This is the place to track the state’s progress implementing federal and state health reform—and how these two processes interact. This meeting features (click for agenda) :

• an update on the new federal high-risk pool (going well, though the waiting list is not very long, etc.)
• reports from the Task Force’s 2 workgroups: Implementation/Oversight (the first August 5 meeting went well: but must be there to follow how leaders are handling the early federal reform opportunities and sometimes awkward interface between federal and state health reform) and Cost Containment (this group will have its first meeting on August 17th 4-6 PM in room 250. Note that neither workgroups will be generating any minutes—we’re working on changing this.
• Update on the Utah Health Exchange from the new Exchange Director Matt Spencer.
• Update on the payment and delivery system reform demo projects.

Don’t miss the 1^st meeting of the Implementation/Oversight (IO) Workgroup of the State Health Reform Task Force.  

When:                  August 5^th 1:00-4:00 PM

Where:                        W325 House Bldg

Now is the time to create lines of connection and accountability around efforts to implement federal health reform at the state level. At the moment, the IO Workgroup may be the best mechanism we have to give input to the state’s implementation efforts.  Don’t get us wrong: we think state leaders are showing good interest in the early reform options.  Already Gov. Herbert has decided to run the new temporary high-risk pool alongside the state’s current HIP pool. And our leaders intend to apply for the Exchange planning grants and the rate review planning grants. So far so good, though we may be facing a few hurdles ahead. 

At the last meeting of the Task Force we heard that the IO Workgroup will be the place to address implementation of federal (and not just state) health reform. If you were not able to attend the June meeting of the Task Force, make a point of listening to the audio. This will give you a sense of where we stand, from different angles, on implementation of federal and state reform—and how we might bring these into some sort of alignment).

1.  UHPP has updated the Implementation Station!  See our new ‘cheat sheet’ that outlines the key policies in federal health reform and what the changes will look like in Utah.  Plus, we’ve added some great new links on exchanges from the consumer-friendly NAIC (National Association of Insurance Commissioners) and the Kaiser Family Foundation.

2.  UHPP has updated our Looking for Coverage webpage! It will take time to fully implement the new federal reform law. In the meantime, please be of help to folks trying to navigate the current options for coverage and care: medical assistance programs, private health insurance or the health care safety net, and a new section on prescription drug assistance.

3.  AARP has developed lots of great new factsheets explaining health reform PLUS an excellent summary of the law.  Check out these great resources at www.aarp.org/getthefacts, including a guide to the new reform law en Español.

4.  Please urge that CIR (Comprehensive Immigration Reform) deal fairly with immigrants’ access to benefits! Sign on to a national sign-on letter (sponsored by our friends at the National Immigration Law Center) by end of day tomorrow, May 18.

As you know, key Senate Democrats released a conceptual proposal for immigration reform last month.  The outline is silent regarding newly legalized immigrants’ eligibility for public benefits.  Specificity on this issue will eventually be required in legislation, or else newly legalized immigrants would be subjected to an unprecedented waiting period of more than 13 years before their eligibility for major benefits programs could be considered.

Please join the below sign-on letter drafted by Families USA on this important issue.  Responses are needed to Angela Shubert, ashubert@familiesusa.org, as soon as possible.  The official deadline for response is tomorrow (Tuesday, May 18).

5.  Please take 5 minutes to fill out a very important statewide immigration survey: http://www.surveymonkey.com/s/YJ7C8KW.

There is also a new option to take the survey in Spanish: http://www.surveymonkey.com/s/VSTFNB9

We hope you’ve all had a chance to relax a bit and recover from the grueling 2010 General Session, because it’s time to focus once again on state reform and the delicate interface with the new federal reform law. Given all the posturing against federal reform during the 2010 session, UHPP has made a point of checking in with state policy leaders over these last few weeks to see where we stand on implementing the new law. So far that feedback is mixed. Below we summarize recent events and activities and highlight what’s coming up.  One thing is clear: This will be a pivotal year for Utah’s reform efforts!

Exchange Jam Session
UHPP convened a summit on April 5 with two national reform experts. The purpose was two-fold:

• to review the lessons learned from the pilot launch of Utah’s Exchange;
• to learn about the new Exchange provisions within federal health reform and what Utah would need to do to transition its Exchange to the more robust federal parameters for Exchanges.

