Friday, February 25, 2011

State and federal legislative activity impacting North Carolina

The following update on pending state and federal legislation was provided by BCBSNC in an effort to keep North Carolinians informed on relevant changes to health care and health insurance.

State Issues
The Senate approved HB 2 – Protect Health Care Freedom. The bill would block the federal requirement that people purchase health insurance or face a penalty. The measure would also require the attorney general to defend the challenge in court. The Senate made a change to the bill so it will need to go back to the House for approval.

The Senate Insurance Committee held its first hearing on SB 33 – Medical Liability Reforms by Senate Insurance Chairman Apodaca (R). The bill would make changes to the state’s medical malpractice statutes including:
• Providing limited protection from liability for providing emergency medical care
• Authorizing the bifurcation of trials on issues of liability and damages in certain actions
• Limiting the amount of non-economic damages to $250,000
• Authorizing the periodic payment of future economic damages in lieu of a lump sum payment
• Modifying appeal bonds in medical malpractice actions

Supporters and opponents spoke about the bill. The committee did not vote on the bill, but a vote is expected this week.

House Insurance Chairman Dockham (R) filed HB 115 – North Carolina Health Benefit Exchange Act. The bill would establish a health benefit exchange in North Carolina as required by federal law. The bill is based on the National Association of Insurance Commissioner’s model exchange act and includes governance and funding provisions from the state’s high-risk pool statute. The exchange would be governed by an eleven-member board with oversight by the Commissioner of Insurance. HB 115 provides for a market-based approach with the exchange accepting health plans that meet the federal requirements. Current high-risk pool funding would be diverted to the exchange in 2014 to support its operations. The bill was referred to the House Health Committee with a re-referral to the House Appropriations Committee.

Rep. Verla Insko (D) introduced a competing bill to establish a health benefit exchange in North Carolina. HB 126 – North Carolina Health Benefit Exchange Act tracks recommendations made by an Institute of Medicine work group on exchanges. HB 126 would create an eight-person independent board to govern the exchange. Insurers would be prohibited from serving on the board, and the exchange would have the discretion to limit the number and types of health plans offered in the exchange. The exchange and the Department of Insurance would also have unlimited authority to assess insurers to pay for exchange operations. HB 126 has not been referred to committee.

Chairman Dockham also introduced HB 138 – Amend Health Insurance Risk Pool Statutes. HB 138 would make changes to the high-risk pool. The changes include:
• Allowing the pool to use state money for premium subsidies for people up to 300% of the federal poverty level
• Reducing the minimum premium cap from 150% of the standard rate to 125%
• Eliminating the requirement that an individual exhaust COBRA coverage to be eligible for the pool
• Reducing the exclusion for paying for pre-existing conditions to the first six months of pool coverage

The changes would become effective October 1, 2011. The bill has not been referred to committee.

Rep. Stam (R) introduced HB 139 – Limit Contributions by State Vendors. The bill would prohibit a vendor from contributing more than $500 to a candidate for the following elected positions: governor, lieutenant governor, secretary of state, auditor, treasurer, superintendent of public instruction, attorney general, commissioner of agriculture, commissioner of labor, and commissioner of insurance. A vendor is defined as any individual with a contract greater than $25,000 with any of the above mentioned positions. HB 139 has not been assigned to a committee.

Federal Issues
Early Saturday morning, the House completed its work on a continuing resolution to fund the federal government through the end of the 2011 fiscal year (September 30). The final vote came after an agreement was reached to allow limited debate on 125 remaining amendments, down from the original 585 filed. The House voted to approve the following Republican amendments that would halt funding and implementation of the Patient Protection and Affordable Care Act (PPACA):
• An amendment by Labor-HHS-Education Appropriations Subcommittee Chair Denny Rehberg (R-MT) that would prohibit using funding in the bill to implement PPACA
• An amendment by Steve King (R-IA) to prohibit any funds from being used to implement any provision of PPACA
• An amendment by Steve King (R-IA) to prohibit any funds from being used to pay the salary of employees of any federal department or agency with respect to implementing any provision of PPACA
• An amendment by Jo Ann Emerson (R-MO) to prohibit any funds from being used by the Internal Revenue Service to enforce PPACA individual mandate

It is unlikely the Senate would approve such restrictions to PPACA implementation. This could lead to contentious negotiations among House and Senate leaders and the White House over final approval of the spending bill. Congress is in recess this week in observance of President’s Day so lawmakers will have just four days to reach a deal before the March 4 expiration date of the current spending plan. Congress will likely pass one or more short-term extensions of the current continuing resolution to avoid a government shutdown.

Meanwhile, the continuing resolution is the first such measure in history to include spending cuts, approximately $58 billion overall and $17.5 billion (11 percent) from the Departments of Health and Human Services (HHS) and Labor compared to 2010 fiscal year spending. The bill would put overall discretionary spending at roughly $36 billion less than President Obama’s 2011 fiscal year budget request submitted last year.

Among healthcare-related cuts, the continuing resolution would reduce the Centers for Medicare & Medicaid Services operating budget by $340 million and cut $56.5 million from Medicare contracting reform initiatives. It would also reduce discretionary spending on several programs that received funding in PPACA, including Community Health Centers, the National Health Service Corps (an initiative that funds, among other things, primary care physician development) and the Maternal and Child Health Block Grant.

In addition, the continuing resolution would prohibit funding to implement the 1099 tax reporting requirement in PPACA. It would also cut unobligated stimulus funding authorized by the American Recovery and Reinvestment Act, contributing $2 billion in savings.

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