more difficult for consumers to understand what they’re buying. I believe their wrong: why assume bad intent when indifference or incompetence explains the situation? When it comes to presenting benefits I think it’s more a case of an inward orientation with a dash of pride of authorship thrown in.

 

Or take provider directories. Many have moved online, but again, there’s a best practice out there that would make finding your doctor even easier. Or claim forms. Every doctor I see (and at my age it’s more than one, now) complains about the paper work. There have been efforts to move claim submittals online, but the problems with the process are more than technical. There’s also a need to simply make the process simpler. There’s a place for uniqueness. Commodity material is rarely that place.

 

Instead, the focus needs to be on something somewhat foreign to most health plans: design. Design has become a hot business concept. Magazines like Fast Company, Inc., Fortune fawn over the concept and those who excel at it. Products like iPods and half the house wares at Target are held up as icons of a new business paradigm.

 

Yet design shouldn’t be the sole purview of gadget manufacturers or fashion designers. Processes can be well designed, too; so can forms. But good design will only come to the work flows and materials of health plans if it’s a priority of their leadership. And that takes some courage. It’s not easy to make being easy a corporate priority, especially when your industry is under fire.

 

Yet those attacks can be seen as a motivator for simplification, too. For example, individual health plans are going to have change the way they underwrite applications. Their ability to discover fraudulent applications is going to be extremely limited once lawmakers get done reforming the rescission process. With no back-up, the importance of underwriting at the front-end becomes even more critical than it already is.

 

This is a great opportunity to make enrollment applications simpler. Again, there are those who claim the applications are complicated to enable carriers to play “gotcha” with their members who later incur claims. They have no facts to back this up, but that hardly matters, especially when these critics get a lot of attention just for making the claim. Which means carriers are going to have to deal with this charge for quite awhile – or until something changes.

 

(What’s more likely to blame for complex applications is the same dynamic that haunts anything created by committee. When lawyers, underwriters, actuaries, and business managers sit down to create a form – especially one that needs to meet regulatory standards – that form is going to be bloated, complicated and annoying. No ulterior motive is required.)

 

Instead of spending time repeatedly repudiating the charge, however, health plans would be better served to move beyond it. The fact is, applications are more cumbersome and complicated than they should be. Carriers should work with their Departments of Insurance and an outside design consultant to come up with standardized and, even more importantly, simplified underwriting forms. The forms should focus on making it as easy as possible for consumers to provide enough information for the carriers to make their underwriting decisions.

 

And that should be the explicit goal: easy sufficiency. This, in turn, means using simple language in a clear, concise manner. It means laying out the questions in a manner that flows and avoids asking for the same information repeatedly. It’s a lot easier to describe than do (I know, I tried once), but if made a priority, it’s doable.

 

When lawmakers, prosecutors and others are lobbing grenades your way it might be counter-intuitive to use the situation to focus on design. In reality, simplifying the touch points where consumers, agents and medical providers interact with the carrier is an extremely visible way of demonstrating a commitment to change. As important, it’s a vehicle for getting in front of the change that is inevitable.

Executing the Basics: Reinventing Individual Health Insurance

The best strategy in the game, the most inspiring vision in the industry means nothing without execution. And if an organization isn’t executing the basic components of the business, implementing something fancy — culture change, a new business model — isn’t going to get very far.

Executing the basics is the least exciting critical component of any successful business. By definition, a successful business has proven itself. It’s an ongoing concern. Leaders like to lead and that usually involves moving in new, more exciting directions. Over time, attention to the nuts and bolts can wane. The basics become a source for savings. The attention moves from serving the customer to an internal focus on efficiency. After all, resources need to be freed up to fund those new initiatives.

In the context of individual health insurance, the basics include processing applications, issuing bills, paying claims, contracting with doctors, appointing agents, and answering the phone. Most carriers do an adequate job on these items most of the time. All carriers do a lousy job on some of these at some time. Those osciallations in performance are normal and to be expected. What’s unacceptable is that “adequate” is, well, acceptable. Carriers will talk about delivering first class customer service, being partners with their providers and producers, but few, if any, consistently succeed.

The problem, I believe, is two-fold: an inability to measure the return on investment of better service; and an unwillingness for competitors to cooperate.

Providing services, whether it’s underwriting applications, answering questions from insureds and their physicians, or paying commissions, costs money. These dollars can be measured, tallied and monitored. Given the need to keep coverage affordable, the appropriate goal for carriers is to provide these services as efficiently (meaning at the lowest cost) as possible.

