[November 24, 2008]

States Look to Washington for Health Care Action

(BestWire Services Via Acquire Media NewsEdge) Last year, the eyes of the health insurance industry turned to California. After the 2008 elections, observers are looking to toward Washington, D.C.

The failure of comprehensive health care reform in the nation's largest state in January 2008 helped chill momentum for large-scale, state-based solutions that began when Massachusetts adopted its first-in-the-nation reform in 2006. Since then, various states, including California, have considered targeted reforms while calling on the federal government to act.

With the election of Barack Obama to the presidency -- and increased Democratic majorities in the House and Senate -- states will generally take a wait-and-see approach to health insurance legislation, said Robert Zirkelbach, a spokesman for America's Health Insurance Plans. "With so much momentum happening at the federal level, it doesn't look like many states will do large comprehensive health reform proposals as we've seen in the past," Zirkelbach said.

With states experiencing major budget stress, a significant factor in California's failure to adopt a plan, "states are operating within a limited arena for health insurance," said Jordan Estey, director of legislative affairs and education for the National Conference of Insurance Legislators.

"The legislators want to do something regarding health insurance," NCOIL Director of State-Federal Relations Mike Humphreys said. However, action will be targeted on issues where states may have some flexibility, including rescissions and care for children and low-income residents, he said.

States may also pursue legislative and regulatory action on health information technology and to promote greater transparency, Zirkelbach said. "States are more likely to look at market reforms and smaller steps toward expanding access and providing affordability," he said.

Jessica Waltman, senior vice president of government affairs for the National Association of Health Underwriters, said states to watch include Massachusetts, where the health plan is experiencing financial difficulties; Maryland, where Gov. Martin O'Malley has proposed premium subsidies for low-income residents; and Pennsylvania, where Democratic Gov. Ed Rendell is gridlocked with legislative Republicans over health measures. In Utah, a legislative task force is recommending bills to expand options for insurance coverage.

But don't count California out, said Alan Katz, an insurance consultant and past president of both NAHU and the California Association of Health Underwriters.

Gov. Arnold Schwarzenegger vetoed targeted health care bills at the close of the 2008 legislative session, including a measure that would have limited health insurers' profits and administrative expenses by mandating that health insurers spend at least 85% of their premium costs on medical care and another that would have barred health insurers from rescinding a policy unless the policyholder intentionally misrepresented or omitted health information on the application for coverage (BestWire, Oct. 7, 2008).

While Schwarzenegger vetoed the bills as individual items, he may back their provisions in a new try at a comprehensive approach, Waldman and Katz said, even with California's continuing state fiscal shortfalls.

"Schwarzenegger doesn't like to give up, so part of it is sheer ornery stubbornness," Katz said. "He also has a deep commitment to the issue."

However, he said, the momentum has shifted to the nation's capital, not the state capital: "Washington may move too fast for Sacramento."

(By Sean P. Carr, senior associate editor, BestWeek: Sean.Carr@ambest.com)

Copyright ? 2008 A.M. Best Company, Inc.

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