In attendance we had Speaker Dave Clark, Utah’s Exchange staff, the state reform lead from the health department Dr. Norm Thurston, 4 local chamber presidents, a few small business owners, a provider, and advocates—in all about 30 people.

These were the main lessons from the pilot launch:

1. Premium pricing turned out to be different inside and outside the Exchange. Legislation passed in the2010 Session will bring these into parity.
2. The Universal Health Application asked too many questions: now this is bring simplified;
3. There were challenges in the plan selection process: moving forward you will only shop on the ‘aisles’ that meet your needs.
4. Integration with the state’s premium subsidy program has been problematic: but now that federal reforms have passed, we may not want to re-invent the wheel.

The national experts, Edwin Park from Center on Budget and Policy Priorities and Joan Alker of Georgetown University’s Center for Children and Families, walked us through the Exchange provisions and timeline for implementation.  Given that we already have an Exchange in place along with many key components for Exchanges (internet presence, standardized interface, calculator, navigator functions, and a toll-free hotline), Utah is already off to a great start.  We should be very competitive for the Exchange planning grants, which is great, because we still have a fair amount of work to do (see lessons above), for example: creating a robust exchange for individuals; the insurance market reforms (starting with modified community rating); minimum benefit standards; tiered benefit levels; and the significant affordability provisions. Mr. Park pointed out that even the best executed risk adjuster (the most significant element of Utah reforms in year 3) would only address 50% of the adverse risk. Clearly, we have a ways to go, though we’re headed in the right direction.

There is a strong desire among state leaders like Speaker Clark to go for a super-waiver to federal reforms, giving Utah limited autonomy to do reform on its own.  The legislation does have such an opt-out provision built in, but on one condition: 94% of the Utah’s population has to be covered by 2014. It’s a provocative, not to mention expensive challenge.  Of course, Utah will have trouble achieving this goal without embracing the other required policy changes around cost sharing, affordability, and scope of benefits. Ultimately, our leaders will need to decide how important autonomy is to the state. State reform leaders at the event indicated Utah would probably go for the federal reform opportunities and dollars available while also working to create more flexibility for Utah—good news so far.

Speaker Clark’s Remarks in Recent Tribune Article
More recently Speaker Clark weighed in on the new reform law in an April 13 Tribune article. There he stated that the legal challenges will probably not succeed, though he still thinks they are worthwhile.  He also articulated a practical approach and recognized that, rather than trying to ‘repeal and replace’ the law, states should work with the Feds to turn the complicated law into workable rules.

Small Business Forums around the State on Utah’s Exchange
Sponsored by the Governor’s Office of Economic Development (host of Utah’s Exchange), the SL Chamber, Intermountain Healthcare, and underwritten by American Express, several small business forums were held around the state to educate small business owners about the next steps for Utah’s Exchange.   The Exchange will be open for continuous enrollment starting in the early fall.  While a discussion about federal health reform was for the most part notably absent and off the table, one of the speakers, John Pingree from Intermountain Healthcare, did provide the IRS FAQs about the new tax credits available to small businesses this year.  UHPP used the event to recruit small businesses to participate in our recent ‘What’s in Health Reform for Small Businesses’ conference call (details below).

Dr. Sundwall at the MHN Satellite Session, “What in it for us: Reform Law and Communities of Color”
At last week’s 5-city satellite meeting on the health equity opportunities within federal health reform, Department of Health Executive Director Dr. David Sundwall provided much welcome reassurance on the state’s approach to implementing the reforms. We will see a bit more posturing—some of which he thinks is valid—but at the end of the day, the Governor will “not turn away a dollar” or forego any of the resources that become available through the new reform law.

Coming up: First Meeting of the State Health Reform Task Force, Year 3
The first gathering of the State’s Health Reform Task Force will be around Harvard Business professor Clayton Christensen and his fascinating book, The Innovator’s Prescription: A Disruptive Solution for Health Care. He will be speaking on April 23 at LDS Hospital. See details here.