These services also have benefits in the form of customer satisfaction, increased efficiencies at the partner level (less time spent in doctors offices tracking down an answer freeing up more time to work with patients), and a negative public image. The problem is that dollars are a lot easier to track than satisfaction or efficiency in someone else’s office. So when carriers do a cost benefit analysis on a new IVR system (IVRs are those automated “press 1″ or “say ‘billing’” phone routing systems) they can measure the savings in personnel costs, but they lack the tools to measure the increased frustration members feel when unable to make the artificial (un)intelligence get them to the right place.

Health plans aren’t the only industry with frustrating phone systems. Sprint, AT&T, Time Warner, DirecTV and Verizon are a few others with IVRs deserving of a shout-out — or shut down, depending on your point of view. But cable and phone utilities are not the standard to which carriers should hold themselves. Nor should the standard be Nordstrom or Starbucks. It should be what consumers define as good customer service, doctors define as good physician service, and producers define as good agent service.

Carriers need to examine their basic operations from the consumer point of view. They need to define customer expectations and then think about ways to deliver those services in a cost-effective way that meets those expectations.

This means shifting the focus from an internal point-of-view to one that looks at operations through the eyes of the consumer (or physician or agent). This isn’t hard: every officer in every health plan should be required to call their customer service departments on a monthly basis. They should get a monthly bill and call in with a question. They should receive an Explanation of Benefits (EOBs) and be asked how much and to whom they would cut a check if it was for real. They should call in to the pre-authorization phone line and follow-up on an application. In other words, they should walk in their customer shoes at least monthly. Then, on a quarterly basis, their staff meetings should focus on what they experienced.

There’s other techniques that work. For example, executives and managers should be required to plug in and listen to phone calls between their service reps and customers. Not occasionally, but in a regular, disciplined way.

Carriers also need to find ways to quantify something more than dollars. Perhaps bonuses should be impacted by customer satisfaction survey results or even public surveys. Or, perhaps they should ask someone. Fortunately for carriers, there’s too many economists in the world with too little to do. Certainly some of them have come up with mathematical formulas for measuring intangibles. Give them a call — they’re hungry for someone to talk to. Make your CFOs sit down with them and come up with a formula that works.

And then share the results. Which is the other part of the challenge. Most businesses tend to think that everything they do must be confidential and proprietary. The market is a jungle and every advantage needs to be exploited to survive. In this mindset, advantages are to be hoarded, not diluted by sharing.

The problem is that most customers don’t really care about a lot of these proprietary advantages. An example from a book I read, but now forget the title, describes the foolishness of the auto industry when lawmakers required them to incorporate catalytic converters into their cars. Each auto maker spent many millions of dollars to invent and implement their own design. Yet who has ever purchased a car because of its catalytic converter? The industry could have redirected most of those dollars to features that matter if they had come together and designed a standard converter they all could have used.

This concept of standardizing and sharing resources is much more acceptable in the software world where open source systems like Linux and MySQL are widely used. It’s foreign to most companies, including carriers. 

Yet the opportunity to standardize and share resources is huge in the industry. Applications for coverage, claim forms, EOBs, bills, commission statements aren’t competitive advantages — their Babel-like diversity is merely a source of frustration for users. Better yet, by standardizing them, entrepreneurs could develop tools to increase efficiency for the carriers and convenience for consumers.

Consider: most carriers currently accept online applications from large producers like eHealthinsurance. Yet, as large as eHealthinsurance’s production is, it represents a small percentage of carriers’ overall sales. Why create mechanisms that benefit just a few agencies? Instead, carriers should agree on standards for quoting and case submission systems that works for all health plans in all states. These standards should be freely distributed as open-source software. eHealthinsurance may compete in the market based on its quoting system, but carriers don’t. By creating a publishing low- or no-cost software carriers can more easily implement customer friendly services like automated underwriting, immediate issuance of membership cards and the like.

Standardization doesn’t mean customization isn’t allowed. There are several flavors of Linux commercially available. Similarly, entrepreneurs could take the open-source quoting/submittal software and package them, adding new interfaces and functionality. So long as carriers standardize around the basics, however, they should all save money, increase efficiency and improve customer satisfaction with the industry as a whole. They could then use the freed-up funds to better compete on what does matter to consumers: benefit design, cost of coverage, and the like.

