Executive Director's Report March 5, 2009 Administration • Medco

Executive Director’s Report March 5, 2009 Administration • Medco Contract Update The latest draft of the agreement memorializing the agreement effective July 1, 2008 was received from Medco on Monday, March 2, 2009. There are still a few outstanding issues, however we are getting close to a final agreement. • Medco Payment Error Medco has informed us that their Medicare Prescription Drug Plan (PDP) has issued refunds to WSHIP SPAP enrollees that should have been paid to WSHIP since WSHIP is the secondary payor. We are cooperating with them to try to recover these monies from WSHIP enrollees. Medco is working on a plan for recovery and to make WSHIP whole. The total amount involved is about $113,000. Federal Government • High Risk Pool Grant Funding As of February 25, 2009 the US House of Representatives was considering H.R. 1105, the Consolidated Appropriations Bill for FY2009. The legislation contains full funding for the State High Risk Pool Grants program of $75 million for FY2009 (October 1, 2008 – September 30, 2009). Both the House and Senate are expected to pass H.R. 1105. This should result in WSHIP receiving a grant similar to what was received in 2006 (approximately $2.3 million). • Medicare Advantage Plan Funding The Obama budget would reduce excess funding for Medicare Advantage Plans from 114% of standard Medicare to 107% for 2010. This may result in some carriers currently offering Advantage plans in Washington state to withdraw. However, it is likely that most, if not all, of the HMO and PPO plans will continue in 2010. Washington State Government Legislature • Fulfillment of requirement in the Blue Ribbon Commission bill to study broadening funding for WSHIP The final report was issued to the Legislature on February 11, 2009. It can be viewed at http://www.ofm.wa.gov/healthcare/healthin/options/2008/final.pdf Office of the Insurance Commissioner • Financial Audit The draft report to the Office of the Insurance Commissioner, in response to the final report that was issued on January 8, 2009 and distributed to the Board on January 28, 2009 is appended to this report. By your approval of the consent agenda you will be approving it as well. If you would like to discuss the report, please follow the usual procedure to remove it from the consent agenda. NASCHIP Activities • Public Relations Document NASCHIP released its educational paper to the health committees of Congress and the press on January 12, 2009. The paper is attached. Miscellaneous • WAHU Annual Conference Anne Mackie and I attended the Washington Association of Health Underwriters annual meeting in Seattle on March 4, 2009. Anne staffed the WSHIP display in the exhibit hall, while I spoke to the group on the importance of WSHIP to the individual market, the Standard Health Questionnaire and WSHIP benefit plans. Anne traveled to Spokane that evening and staffed the display as well as giving the same talk to the Spokane meeting. 2009 Board Schedule and Work Plan • Seek Out Grant Sponsorship for Funding Study I am working with Cindy Watts, of the University of Washington Department of Health Services, to identify sources and solicit grant funds for the study included in SB5777 and SB1713. She believes it is an excellent health policy study and has agreed to supervise the conduct of the study. I expect to receive a draft budget from University staff which I will use in approaching foundations. Page 2 of 2 Kären Larson, Executive Director P. O. Box 329 Bow, Washington 98232-0329 360/766-6336, fax 360/766-5287 [email protected] March 13, 2009 James T. Odiorne, CPA, JD Deputy Insurance Commissioner Company Supervision Division PO Box 40255 5000 Capitol Blvd. Tumwater, WA 98501 Re: Financial Examination of Washington State Health Insurance Pool Dear Mr. Odiorne: The Washington State Health Insurance Pool (WSHIP) is in receipt of the Findings, Conclusions, and Order Adopting Report of The Financial Examination of the Washington State Health Insurance Pool as of December 31, 2007 issued January 8, 2009. On behalf of the WSHIP Board of Directors, I want to confirm that we value the opportunity provided by this examination to improve the accuracy and integrity of financial information we keep and report. Please find below responses to the orders in the report. The report order is shown in italics, followed by WSHIP’s response. 1. It is ordered that WSHIP consider recording premiums on the due date. Comments and Recommendations 1, Examination Report, page 1. Response: WSHIP accepts the recommendation of recording premiums on the due date, and will implement this change effective in the 2008 financial statements and in all financial reporting thereafter. 