Friday, July 22, 2011

For your information, a copy of the letter sent today from the U.S. Center for Medicare and Medicaid Services to the Iowa Insurance Commissioner is attached.

As described in the letter, the federal government has approved Iowa's request for a waiver from the medical loss ratio requirements of the Affordable Care Act of 2010.

The new health care law basically requires states to change the requirement of plans in their states to spend more money on care and less on administration and reserves.  As a practical matter, it could run small carriers out of the state.  The potential market disruption has led a number of states to seek waivers of the medical loss ratio requirement until 2014.  Maine and New Hampshire already have waivers.  Today North Dakota was turned down.  Kentucky was effectively turned down, as well.  Iowa was partially approved.

Here is a comment from Sen. Grassley:

"The purpose of this waiver is to allow Iowa to have different medical loss ratios for insurers than would have been required under the health care overhaul enacted last year.  Without this waiver, because of the mandates in the new law, insurers likely would have left the state, leaving Iowans with fewer health coverage options.  The need for this kind of waiver emphasizes that it should be up to states to regulate their insurance markets.  The 2010 health care needs to be repealed and replaced with policies that allow coverage that fits the needs of different marketplaces."

Here is a fact sheet from the Centers for Medicare and Medicaid Services:

Medical loss ratios apply to all health insurance plans, including job-based coverage and coverage sold in the individual market. However, insurance plans in the individual market often spend a larger percent of premiums on administrative expenses and non-health related costs than job-based health plans do.

Recognizing the variation in local insurance markets, the Affordable Care Act allows States to request a temporary adjustment in the MLR ratio for up to three years, to avoid disruptions to coverage in the individual market. This flexibility allows consumers to maintain the choices currently available to them in their State while transitioning to a new marketplace where they will have more options for coverage and more affordable health insurance through State-based Health Insurance Exchanges. This is one of many ways the Affordable Care Act is building a bridge from today's often disjointed and dysfunctional markets to a better health care system.

HHS has set up a transparent process for how States can apply for an MLR adjustment and what criteria will be used to determine whether to grant those requests. States must provide information to the Department of Health and Human Services (HHS) showing that requiring insurers in their individual market to spend at least 80 percent of their premiums on medical care and quality improvement may cause one or more insurers to leave the market, reducing access to coverage for consumers. States must also show the number of consumers likely to be affected if an adjustment is not granted and the potential impact on premiums charged, benefits provided, and enrollee cost-sharing. All State application materials are posted on the HHS website.

Iowa's Department of Insurance requested an adjustment of the 80 percent MLR to a 60% MLR standard for 2011, 70% for 2012, and 75% for 2013. 

Three of Iowa's dominant issuers, Wellmark, Time and American Family -with 88% of Iowa's individual market share- are not expected to be impacted by the 80% MLR standard.  Wellmark and American Family both had a 2010 MLR of well above 80% and while Time had a 2010 MLR below 80%, it does not expect to owe rebates in 2011 or beyond.  Enrollees in these plans will not be affected by the new 80% MLR standard.

However, the remaining three smaller issuers that would owe rebates in 2011, Golden Rule, Coventry, and American Republic - comprising 5.4% of the market share - have MLRs of 48% to 68%.  These three smaller issuers also reported relatively high commissions, validating Iowa's concern that they may have difficulty adjusting their business models to meet an 80% standard as a result of being locked into binding multi-year agent commission and provider contracts.  Some or all of these three issuers could be impacted by meeting an 80% standard and could withdraw from the market, potentially leaving roughly 15,000 enrollees without coverage.

At the same time, the information provided in Iowa's application makes it clear that issuers can meet a higher MLR than it requested for 2011, 2012 and 2013.

Of the six issuers expected to owe rebates in 2011, five have MLRs above Iowa's requested 2011 adjustment to 60%, and three of those 5 have MLRs above 67%.

Iowa has an additional 13 issuers that cover between 300 and 1,000 lives each, and thus are not expected to owe rebates in 2011, but may become subject to rebate provisions in 2013 even if they do not grow their business.[1]  However, nine have MLRs above 75%, which is well above Iowa's requested 60% for 2011 and 70% for 2012.

For these reasons, Iowa is granted an alternative adjustment of 67% for 2011, 75% for 2012, and 80% thereafter.  This approach creates a glide path for compliance with the 80 percent standard and balances the interests of consumers, the State and the issuers in accordance with the principles underlying the MLR provision

Humility of Mary Housing is preparing for its 21st annual Fresh Start Benefit Sale to be held at the Mississippi Valley Fairgrounds August 17 - 20, 2010.