Would this kind of cooperation be legal? It depends on how it’s approached. The standards negotiations can be outsourced to an independent third party. Or they can be convened under the auspices of regulators. In California, Insurance Commissioner Steve Poizner has done something similar and has expressed an interest in helping carriers appropriately address common challenges. So yes, it can be done legally.

Attending to the basics is not exciting, but it can be impactful. Perhaps more importantly, invigorating innovations will fail unless they’re built on a strong foundation. So if the individual health insurance industry is going to reinvent itself, the nuts-and-bolts of the business is where it has to begin.

 

Reinventing Individual Coverage: Defining the Approach

In my previous post I suggested the current political environment provides more than sufficient inspiration for individual health insurance industry to reinvent itself. One of the challenges to actually implementing change is figuring out how to approach the problem. It’s often too easy to get caught up in the details without remembering the goal.

And the goal here is to deliver value to consumers who purchase their own health insurance coverage. This may seem obvious, but in too many cases, industry insiders and reformers at the barricades alike get so caught up in rules and regulations, processes and work flows, structure and platforms that they lose site of this simple truth: at the end of the day we either provide value to consumers … or else.

And it’s a truth that is agnostic as to whether the “we” is a private enterprise or a government agency. We either deliver or we go away.

So instead of structuring the gratuitous advice I intend to offer over the next several posts on specific items (dealing with rescissions, simplifying the application, etc.) I’m going to focus on a few general themes. Specifics may crop up as examples or to help amplify the themes, but it’s the overarching themes that provide a framework for change.

As of now, I’m inclined toward four major themes:

1. Executing the Basics
2. Making it Simpler
3. Sharing Technology
4. Earning Trust

Executing the Basics is all about the nuts-and-bolts of being a health insurer. Processing applications, issuing bills, paying claims, contracting with doctors, appointing agents, and answering the phone.

Making it Simpler recognizes that individuals are not businesses, even when they have the assistance and counsel of a qualified agent. Health insurance coverage is complicated enough. The process of getting and using it, however, shouldn’t be as complicated as it is. Nor should finding the plan that best fits a family’s need. Nor filing a claim. Nor … well, you get the idea.

Sharing Technology stresses that a carriers’ sales and member service technology shouldn’t drive consumers’ buying decision. A health plan’s benefit design, pricing, access to providers and the carriers’ customer service offerings should.  The industry could save millions of dollars by adopting standards that any and all technology providers can use for everything from accepting online applications, issuing online membership cards, processing claims, creating provider directories, etc.

Earning Trust may be the most important theme. After more than a year of every major office holder in the country calling the system broken, after endless legislative hearings, headlines and press conferences attacking the industry, consumer confidence in the industry is lower than its ever been. Worse, this only seems to inspire supposed industry insiders to pile on. The fact is there are problems in any enterprise, public or private. What’s needed is facing them honestly, not to score points.  Most of all, earning trust means raising the standards of behavior and meeting them.

These themes overlap with one another. What works in one area might well impact another. But they provide a general framework for discussing ways to reinvent individual health insurance. At least they are the themes I’ll be addressing over the next several days. Do you have others you think need to be considered? Are these off-target? Please let me know your thoughts by posting a comment. 

Reinventing the Individual Health Insurance Market

The health insurance industry has been under attack for years. There are those who would like to do away with it completely. While those voices have grown louder in recent years their political success has been limited at best. For evidence, just look at the campaign for the Democratic presidential nomination: no major candidate called for a government-run, single-payer system. The two remaining contenders have both explicitly taken such an approach off the table.

Yet there is one aspect of the industry that is under intense attack: the individual market. Again, this isn’t new. In the past, however, most of the attacks have been unfocused or ill-informed. Critics tended to ignore unique aspects of the coverage targeted at individuals and families buying insurance outside of work: it’s a voluntary decision. To maintain affordable premiums carriers must weed out potential buyers who are certain to incur substantial claims.

For example, carriers will often reject an applicant who is a regular user of a particular prescription drug. This strikes many as wrong, if not immoral. Just because someone needs a certain medication is no reason to deny them insurance.

Yet, when the monthly prescription costs exceeds the monthly premium, what else can the carrier do? Insurance is about spreading risk. In a voluntary market where people can choose when to purchase coverage, it means they need to buy insurance before their known risks exceeds the premium. Otherwise, they are simply asking other consumers to subsidize them. This dynamic, known as adverse selection, is at the root of much of the problems facing the individual market.