We might have preferred to see some discussion on the new federal reform law, but what we like about this particular choice of speakers is the implied reminder that states will have plenty of room to innovate within the parameters of the federal health reform law. States could even help facilitate the market conditions and “disruptive innovations” that, Christensen argues, will bring down health care costs and improve access to care.

Health care will become more affordable and accessible if the industry would only embrace the shift toward ‘rules-based’ care, among other disruptive innovations: problems that once called for elaborate and intensive diagnostic work  by highly trained (and well paid) physicians and specialists can now be handled by lower paid assistants using algorithms that systematically reflect clinical expertise. Modern medicine is actually to the point where such algorithms and value-adding processes and facilitated networks are required to handle the full complexity of clinical decision making. The expertise needed to deliver health care today can no longer be contained within any one practitioner or one health care setting, though integration across these settings and practitioners is critical.

The irony in this choice of speakers is that federal reform law actually incorporates or reflects much of Clayton’s thinking.  A starting point for federal reform is the recognition that we don’t have enough primary care providers in the U.S. to handle the reforms’ pointed emphasis on prevention and cost-effective primary care. Thus the reforms embrace the health care home model of care, where care for people with chronic conditions along with payment will be coordinated across multiple settings using more mid-level providers (nurses and physician assistants).

Clayton has been claimed as the champion of consumer-driven health care, and this is related mostly to his elegant, if exaggerated case for health savings accounts coupled with high-deductible plans.  But Clayton’s line of argument from theory to application in the health care industry is so tight, that he forgets about the considerable waste, overhead, and perverse incentives in today’s payment systems: consumers can only have more skin in the game if there is a source of payment for basic and catastrophic needs. This is why reforms therefore begin with a significant down payment on decent, affordable coverage for the uninsured, mostly on the new Exchanges: most of the disruptive innovation that Clayton calls for will only work if consumers are part of the system.  Those criticisms aside, Clayton’s visit could not be more timely. Read the introduction to Clayton’s book here.

This has not been an easy session for our fearless champions of state health reform, starting with Speaker Clark, Senator Niederhauser, and Rep. Biskupski.  The far right mounted an assault on the statewide risk adjuster, claiming in so many words that it represents a government take-over of health care—and yet we persevered and key provisions of HB294 survived intact.  Warm kudos to Sen. Niederhauser for his eloquent defense of the statewide risk adjuster, a critical step forward on state reforms. Only one relatively benign Senate amendment, sponsored by Sen. Valentine, passed: to sunset (retire) the risk adjuster after three years. We can live with this.

If you did not get a chance to hear the debate, make a point of doing so. This will show you how much work we still need to do to educate policymakers on the changes needed to succeed in private market based reforms at the state level. Sen. Niederhauser and several of his colleagues used many of the points in our recent Myths vs. Facts piece on the statewide risk adjuster.

A key provision of Speaker Clark’s HB294 is the expansion of the risk adjuster mechanism within the Exchange to the whole small group market in Utah.  This wonky term actually refers to a fundamental tool we must use to stabilize the Exchange and ensure it doesn’t become a magnet for sick Utahns.

A risk adjuster (RA) works by determining which insurance carriers are experiencing significant risk and the best way to mitigate that risk.  As a first step, carriers pay into a risk adjustment pool. Those funds are then redistributed to carriers that have attracted risk in excess of what was anticipated.  The redistribution of funds must be approved by the RA Board (RAB), which is comprised of insurance executives and others representing the state, businesses, and consumers.   To date, the RAB has not yet redistributed any funds.

If insurance companies are private businesses with a motive to make profits, why should the state penalize successful companies and help the weak ones? The answer is that the creation of the Exchange fundamentally altered the business model for insurance companies. With this alteration came a lot of uncertainty for insurers. To give these companies time to adjust their business practices to the new reality, it was important to have safeguards for insurers. Otherwise, there was a real risk those companies would pull out of the Exchange and maybe out of providing insurance in the small group market altogether. Thus the risk adjuster is in place to stabilize the private market so that it can serve as the main platform for state health reforms.

