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Home , Allyson Schwartz, Chaka Fattah, Chris Carney, Jason Altmire, Jim Gerlach, Joe Pitts

LEG REG REVIEW 2009, 36th Issue November 9

LEG REG REVIEW is a periodic newsletter produced by PHILLIPS ASSOCIATES, a professional lobbying and consultant firm located near the State Capitol. It contains news on the legislative and regulatory scene in that may be of interest to the Insurance and Business Communities. It is a free member benefit for those who are members of the Pennsylvania Association of Health Underwriters (PAHU) or Manufacturers Association of South Central PA (MASCPA). Subscription information may be obtained by contacting PHILLIPS ASSOCIATES at 717/728-1217 FAX 717/728-1164 or e-mail to [email protected]. Please email [email protected] supplying both your name and e-mail address if you wish to be removed from this list.

PELOSI HEALTH BILL PASSES HOUSE By a five-vote margin, Speaker of the House ’s bill to reshape American health care was voted out of the U.S. House of Representatives Saturday November 7. HR 3962 is almost 2,000 pages long and incorporates most of what the Democratic leadership wanted. A last minute concession against abortion funding was inserted to try to keep some wavering Democrats in line. President Obama also visited with individual Democratic House members who were undecided. Voting was not unanimous among Democrats however. 39 Democrats broke party ranks to vote no while only one Republican voted for HR 3962.

In Pennsylvania, the vote was party line with two Democratic exceptions. Rep. from central PA and Rep. from said no. Holden and Altmire are considered Blue Dog Democrats. Holden has an insurance producer’s license and Altmire has an extensive background in health. Others who were touted as Blue Dog Democrats decided to vote with Pelosi to stay in the party fold. These were Rep. from Erie and Rep. from north central/northeast PA. One Democrat who holds an insurance license, Rep. Mike Doyle from Pittsburgh, voted for HR 3962 just as he voted for HR 3200 as it went through the House Energy & Commerce Committee last summer. Altmire, also on that committee, voted no on HR 3200.

The bill now goes to the U.S. Senate for consideration.

FOR HR 3062 AGAINST HR 3962 Robert Brady (D-Phila.) Jason Altmire (D-Pittsburgh) Chris Carney (D-Lackawanna) (R-Lehigh) Kathy Dahlkemper (D-Erie) (R-Chester) Mike Doyle (D-Pittsburgh) Tim Holden (D-Schuylkill) (D-Phila.) Tim Murphy (R-Allegheny (D-Luzerne) (R-Lancaster/Chester) Patrick Murphy (D-Bucks) Todd Platts (R-York) (D-Johnstown) (R-Blair) (D-Montgomery) Glenn Thompson (R-Centre) (D-Delaware)

WHAT IS IN THE BILL (Selected Items)  Agents: Insurance agents are allowed to market the Exchange and Public Plan but federal Health Choices Commissioner will develop uniform marketing standards; Exchange will work with small Business Administration to provide educational opportunities and assist with enrollment  Benefit levels for all private sector plans to be determined by a federal Benefits Advisory Committee; Five year phase-in; Three levels of coverage

1  Cooperatives: Start up loans to non-profits to compete with private sector, the Exchange, and the Public Option  Dependents to age 26  Exchange to be administered by Health Choices Administration and phased in over three years; Persons in Exchange always eligible for Exchange until kicks in; States may convert Medicaid to the Exchange after five years; States could start own Exchanges under federal enforcement authority (not state); Agents would be able to market the Exchange.  Health Savings Accounts: Over the counter drugs would no longer be eligible for HSAs; FSA contributions limited to $2,500.00; Increases tax on ineligible distributions from ten to 20%  Long-Term Care Insurance: Establishes a new federal LTC insurance program funded by employee payroll tax (assumed unless there is an opt-out) with five year vesting period; Benefit = $50 per day  Mandate/Employer : All employers would have to have either a qualified health benefit plan or a grandfathered plan; Required to pay 72.5% of premium for individuals, 65% for families and part-timers would be included for partial coverage; Pay or play is 8% gross payroll to the government  Mandate/Individual: Acceptable coverage includes qualified health benefit plan, grandfathered plans, VA, Medicaid, tribal coverage, TRICARE, the Exchange; Penalty is 2.5% of the adjusted gross income over the threshold amount of the average premium in the Exchange  Medicare Advantage payment benchmarks would be reduced to traditional Medicare fee for service levels over a three year period (Goal is to save $150 billion.);  Medicaid expanded to 150 percent of the federal poverty level  Medical loss ratio set at 85%; If non-claims exceed 15%, beneficiaries will be rebated  Medical underwriting prohibited; No pre-existing condition exclusion; Modified community rating using family, geography, age  “Robust” Public Option; Financed by federal government with no stated limit although goal is that it be self-supporting; Health provider payment rates not higher than average reimbursements paid for by private plans offered through the Exchange; Medicare providers presumed to participate unless opt out  Risk Pool as interim step leading to changes in underwriting, Exchange, and Public Option  State opt-out: None  Subsidies/Businesses: Tax credits for small businesses equal to 50% of cost where average employee compensation is less than $20,000; Firms with ten or fewer employees are eligible for full credit which phases out above 25 employees  Subsidies/Individuals: A complicated system of sliding scales to determine subsidy ONLY available through the Exchange; Illegal aliens would be ineligible  Tax Credits for small businesses but employees earning more than $80,000 would not be included in calculating the credit amount  Tort Reform: Allows grants to states to encourage alternatives to traditional medical malpractice reforms (such as caps on non-economic damages?)  Wellness grants for small employers Other: A Health Insurance Ombudsman office established under the Health Choices Administration to provide assistance with complaints, grievances, and requests for information; help individuals select plans, etc.

THANKS TO NAHU’s Jessica Waltman for supplying this core information. A side by side of HR 3962 versus the two Senate bills is available at www.nahu.org. Full text of HR 3962 is found at www.thomas.gov.

CORRECTION…In last week’s Leg Reg Review, a provision in HR 3962 was incorrectly reported as eliminating individual health plans after 2013. More accurately stated, existing individual policies could be retained only if a policy change was limited to change of dependent. They would have to be Exchange plans after 2013 unless grandfathered. 2