It’s not the only cause, however. Carriers exacerbated the problem by mishandling their approach to managing adverse selection. The most obvious mistakes involved how rescissions were handled. Even the industry’s most ardent foes admit carriers need to protect themselves from fraud. If an applicant knowingly and intentionally lies about material information on an application for coverage, the carrier should have the right to revoke the coverage.

It’s identifying when the misstatements are knowingly and intentionally that creates a gray area. Carriers chose to be aggressive in applying their right to rescind coverage. Now they’re paying a huge cost for this posture in the form of large fines, law suits and horrendous publicity.

The rescission issue is the hammer being used by lawmakers, regulators and pundits interested in reshaping the individual health insurance market. That their proposals would be more likely to do more harm (in the form of higher prices and less consumer choice) than good seems almost beside the point. They want change. They want it now.

While their changes are often off target their goal may not be. Perhaps the attack on the this market segment is what’s needed to prod the industry to reform itself. Perhaps it’s the motivation needed to reinvent the individual health insurance market, to make it stronger, more valuable and more respected than in the past.

I’ll be writing about the opportunities for reinvigorating the individual market over the next several days. I hope you’ll share your ideas, too. Please post your thoughts on ways to reinvent individual health insurance products, the way they’re sold, administered and used. By the end of this dialogue we’ll at the very least have built a list of alternatives to some of the misguided proposals currently being considered in Sacramento, Washington D.C. and elsewhere. At best, someone who can actually implement the changes may be inspired by your thoughts and meaningful change will follow.

Stay tuned.  

Debating Medical Cost Controls in Massachusetts

The folks in Massachusetts are engaged in a lively debate over health care reform. Seems their widely touted reform plan, complete with Connector and individual mandate, is running into some unintended consequences. Among them, higher costs than anticipated and a lack of primary care physicians. The good news is the wide-ranging debate has moved beyond the politics and mechanics of the Massachusetts health plan to encompass controlling health care costs.

Consider the dialogue occurring on the Commonhealth blog (published by 90.9 WBUR, Boston’s NPR station), between Dr. David Himmelstein, Co-Founder of Physicians for a National Health Program, and Eric Shultz, President of Fallon Community Health Plan. Dr. Himmelstein kicked things off with a post claiming “With spiraling costs threatening to derail Massachusetts’ health reform, politicians and health policy wonks are rounding up the usual cost-control suspects. Unfortunately, the tired ideas they’re trotting out have virtually no chance of success.”

Dr. Himmelstein then runs through why computerization, prevention, disease management, and cost sharing won’t restrain medical costs. He believes the only way to reduce costs is to eliminate the “middle men” in the system — what you and I call the insurance industry – and to limit the profusion of expensive high technology facilities. Leaving aside a moment the public policy of a government-run system, Dr. Himmelstein fails to explain how eliminating insurance companies, insurance agents and purchasing pools curtails the rate of medical cost increase. Once they’re gone, they’re gone. Eliminating private bureaucracies and delivery systems simply shifts is a one-shot savings, not a long term solution — and that doesn’t include the offset created by the need to create a government bureaucracy and delivery system in its place.

Dr. Himmelstein’s call for fewer CAT scanners and other technologies might be more substantive, although his approach to controlling them is chilling. “So long as we leave health planning to the market, the expensive medical arms race will continue.” The implication being that only the government can control costs. Dr. Himmelstein fails to provide any examples where that has worked. I wonder why?

In any event, Mr. Shultz responded in a post with a warning that “Discussions about who pays — whether it’s a single-payer or otherwise — are, fundamentally, discussions about cost-shifting. But cost-shifting does little to get at the relentless underlying drivers of health care costs. And what’s driving up health insurance costs are skyrocketing medical costs, which consume roughly 87 cents of every health insurance dollar.” While allowing that Dr. Himmelstein’s identifying the need for limits on expensive high tech facilities is “well taken,” Mr. Shultz rejects the single payer approach. Citing a Rand study, he notes that ”only half of all health care dollars are spent on appropriate medical care.” 

This reality can only be addressed, according to Mr. Shultz, by first requiring that “all players within the health care system have quality and cost information, combined with innovative health insurance plans.” Mr. Shultz goes on to refute Dr. Himmelstein’s dismissal of disease management and smoking cessation programs as ineffective, instead calling for continued focus on prevention and disease management efforts “to ensure the most optimal results are achieved.”