Speaker Clark’s HB294 has stimulated a good deal of misunderstanding and misinformation about the purpose of the risk adjuster. The bill language on this is deliberately vague because the risk adjuster mechanism is still under development.  While there are no guarantees that this expansion will work to equalize premiums inside and outside the Exchange, experience with risk adjustment mechanisms tells us this is the only way forward. Furthermore, there are no guarantees that the risk adjuster will do anything to lower premiums enough to entice the uninsured to obtain insurance–that’s actually what affordability provisions and individual mandates are for. What the risk adjuster might do is set up a laboratory to meet these goals by other means. In this, the risk adjuster is the latest in a long line of Utah government experiments meant to foster private sector innovation. In this respect, it is in good company with programs like USTAR (Utah Science, Technology and Research initiative) and Utah charter schools. Simply put, the Statewide RA exemplifies private market, state-based health reforms.  It is not socialized medicine or the single-payer conspiracy that some have claimed it to be. UHPP has authored a brief on the topic to explain what the risk adjuster is and is not, and what the expansion might do to stabilize the private market for small groups.  Read our new report here.

As the Legislative Session hits mid-point, state health reform efforts continue. Speaker Clark’s HB294 is scheduled to be heard on the House floor on Tuesday, February 16^th. A portion of this bill creates a new advisory group of insurers, consumers, and a representative from the Public Employees Benefit and Insurance Program to develop information and tools consumers can use to compare policies offered on the Exchange. By statute the group is required to consider an insurer’s claim denial rates, the costs of those denied claims, and how much of those costs are transferred to healthcare providers. The group will also assess the average out-of-pocket costs to enrollees in the different plans offered on the Exchange. This piece of information will be extremely helpful for consumers since it will give them an idea of what their potential personal health care budget will be for each plan they consider purchasing. The group will also develop a system by which consumers rate their satisfaction with their insurer or plan. In addition, they will work to develop the series of forms and reports insurers will need to submit to provide the information required by statute.

This is a great step forward for consumers. First, it acknowledges that consumers need the information around the value of policies they may be purchasing with their premium dollars. Second, it requires insurers and others to work collaboratively with consumer groups determine the best approach to educate the public on these issues. Too often, critical information like this hasn’t been available to the consumer in a way that is meaningful to them.

However, the list of indicators outlined in statute is not as inclusive as it should be. There can and should be other indicators that need to be looked at. Two that UHPP is proposing to include in HB294 are actuarial value and medical loss ratio.

Medical loss ratio is the unfortunate term used to indicate the portion of each premium dollar that goes towards paying for healthcare.—the higher, the better.  In Utah, SelectHealth (IHC) has the highest overall medical loss ratio. For every dollar they collect in premiums, roughly 85 cents is paid out in claims. The other 15 cents represents the cost of running a business such as salaries, facilities, etc. What UHPP is proposing as an amendment to HB294 is that information regarding medical loss ratios be provided to consumers by plan, not just in aggregate. SelectHealth has a variety of products and we feel it is important to know how these plans compare against each other. For more information about medical loss ratios, please click here to read the UHPP fact sheet.

Actuarial Value is also a valuable tool for consumers to use in comparing plans. Actuarial value indicates the percentage of healthcare costs an insurer anticipates covering for the average policyholder. The difference between the actuarial value and 100% would then be the out-of-pocket costs to the consumer. For example, if a plan had an actuarial value of 85%, consumers would know that they would need to budget for 15% of their anticipated medical costs that year. Currently in Utah, insurers submit the actuarial values of their plans to the Department of Insurance. However, those values are kept confidential—consumers do not have access to them. By requiring that actuarial values be published on the Exchange, consumer would better understand the correlation between monthly premium costs and the coverage they are receiving. They can better decide for themselves if a low monthly premium for a policy that has high out-of-pocket costs is the best choice for them or if they would rather spend more on premiums and have lower costs.

By requiring insurance companies to provide this information to consumers, we hope to make the process of selecting an insurance product easier and more meaningful for consumers. The more information we all have up front, the better decisions we can make about exactly what is the best health insurance plan for ourselves, our families—and our pocketbooks.

These tools should be included in HB294 to provide clarity to consumers as they shop for insurance and to help them decide the best value for their money. UHPP will continue to work to ensure that consumers’ needs are addressed as the Utah Health Exchange unfolds.