2. It is ordered that, if access to the datacenter is required by individuals other than IS personnel, WSHIP consider having individuals sign in, using an entry log, and be escorted by someone from the IS department. Comments and Recommendations 2, Examination Report, page 2. WSHIP Financial Examination Page 2 of 2 Response: Datacenter access will be limited exclusively to IS personnel. Access is not required by individuals other than IS personnel. Thank you for the opportunity to provide WSHIP’s detailed report specifying how the company has addressed each of the requirements of the order. Sincerely, Kären J. Larson Executive Director CC: Vernon E. Stoner, Chief Deputy Insurance Commissioner Patrick H. McNaughton, Chief Examiner HOW STATE HEALTH INSURANCE POOLS ARE HELPING AMERICANS An Important Safety Net for Persons with Chronic Medical Conditions BY LYNN R. GRUBER guaranteed issue and community rating. This article President, Minnesota Comprehensive Health Association examines what a high risk insurance pool is, which states Chair, NASCHIP Communications Committee have them, and the role they play in the insurance market. The article also offers facts to debunk some January 6, 2009 myths surrounding high risk insurance pools. UNSUSTAINABLE HEALTH CARE SYSTEM CHANGE IS COMING TO THE AMERICAN HEALTH CARE SYSTEM America’s current health care system is a ticking time bomb. The skyrocketing costs of health care for The harsh reality that confronts the new Presidential Americans who are uninsured, underinsured, or paying Administration and Congress this January is that ever increasing insurance premiums place a huge significant change is needed in our health care system. economic and psychological burden on struggling It is important that legislators, their staffs and the public families. understand the function high risk insurance pools play in the current system and what role, if any, they might have In mid 2008, The Denver Post reported that health as America looks to improve its health care system. insurance costs for employer sponsored health plans might rise 10.6 percent in the coming 12 months. That is WHAT ARE HIGH RISK INSURANCE POOLS? the smallest increase since at least 2001, but also more than double the rate of inflation, according to a survey by While most health care policy experts have some Aon Consulting Worldwide Inc. The expected cost understanding of high risk insurance pools, many increase for employer health misconceptions remain. coverage reflects the rising price of “Adequately funded high-risk Understanding exactly what high services and increased utilization risk insurance pools are and the by an aging population. insurance pools can provide affordable coverage for persons role the play in the health care system is essential if we are going to As the population ages and with serious, chronic conditions examine their role as part of any employer coverage dwindles, those or with acute illnesses of shorter health care reform proposal. numbers and the percentage of duration more effectively and at GDP spent on health care may lower costs than do requirements High risk insurance pools are continue to escalate until the for guaranteed issue and health insurance plans created by system is no longer sustainable. As state legislatures as non-profit it stands, healthcare spending community rating.” organization or state/governmental makes up about 16 percent of the – Lanny Craft, Chair, NASCHIP agencies with their own benefit U.S. economy, or $2.2 trillion a – plans, premium rates, year. These numbers are only administration, and management. going to rise, forces many These high risk insurance pools are commonly called employers to limit or drop coverage and add many to the health insurance associations or comprehensive health categories of un-insured or under insured. insurance associations. State law dictates eligibility rules, ranges for premium rates, and funding mechanisms to Enter High Risk Insurance Pools. These pools play a cover expenses not paid for by premium revenue. crucial role for many Americans. They can make the Funding mechanisms include assessments on health difference between coverage and no coverage, treatment insurers and state appropriations from a state’s general or no treatment and even life and death. Organizations fund. such as the National Association of State Comprehensive Health Insurance Plans (NASCHIP) believe that Typically, three groups of people are eligible for high risk adequately funded high risk insurance pools can provide insurance pool coverage: affordable coverage for persons with serious, chronic conditions or with short-term acute illnesses more effectively and at a lower cost than programs such as 1 HOW STATE HEALTH INSURANCE POOLS ARE HELPING AMERICANS • Persons rejected for individual health insurance static. Since the inception of high risk insurance pools in in the commercial market; 1975, the total number of Americans who have been • Persons eligible for individual market portability insured by high risk insurance pools is probably at least under the Health Insurance Portability and 1,000,000. This is because, based upon data from several Accountability Act (HIPAA); and high risk insurance pools, about 20% to 25% of enrollees • Persons who are qualified for the federal Health in high risk insurance pools leave each year.

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