There’s more to the Fallon post. The reality is that controlling medical care costs is a far from easy task. It requires saying “no” to patients demanding inappropriate or ineffective care, “no” to facilities and other providers seeking a market advantage by deploying the latest technologies, “no” to health plans who are less than clear on what’s covered — and what’s not — in their plan designs, and a whole lot more.

What’s significant is that the struggles facing Massachusetts’ health care reform plan is sparking a fulsome debate on what’s needed to restrain health care costs. That may be an unanticipated outcome of the reform effort, but it’s useful and welcome nonetheless.

Why Health Care Reform is So Complicated

As Senator Barack Obama puts it when talking about health care reform, “If it was easy, we’d have done it by now.” For proof of how complex things can be, take a look at Massachusetts. Insurance agent Bruce Benton passed along a New York Times article describing the challenges some patients in the state face in finding a family physician.

Massachusetts’ health care reform plan strives for universal coverage. Since being implemented last year, about 340,000 of the 600,000 uninsured in the state have gained coverage. The strain on the state’s budget was widely anticipated. Of the newly insured, 176,000 have government-subsidized coverage and another 55,000 have enrolled in Medicaid according to The Boston Globe. The strain on the state’s budget is serious. But again, these kind of cost problems were predictable and aren’t really surprising.

What was apparently overlooked was how the influx of newly insureds into the system is straining the pressure on family doctors and other primary care physicians. As a result there’s waiting lists for some non-emergency treatment that stretches for months in some communities. The Times article recounts one physician in Amherst that is now scheduling physicals for early May — of 2009.

The problem is a serious one. By coming into the system, through subsidized coverage or not, residents of Massachusetts anticipated having access to basic health care services. Yet there’s just not enough primary care physicians to go around.

The United States will need 40 percent more primary care doctors by 2020, according to the American College of Physicians, to accommodate the aging population. It’s hard to see where they’re going to come from. The reasons are many. As the Times story reports, factors include reimbursement rates by Medicaid, and the attraction of a specialist’s practice among them. What’s ironic is that Massachusetts ranks significantly above the average in the per capita number of all doctors and primary care physicians.

Which does one little good if you need a doctor and can’t get one to see you. And none of this means attempts to achieve universal coverage should stop. It just underscores how tough a challenge it will be to make any reform package work.

 

 

State Budget Cutting Holes in Health Care Safety Net

Say what you will about Governor Arnold Schwarzenegger’s failed health care reform plan, it’s goal was noble. If it had worked as planed (which is highly unlikely) it would have not only brought millions of Californians into the health care coverage system, but would have strengthened the state’s medical safety net. Instead, the health care plan failed, the California budget is in tatters and that safety net is in grave danger.

Community health clinics and community health centers play a critical role in assuring that uninsured Californians obtain the health care treatment they need. As is often noted in health care reform debates, no one goes without care. The “safety net” is there to assure treatment is available to everyone. Community health care centers, for example, provide a medical home to 3.6 million uninsured Californians, according to Jason Vega of the Community Clinic Consortiumof Contra Costa and Solano counties.

What’s often overlooked, however, is how fragile that safety net really is. Part of the reason is demand. With millions of uninsured and underinsured Californians, community clinics and the like have no shortfall of clients. The quality of the care provided belies the cost of the care to those patients, who usually pay what they can — if they can at all.

The vast bulk of the funds for community clinics comes from donors and, even more importantly, from government health care programs. And that’s where the danger arises.

Under the Schwarzenegger health care plan, Medi-Cal reimbursement rates (what the state pays doctors, hospitals and clinics) was to increase. There’s certainly room for an increase: California’s reimbursement rates are among the lowest in the country.

But the health care plan failed. Part of the reason was the state’s dire fiscal condition. Even with draconian cuts recently enacted by lawmakers in Sacramento, the state needs to close a multi-billion budget gap. One way they’re likely to do that is to reduce Medi-Cal reimbursement. That, in turn, means fewer doctors will take Medi-Cal patients and, of those that do, many will see fewer of them. And that means more patients turning to community clinics.

The safety net is a critical component of today’s health care system. For those who oppose a government takeover of medical care, it is an element of the system that needs to be strengthened and protected. Yet that’s not happening now. And if the safety net disappears, the government will rush in to fill the vacumn, at great expense and to the detriment of consumer choice.

