BLUE CROSS BLUE SHIELD OF MICHIGAN POLITICAL ACTION COMMITTEE Annual Report 2011 Mission Statement The mission of bluesPAC is to provide its members with a collective opportunity to be involved in the political process for the good of the organization and the communities it serves by supporting candidates whose political views are closely aligned with those of Blue Cross Blue Shield of Michigan, Blue Care Network, LifeSecure, and the Accident Fund Insurance Company of America. 2 Table of Contents Mission of bluesPAC .........................................................2 Message from the Board ...................................................4 2011 Key Issues ...................................................................6 Board of Directors Overview ........................................ 10 2011 Financial Overview ............................................... 12 2011 Statement of Operations .................................... 13 Acknowledgement to our Contributors .................... 14 2011 PAC Contributors ................................................. 15 2011 Contributions ........................................................ 25 3 Message from the Board As 2011 got underway, the Governmental Affairs team was busy familiarizing themselves with a new Michigan legislature, governor, attorney general, as well as several new congressional delegation members. Additionally, efforts continued within the enterprise to work through the tangled confines of National Healthcare Reform while also monitoring, analyzing and advocating on numerous state and federal bills. All in all, 2011 brought many successes. Although bluesPAC membership declined slightly from 2010, it remained fairly steady throughout the year and revenue increased moderately. Your support enabled us to participate in the campaigns of many deserving candidates and public officials on the local, state and federal levels. We thank all of our loyal members for their continued support! 4 5 2011 Key Issues The 112th Congress began work in 2011 with new Republican leadership in the U.S. House of Representatives and with Democrats narrowly holding on to the majority in the U.S. Senate. Throughout the year the Patient Protection and Affordable Care Act (ACA) remained one of the most complex and controversial issues. Significant groundwork was laid by federal agencies and the States with regard to National Health Care Reform, but progress has proven challenging due to the volatility of the overall political environment. Republican members of Congress included repeal of the ACA in their political agenda and introduced a bill to accomplish this early on in the year. The measure passed the Republican-controlled House, but was voted down in the Senate. Efforts were then put in place to defund or dismantle key elements of the law. Throughout the year, the newly formed BCBSM Office of Federal Affairs (OFA), operating within Governmental Affairs, along with BCBSM Public Policy, monitored multiple issues and sought legislative and regulatory changes when necessary. BluesPAC was an integral part of this effort as strong relationships with both Democratic and Republican members of Michigan’s Congressional delegation guaranteed our ability to weigh in on federal matters. 6 Following are a few of the important federal issues BCBSM impacted in 2011: Medical Loss Ratio (MLR) Requirements forward” for implementation of the CLASS The final federal rule for the MLR requirements program. Legislative efforts to officially repeal of the ACA contains an important provision the program are now in play. that addresses complex financial issues unique Across State Lines Legislation to BCBSM. The Office of Federal Affairs As expected, the “Health Care Choice Act of team successfully advocated with members of 2011” (H.R. 371) was introduced in January and Congress and worked with Blue Cross Blue would allow a health insurer to select the state Shield Association and the National Association that regulates its individual market coverage. of Insurance Commissioners to ensure that This means an insurer could sell products in the MLR formula excludes state mandated other states without having to comply with the tax assessments (Medigap) that would have other states’ mandates and insurance laws. As a inappropriately and negatively impacted result the local insurance commissioner would BCBSM in the MLR calculation. have very limited authority and local state laws Community Living Assistance Services and would be pre-empted because the insurer would Supports (CLASS) Program Repeal comply with the regulations in the state in The CLASS program, enacted under the ACA which they are domiciled. was intended to establish a national, voluntary BCBSM’s position is that consumers and insurance program for purchasing community providers are best served when state insurance living assistance services and supports in commissioners – who best know their local order to provide individuals with functional markets – are responsible for regulating limitations with tools that would allow them insurance sold in their states. Further, this to maintain their personal and financial bill would facilitate “cherry picking” which independence and live in the community. is already problematic for BCBSM, because The CLASS program was of particular interest insurers would have more opportunity to pick to BCBSM’s subsidiary LifeSecure, as it provides the best risk, leaving older, sicker individuals individual insurance policies for long term isolated in pools without healthier individuals care such as nursing and in-home care. It was to offset their costs. important to closely monitor the development BCBSM took measures to prevent momentum of the CLASS Program in order to assess the for this problematic proposal from building impact implementation might have on Life in the run-up to the 2012 elections by meeting Secure products and policies. with key congressional committee members After 19 months of federal agency analysis, the to ensure our concerns were voiced during Secretary of the U.S. Department of Health meetings and hearings. and Human Services (HHS) Kathleen Sebelius announced that she does not “see a viable path 7 7 On the state level over 300 pieces of legislation were introduced in 2011 with the potential to impact Blue Cross Blue Shield of Michigan and its subsidiaries. The Governmental Affairs and Public Policy teams, in a joint effort, along with subject matter experts throughout the enterprise, were able to analyze a formulate positions on each piece of legislation. Consequently, BCBSM was able to work closely with policymakers to block and/or amend legislation with potential negative impacts to the enterprise. A few of the key state legislative issues for 2011 include: Claims Tax Assessment The Legislature adopted legislation establishing a new health insurance claims assessment (HICA). This legislation replaced the current 6-percent state use tax imposed on HMOs with a 1-percent carrier assessment on certain paid claims. Governmental Affairs working with Public Policy were able to secure numerous amendments to help mitigate the effects for the enterprise and its customers including: a mechanism for refunds for amounts exceeding a cap; tax assessment limits; exempting certain paid claims (worker’s compensation); favorable rate approval language; sunset provision to 2014. This law took effect January 1, 2012. Health Insurance Exchange In September, 2011, the Senate passed legislation to provide for the establishment of the MIHealth Marketplace, Michigan’s state Exchange in accordance with provisions in the federal Affordable Care Act (ACA). This legislation was passed in the Senate to lay the foundation for the qualified health plans to be offered in the individual market through the Exchange as well as provide for small business health options to be offered on an Exchange. BCBSM testified before the Senate and was able to secure amendatory language favorable for the enterprise in the Senate version of this legislation. Formal House action on creating an Exchange was not taken during 2011, however, BCBSM did testify before the House Health Policy Committee in 2011 and has provided additional amendatory language for any legislation that may move through the House Committee in 2012. Anticipated action is anticipated in 2012 if a state run Exchange is to be created by necessary deadlines to receive federal funding. 8 Controlled Substance Monitoring System Governmental Affairs worked with Representative Lesia Liss (D-Warren) to develop legislation that would provide certain carriers with access to the State’s Controlled Substance Monitoring System for the purposes of monitoring fraudulent activities and abuse. Ultimately, this system will enable Blue Care Network access to valuable information that will serve as a vital tool to combat costly and dangerous activities encountered with controlled substances. This law became effective on March 7, 2012. Worker’s Compensation Reform In 2011, the Legislature took on several Worker’s Compensation issues that have been unsettled in the court system for decades. Specifically, legislation was sought to codify numerous case verdicts into law to clarify multiple decisions relating to employee-employee coverage for work related injuries. BCBSM on behalf of the Accident Fund was able to weigh in on several aspects of this legislation ensuring that any amendatory changes favorably impacted the Accident Fund’s operations. Some notable provisions related to: termination