Health Insurance

Early this morning, the California Legislature approved a budget proposal for fiscal year 2008-2009 that avoided some cuts to health care and other programs, the San Jose Mercury News reports. Democrats widely opposed the proposed cuts (Zapler, San Jose Mercury News, 9/16).

The proposal does not eliminate dental services for adult Medi-Cal beneficiaries or impose new restrictions on Medi-Cal services for undocumented immigrants. Medi-Cal is California’s Medicaid program (Halper/Rau, Los Angeles Times, 9/16).

Beyond those already introduced by Senate Democrats, the budget agreement does not include cuts to California health care, human services or education programs, according to information Ventura County officials received from the California State Association of Counties (Biasotti, Ventura County Star, 9/16).
Healthy Families, Medi-Cal

The budget retains a provision to increase monthly premiums for Healthy Families, California’s version of the State Children’s Health Insurance Program (Los Angeles Times, 9/16).

The proposal would restore most of the 10% cut in Medi-Cal payments to health care providers beginning in March 2009 (Lin, AP/San Francisco Chronicle, 9/16). California’s Medicaid reimbursement rates will remain the lowest in the U.S. even after the cuts are restored, according to the Los Angeles Times.

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Thousands of California children could lose health insurance coverage in the coming months as a result of changes in Medi-Cal rules and decreased funding for local efforts that have provided coverage to children, the Los Angeles Times reports. Medi-Cal is California’s Medicaid program.

State lawmakers will require parents of children enrolled in Medi-Cal to renew their enrollment every six months.

The administration of Gov. Arnold Schwarzenegger (R) projects that the requirement will contribute to a drop in Medi-Cal enrollment over the next two years of about 196,000 children.

State lawmakers also have increased monthly premiums for Healthy Families, California’s version of the State Children’s Health Insurance Program, by $2 to $3 per child.

As a result, the state estimates that the parents of 19,000 children no longer will receive coverage through the program by July 2009.

The changes to Medi-Cal and Healthy Families were approved as part of a larger effort to address the state budget deficit.
Local Efforts.

Beyond changes to Medi-Cal and Healthy Families rules, children also could lose coverage because of funding challenges faced by local initiatives operating in 30 counties. The efforts target children who are ineligible for Medi-Cal or Healthy Families because of income or citizenship requirements.

The initiatives are funded largely by private philanthropies and local First 5 commissions, which disburse funds from a state tobacco tax for early childhood health care and education efforts.

Wendy Lazarus, co-president of the advocacy group Children’s Partnership, estimates that enrollment in the efforts has dropped by 8,000 over the past two years.

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A bill was recently approved in both the Connecticut state House of Representatives and Senate which would broadly expand the state’s health insurance pool. If Governor M. Jodi Rell signs the measure, would up the number of people covered in the pool to around 600,000 people.

With this expansion, argue the bill’s proponents, members will have more bargaining power with insurance companies and could drive down rates.

Under the measure, municipalities, non profit organizations, and small businesses with fewer than 50 employees could buy into the pool, reported the Hartford Courant.

“Finally passing the pooling bill shows that our lawmakers truly do care about the healthcare burden on Connecticut’s towns, school districts and small businesses,” said Michael O’Brien, the president of a Connecticut worker’s union.

But the bill is facing strong opposition from insurance companies, business associations, and Governor Rell’s administration.

One insurer estimated the expansion will cause rates to increase by 4 percent, and they would have to re-negotiate previously agreed upon rates for 2009 and 2010.

Governor Rell has indicated that she is considering using her veto power to strike down the bill.

“We believe the bill could damage competition in the current private market, put an unfunded burden upon the state, and prevent municipalities from having the flexibility to control their employees’ health costs,” said a spokesman for ConnectiCare, a state-based insurer.

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A few of the largest U.S. health insurance companies have been setting sights on China to expand their business.

Already, CIGNA, UnitedHealth, WellPoint, and Aetna have opened offices in China, hoping to provide service to citizens of the country.

Even though China provides health insurance for all their citizens, some who can afford it purchase private health plans to supplement or replace their national coverage, reported the Hartford Courant.

But the private health insurance business in China is far from booming. And managed care health insurance (PPOs or HMOs) won’t likely work in the country, wrote the Courant article.

That’s why insurers such as Aetna are exploring other options to offer the Chinese. Aetna, still unsure of the product they will sell, is considering introducing disease management plans. CIGNA offers personal accident and hospital care insurance, along with life insurance.

“It’s small. It’s emerging. It’s a very complicated market,” said Aetna’s President of Global Services, Martha Temple.

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Private health insurance companies regulated by the Department of Managed Health Care (DMHC) spend $6 billion each year on administration, and divert an additional $4.3 billion to profit, according to a report released by the California Medical Association (CMA). Prepared using data obtained under the Knox Keene Act, the report breaks down how private health insurance companies spend their revenues.

“This report paints in stark terms why California health care costs are skyrocketing for Californians,” said Dr. Richard Frankenstein, M.D., President of CMA. “Health insurance companies in California spend billions of California’s health care dollars each year on administration, and for-profit insurers divert billions of dollars more to profit. Californians’ health care dollars should be spent on health care, not on bureaucracy.”

Currently, private health insurance companies regulated under Knox Keene - representing some 60% of the health insurance market - are required to spend no more than 15% of their revenues on administrative costs. CMA and other health care advocates believe the statute includes profits as administrative costs; health insurance companies exclude profits from the 15%, allowing them to spend as little as they want on actual health care. SB 1440, a bill authored by Senator Sheila Kuehl and sponsored by CMA, would require insurance companies to spend 85% of their revenues on health care, driving down health care costs for consumers and potentially making coverage more affordable.

“It’s not acceptable for us to ignore such massive waste in the insurance industry when Californians are being bankrupted by rising health insurance premiums and gutted benefits,” stated Senator Kuehl. “California consumers have a right to know that there is a basic formula in the law for how much of their money is actually being spent on medical care. This is the least we should be doing.”

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