All this underscores the need for comprehensive health care reform that attacks skyrocketing medical costs while bringing more residents into the health care coverage system. I’m skeptical about whether states are in a position to accomplish this, but the federal government certainly can. As a new administration approaches this task in 2009, they need to make sure the health and vitality of the nation’s community clinics and its partners in the safety net are top of mind.

State Reform Issues More Incremental than Comprehensive

My personal belief is that comprehensive health care reform is more likely to come from federal action than anything the states do over the next couple of years. That’s certainly true in California where lawmakers are now focused on attacking specific problems rather than fixing the entire system. But the obstacles to state efforts are more than exhaustion, as I’ve written previously, states have limited resources and even more limited levers to exact change on systems as complex as the nation’s health care system.

Yet incremental reforms can make a difference, too, and several states have enacted or are considering interesting approaches. Aetna publishes a “Health Reform Weekly” it distributes to agents (among others) and their March 24th issue provided a roundup of state reform activity. I’ve taken the liberty of  reproducing much of it below. As you’ll see, with the exception of New Jersey — and to a lesser extent, Florida — these are hardly comprehensive efforts:

CONNECTICUT: Many of the health care measures approved by the Insurance Committee last week are focused on the high cost of health care. One of the committee-approved proposals would establish a wellness tax credit for small businesses; another would allow more flexibility to offer lower-cost health plans. Another proposal would allow municipalities to collaborate together to purchase health insurance. The House put forth the Healthy Steps Program, which permits the sale of reduced-mandate products, requires a cost-benefit analysis of mandates and establishes business tax credits for providing employees with health insurance. The Insurance Committee did not act on the “pay or play” health care tax bill, nor did it act on legislation that would dictate the provisions and terms included in the contracts between health insurers and physicians. Disposing of these proposals early in the session provides a boost to the business climate in Connecticut.

FLORIDA: Governor Charlie Crist’s “Cover Florida” plan for the uninsured passed out of its first committee last week and continues to move forward.Aetna has worked with the Governor’s office for several months on this proposal and has been successful in seeing a number of suggestions incorporated into this version. Health plan participation in the plan would be voluntary. Though Cover Florida still contains guaranteed issue language affecting participating plans, the plan would allow pre-existing condition exclusions as well as benefit limits.

GEORGIA: Action on the Georgia Medical Association’s prompt-pay proposal was postponed last week, but it may be acted on in committee this week.While it still contains language applying the prompt-pay requirements to self-insured plans, Aetna has been able to help reduce the bill’s impact by assuring health plans are not assessed penalties regarding prompt payment of claims unless they are below a 95 percent compliance standard. Also, the interest penalty has been reduced from 18 percent to 12 percent.

INDIANA: The Legislature adjourned the 2008 session on March 14. In recent weeks, an Assignment of Benefits bill died in the Senate.However, a “Silent PPO” bill made it through the process. After much negotiation, the industry supported the bill, which requires greater disclosure of information regarding the rental of PPO networks. The provider community attempted to include much more far-reaching, costly, and unnecessary items to the bill, but those were ultimately defeated.

MASSACHUSETTS: Commonwealth Choice health insurance premiums projected for this summer will average 5 percent more than last July’s rates.A state panel last week approved a contract to pay insurers about 10 percent more for each person enrolled in the subsidized insurance program starting July 1, making the lowest premiums in Commonwealth Care $39 a month to $116 a month. Insurers had asked for an increase of about 15 percent but agreed to less after weeks of negotiations. Under the contract, the state also would assume more of the financial risk if the enrollees were to use more medical care than expected. The Connector’s Executive Director John Kingsdale recently reported that more than 300,000 Massachusetts residents have enrolled who were previously uninsured. This large number suggests that the state’s official estimate of the number of uninsured (372,000) was low, so the cost of solving this bigger problem is going to be significantly more than originally thought (an estimated $869 million in FY ‘09 instead of $725 million).

NEW JERSEY: Senators Joseph Vitale and Robert Singer and Assemblymen Neil Cohen and Lou Greenwald joined David Knowlton, President of the New Jersey Health Care Quality Institute, last week in announcing a comprehensive health care reform initiative - the Vitale Plan - with the goal of achieving universal coverage in New Jersey.Phase One would feature a Kids First mandate requiring coverage of all children under 18; expansion of New Jersey Family Care to 200 percent of the federal poverty level; and small group and individual market reforms, including prior approval by the Department of Banking and Insurance for premium increases of more than 15 percent, an increase in MLR from 75 percent to 80 percent, and a requirement that insurers selling small group market products also sell in the individual market. Phase 2 would feature an individual coverage requirement, and establishment of a state-operated health insurance plan administered (ASO) by two insurance carriers. Projected costs for the first year total $28.8 million (of which $20.5 is for the children’s component), and funding is purportedly available at present in the form of surpluses totaling $180 million in the state’s Family Care and Medicaid Programs.

