February 24th, 2010

COMMUNITY HEALTH REINVESTMENT AGREEMENT

The current CHR agreement ith the 4 Blues which began in 2005 ends 12/31/10. This stated that each of them was required to contribute a percentage of their premium volume to their social mission. Although Act 62 required that each provider file an annual plan for how they would be doing this, there is no quantification specified in this act.

The Blue have already shown that they are not interested in continuing this past the end of the current act and in order for this to continue there would need to be legislation passed requiring them to do so. This legislation would need to codify the CHR.

There is worry that the current budget is proposing unsure money in this area considering the end of the agreement at the end of this year.

Rep. Killion: With CHR expiring, a huge hole will be left in the budget. How can we say that these insurers are “socially obligated” to use their premium money to help, when in reality that money belongs to the businesses and people that pay the premiums?

Ario: Compare it to the same as a private company with stakeholders. The people pay the premium to the company and the company also has a responsibility to their stakeholders to distribute some of the funds to them.

ADULT BASIC

Rep. Wheatley asked if there is currently some sort of buy-in option for people who do not qualify for the Adult Basic to buy into it, something similar to a state public option.

Commissioner Ario responded that there is currently a limited option for people to do this and that this is basically what the government is trying to federalize.

Wheatley: What would we as a state have to do in order for this to become federalized like CHIP is?

Ario: We would have to do negotiations with the federal government and it would also take legal actions.

Representative Keller asked for some clarification on the mechanisms of the Adult Basic program and the history of it. In addition, what directly happens with the money for this program?

Ario: Adult Basic was funded by the Tobacco Settlement Fund originally and now the CHR Blues contrinbute because TSF goes mainly to Medicaid.

Adult Basic is eligible to any adult who does not qualify for Medicaid and are 200% below the poverty level. Currently there are 100,000 people waiting and 40,000 on.

The money is allocated and then used to fund the program. It works like CHIP where there is a state defined benefit. The benefits are put up to bid. The average package costs $360 a month per person and the people on it pay a modest premium per month.

ACT 4-2009

Rep: Frankel: For this current plan which allows adult children under 30 to stay on their parent’s insurance…are there better models for this program that are more effective around the country?

Ario: Currently, the problem with this program is that the employer choice makes it less available. Right now, many insurers are treating the child as an independent when it comes to pricing rather than as a dependent child. They are charging the full employee price. Right now we are looking into other options and possibly amending this act in order to make it more accessible.

Rep. Denlinger also commented that we missed the mark on Act 4.

INCREASING PREMIUMS

Rep. Barker: Some of my constituents have told me stories about how their current premium has seen a 90% increase. Is this going to be something normal?

Ario: This doubling of premiums is becoming a trend. The competition is fierce for the best risk, but since the Blues are required to offer health care to all, they are increasing the price drastically for anyone not in the lowest risk categories.

INSURANCE FRAUD

Rep. Siptroth: Working with insurance fraud, how is that going?

Ario: We support all efforts and bills to go after fraud.

CREDIT SCORES USED IN INSURANCE RATES

Rep. Siptroth: It’s come to my attention that people’s credit scores are coming into play when they apply for health insurance. Especially in this economic time, many people’s credit scores are suffering. Is this allowed and were you aware?

Ario: The use of a credit score is very common with other types of insurances and it is coming into play now with health insurance. It is usually used at the beginning of the insurance and not used to determine renewal. Some other states and Congress have looked into prohibiting this.

RATE REGULATIONS

Rep. Shapiro: Many small businesses are losing income because of the current health insurance rate spikes. I am aware that the Dept. of Insurance can’t regulate these rates, but what if anything is being done about this?

Ario: PA is one of only two states without rate regulations. The entire group suffers when one person in the group becomes a high risk patient. The US House has proposed a small group reform that would help with this. Currently, large groups are covered, but small groups are left out in the cold. The President has proposed for a national office to regulate premium rates and strengthen the hand they play in insurance. We are in favor of the government helping having a stronger hand, but not in favor of the government looking at things on a case by case basis.

CHIP

Rep. Manderino: Where are we in regards to our goals with CHIP?

Ario: Right now there are 200,000 kids on CHIP and we expect 208,000 by the end of the year. The budget has been designed to meet the demand of the children. The money we have asked for is to meet the demand without a waiting list.