Friday at the House Health and Human Services Committee, Speaker Clark’s health reform legislation, HB294, passed out of committee with unanimous support.  This “fixer-upper” bill for the Exchange will do several good things for consumers and small businesses looking for more affordable health insurance.

First, the bill takes steps to ensure that plans purchased inside the Exchange are not priced differently than those outside the Exchange. It does this by extending the state’s risk adjustor outside the Exchange, so that risk can be spread among the whole small group market. This will help lower costs for all small businesses without requiring small business employers to purchase their health insurance on the Exchange. This is a huge win for advocates, who worked hard over recent weeks to bring this provision back in to the bill. It also reminds us that the Speaker is open to input from all sides, so let’s keep at it!

Second, HB294 puts stronger limits around how insurance underwriters calculate premiums. This is done through limiting the scope of health questions asked when someone applies for insurance. It also creates an advisory group of consumers and others to work on stronger insurer accountability measures on the Exchange. These measures would include publication of things like claim denial rates, customer satisfaction ratings, and other indicators the advisory group might wish to recommend.

Finally, the Exchange will be open for a large group pilot project. By including large employers, policymakers hope to drive down costs for everyone participating in the Exchange.   Zion’s Bank, the City of Spanish Fork, APX Alarms and Health Equity will be the first large employers to participate.

Testimony at Friday’s committee hearing was generally supportive. Some groups, like UHPP, provided constructive criticism focused on the fact that the bill still does not go far enough in making health insurance affordable for small businesses or individuals.

Kelly Atkinson, a spokesman for Utah’s smaller insurers, argued that health reforms will fail without a requirement on all individuals to purchase insurance.   He’s probably right, though we would add to this point (as we did in our testimony on Speaker Clark’s HCR8, a resolution against federal health reform also presented at the same hearing): that the only way to possibly avoid a mandate, like Vermont, is to make coverage affordable.  Karlene Kidman spoke about how she is uninsured because neither she nor her small non-profit employer can afford the health insurance premiums.  Tom Hori, a Bountiful small business owner was unconvinced that these efforts would result in visible reductions in the exponential growth in his premium rates, though he is hopeful.  UHPP testified that without addressing the affordability issue now rather than later, policymakers are doing a disservice to Utah residents.  To listen to the full committee hearing, click here.

UHPP will be working throughout the legislative session to strengthen the bill further.   Read our NEW issue brief for further analysis and recommendations.

Building on previous legislation in the 2008 and 2009 sessions, House Speaker David Clark will introduce a bill this session intended to fix some of the significant problems that arose during the piloting of the Utah Health Exchange.

Join Utah Health Policy Project for a special public forum/webcast, 2010: A Turning Point for State Health Reform?, where we’ll outline the proposed legislation and how you can help advocate for robust state health reforms this legislative session.

When: Friday February 5th from 1:00 to 2:30 pm

Where:  5100C  HSEB, University of Utah
or
Statewide Webcast

Please RSVP to events@healthpolicyproject.org or call 801-433-2299.  Indicate whether you want to join us at the U or participate via webcast.  After you RSVP, you’ll receive directions and additional materials.

This legislative session could be a critical turning point for state health reform—but it’s up to you to make it so.  As we enter year 4 of reform, it is time to start making the politically hard decisions that will take Utah down the path of robust health system reforms.  We had inklings of this possibility at the December 14th meeting of the Health System Reform Task Force when the Speaker previewed his next health reform bill for 2010.  This draft contained many of the critical next steps you’ve all hungered for in recent years. To review that version of the bill, click here.

That bill represented a significant leap forward on several fronts. First, the entire small group market would be rolled into one risk pool. This is a huge victory for small businesses—the engine of our economy.  Currently, a small business’s insurance premiums skyrocket if one employee becomes ill.  However, these reforms would mean that the costs associated with that employee would instead be spread across a pool that could potentially contain around 150,000 workers and their families. This would bring much needed stability to our small businesses.