SOUTH DAKOTA: The Legislature adjourned its 2008 session on March 17.Recent legislative action includes passage of a transparency bill, which requires licensed hospitals to report charges for any procedure for which the hospital had at least 10 cases. The data will be reported to the South Dakota Association of Healthcare Organizations, which is required to develop a web-based system for making the information available to the public via a link from the Department of Health’s website. In addition, the law requires the dissemination of information about physicians’ charges for certain outpatient procedures.

TENNESSEE: The Tennessee Medical Association this week announced it now officially supports the “Silent PPO” legislation originally introduced by some individual providers.The bill closely follows the AMA model on this issue and contains significant restrictions on insurers’ ability to operate rental networks. Aetna is working with the industry to defeat this legislation.

State lawmakers are not going to ignore health care issues. Nor should they. But when it comes to substantial changes to the structure of health care and health care coverage in this country, the next president and the new Congress will need to take the lead.

California Health Care Reform: The Prequel

Governor Arnold Schwarzenegger wasn’t the first state executive to try to expand health care coverage in California. He won’t be the last. The effort goes back at least as far as 1945 when then Governor Earl Warren sought to impose a payroll tax to cover workers’ and their families.

Steve Wiegand of the Sacramento Bee describes what happened to the Warren proposal. It’s worth reading as a reminder of just how tough health care reform can be. Back then, Governor Warren faced opposition from Labor, the California Medical Association and the Chamber of Commerce. It was branded by some as “socialized medicine” and wound up being killed in the Assembly Health Committee along with competing reform plans.

 While Mr. Wiegand doesn’t delve into whether the details of Governor Warren’s plans was frought with problems or the strength of the California’s economy at the time, there’s still enough parallels to the state’s recent debate to create a sense of deja vu.

Over the past year I’ve become convinced that any meaningful reform will have to be national in scope. States are simply too constrained in addressing a national problem to make much headway. If the new president fails to enact meaningful health care reform, however, the states will need to address the matter. Again. Hopefully whoever is governor of California at the time will have learned from Governor Schwarzenegger’s efforts. And from Governor Warren’s, too.

NFIB Calls for Health Care Reform

The National Federation of Independent Businesses describes itself as “The Voice of Small Business.” And what they’re saying is that, when it comes to America’s health care system, small businesses are fed up with the status quo. They recently posted their health care reform proposal and, while there’s not a lot that’s changed in their proposal, the desire for changes rings through loud and clear.

The NFIB health care reform proposalis built around 11 principles. Notable among them is that all Americans should have access to quality care and protection against catastrophic costs. And while there’s a role for government in providing a saftey net to enable low income Americans to obtain coverage, they make clear “[t]his does not mean a government-run, single-payer system.”

Instead, the NFIB believes “Americans should receive their health insurance and healthcare through the private sector. Care must be taken to minimize the extent to which governmental safety nets crowd out private insurance and care.” They call for affordable coverage that is portable. “Americans should be able to move throughout the United States and change jobs without losing their health insurance.”

In getting specific concerning their reform proposals they call for allowing small business to create multi-state purchasing pools. These Small-Business Health Plans could be sponsored by a variety of organizations including, not surprisingly, the NFIB. This is one of the more controversial aspects of the NFIB reform package as many believe it would undermine state consumer protection laws, creating an unlevel playing field between the pool and non-pool health plans in any given state.

The NFIB’s other provisions include promotion of Health Savings Accounts, full deductibility of health insurance premiums for individuals and the ability for individuals to purchase coverage across state lines. This latter element reflects a component of Senator John McCain’s health care reform plan and is also controversial. It could defeat consumer protections enacted by states as carriers rush to offer plans under the most lenient state regulatory scheme.

While state health care reform proposals will continue to be debated in capitols across the country, my take is that meaningful change will require Federal action. Which means the proposals of advocates like the NFIB will, and should, be part of the debate. And it means proposals from other advocates will be coming fast and furious as a new administration takes shape.