Second, because risk would be shared among so many, insurance companies would no longer be able to assess premiums based on the health status of employees. Instead, the Speaker’s bill would introduce modified community rating, which permits insurers to vary premiums only by age, tobacco usage and a few precariously open-ended health and wellness indicators (click here to learn how wellness incentives can have the same discriminatory impact on premiums and risk but through a backdoor). UHPP reviewed the Dec. 14th version of the Speaker’s bill in a recent issue a brief highlighting both how the bill can strengthen the Exchange as well as some of the things that are still missing—such as critical affordability provisions. To read our brief, click here.

After providing input on a more recent draft revised bill, we are eagerly awaiting the next public version of the Speaker’s bill. This is expected sometime THIS WEEK.  We are hopeful that the next version will retain the many positive provisions described above, but the insurance and broker community will be working hard to ensure they are not.

Stay tuned for UHPP’s analysis of the new bill, which we plan to release within hours of the bill’s public appearance. In the meantime, please make a point of attending the public forum on the new bill which we have scheduled for February 5, 2010 (see above). This will include a walk-through of the new bill and discussion aimed at generating recommendations and advocacy strategies for improving upon the bill.

Despite what you heard in Governor’s State of the State Address, the Utah Exchange is not really open for business.  2009 was a pilot year for the Exchange—and it has hit several bumps in the road.  Speaker Clark’s legislation is aimed at smoothing out these bumps. If we recall correctly, the ultimate goal of Utah’s Exchange is to bring relief from rising or unaffordable health care costs to small businesses and families.  As states are the laboratories of innovation, we thought we’d take a minute to look at the only other state with an Exchange to find lessons for our own: Massachusetts’s Commonwealth Connector.

After much trial and error and a few false starts, the MA Connector (its Exchange) is off to a promising start. What accounts for this success? MA policy experts have outlined lessons for other states’ exchanges in terms of the 7 Ps:

1.    Public Subsidies
The Exchange will have no effect without subsidies, and we know this because two thirds of newly insured Massachusetts citizens are using publicly funded subsidies and another ¼ have employment-based subsidies. Only 5% of the newly insured are not receiving any subsidies. Subsidies are important for the role they play in minimizing adverse selection (where one market becomes a magnet for the sickest and highest cost individuals).

2.   Purging pernicious insurance practices
There must be guaranteed issue and renewal, and no medical underwriting or rating on health status, medical claims history, or gender. Modified community rating or variation in premium based on age is permissible so long as the rating bands are not wider than 2:1. All products must be made available to everyone.

3.    Pooling of risk
The individual and small group markets should be combined, and all products offered by a given carrier should be in one rating pool. Plans for young adults must be included in the Exchange to bring down costs in the rest of the pool.

4.    Protection against adverse selection
There must be the same rating rules inside and outside the Exchange to prevent adverse selection within either market. The individual mandate is the key to minimizing adverse selection.  If there is a way to avoid an individual mandate—and there probably isn’t—it is by making health insurance truly affordable.  Against this background, state reforms (like Utah’s) without an individual mandate and any affordability provisions are doomed to fail.

5.    Product standardization
To help consumers and employers select plans that meet their needs, product choices should be standardized. The best way to measure the true value of plans is by their actuarial value.  This number represents the percentage of the cost of covered services that the plan will assume for the typical enrollee.  Therefore, higher “actuarial values” translate to lower out-of-pocket costs for families.  In Massachusetts, they have found it helpful to group plans by categories like bronze, silver, and gold.

6.    Purchasing Power
The exchange should have the exclusive right to negotiate prices with insurers. The larger the risk pool, the lower the price per beneficiary.  Economies of scale also bring lower administrative overhead costs and minimal (or no) broker fees.

7.   Publicly Accountable.
The MA Connector Board is an independent body without apparent conflicts of interest. All meetings are public, and three of ten seats are filled by consumer representatives. No insurers or brokers are at the table.

So far Utah’s Exchange comes up short on all 7 measures. What we do have, however, is a foundation and structure to build on.  It’s time for the state to begin addressing the 7 P’s and move state health reforms forward.  Otherwise, our exchange will remain only a glorified yellow pages for insurance and do little else to contain costs or expand access to cost-effective quality care.

Sources
Nancy Turnbull, Workshop Presentation at Families USA Health Action 2010 Conference, January 29, 2010