This sale is just the place to recycle those items you have cleaned out of closets, attics, basements or garages. Your gently used items will become someone else's treasure. We can use house wares, small and large appliance in good working order, furniture, toys, tools, jewelry, bedding, linens and much more; no clothes for this sale, please.

There is a new location for dropping off items for the Fresh Start Sale: 2906 Brady Street in Davenport. It is left off Brady at E. 29th Street and just west of Life's Little Treasures. Drop off dates and times are: Monday, Thursday and Saturday 9am - 3pm now through August 12.

All proceeds from the Fresh Start Sale benefit Humility of Mary Housing, Inc., celebrating 20 years of success helping homeless single-parent families return to self-sufficiency. In those 20 years they have served 665 families including 1288 children.

WASHINGTON - The U.S. Senate this afternoon passed legislation sponsored by Senator Chuck Grassley of Iowa, Senator Joe Lieberman of Connecticut and Senator Susan Collins of Maine to require federal agencies to put new safeguards and controls on government charge cards used by federal employees.  The bill also would require penalties for violations.

The Government Charge Card Abuse Prevention Act, S.300, was approved in April by the Homeland Security and Governmental Affairs Committee.  Lieberman is the Committee Chairman, and Collins serves as Ranking Member.

"This bill is about accountability," Grassley said.  "The public trust has been violated by abusive use of government charge cards.  The federal bureaucracy needs to improve the way it manages the use of these cards."

"This legislation would impose common sense controls on the users of government charge cards, which allow federal workers to purchase goods and travel in a timely and cost-efficient manner. In any economy, but especially the one we are now in, there is no room for waste, much less fraud or abuse. These safeguards will make all users of federal charge cards accountable for their use," Lieberman said.

"This bill would require agencies to ensure that purchase and travel cards are used only for approved spending to take action for misuse of cards.  While purchase and travel cards have been important tools in meeting the government's procurement needs in a timely and cost-efficient manner, their use often has been subject to some malfeasance and inappropriate purchases by individual card holders.  American taxpayers get the bill for these federal credit cards and they deserve complete assurance that their money is going to legitimate business purposes," Collins said.

The senators' effort to codify new controls and penalties responds to outrageous accounts of purchases made with government charge cards, as well as independent analysis which found inadequate and inconsistent controls within government agencies.  At issue are purchase cards, which are used by authorized federal employees for small-scale items needed for official business, such as office supplies, as well as travel cards, which are issued to federal employees to pay for official travel expenses.  When purchase cards are misused, taxpayer money is wasted.  When travel cards are misused and the bills aren't paid, the government risks losing millions of dollars in rebates.

Grassley has put the spotlight on problematic use of these cards for the last decade, first at the Department of Defense and then also at the Department of Housing and Urban Development, the U.S. Forest Service, the Federal Aviation Administration, and elsewhere.

Over the years, the nonpartisan Government Accountability Office has documented fraudulent, questionable and overly expensive purchases made by federal workers with government purchase and travel cards, including kitchen appliances, jewelry, gambling, cruises, and even the tab at gentlemen's clubs and legalized brothels.

Below is a summary of the reform legislation.  The Senate previously passed the measure, in 2009, but it was never taken up by the House of Representatives.

Summary of the Government Charge Card Abuse Prevention Act  

The bill would require all federal agencies to establish certain safeguards and internal controls for government charge card programs, and to establish penalties for violations, including dismissal when circumstances warrant.  The bill would also increase oversight by providing that each agency Inspector General periodically conduct risk assessments and audits to identify fraud and improper use of government charge cards. These reforms are based on the experience of Senator Grassley and other members of Congress, the GAO, and agency Inspectors General in investigating the weaknesses in agency policies and procedures that have lead to instances of waste, fraud, and abuse in government charge card programs.  

The required safeguards and internal controls include :  

•  ·          performing credit checks for travel card holders and issuing restricted cards for those with poor or no credit to reduce the potential for misuse  
•  ·          maintaining a record of each cardholder, including single transaction limits and total transaction limits so agencies can effectively manage their cardholders  
•  ·          implementing periodic reviews to determine if cardholders have a need for a card  
•  ·          properly recording rebates to the government based on prompt payment, sales volume, etc.  
•  ·          providing training for cardholders and managers  
•  ·          utilizing effective systems, techniques, and technologies to prevent or catch fraudulent purchases  
•  ·          establishing specific policies about the number of cards to be issued, the credit limits for certain categories of cardholders, and categories of employees eligible to be issued cards  
•  ·          invalidating cards when employees leave the agency or transfer  
•  ·         establishing an approving official other than the purchase card holder so employees cannot approve their own purchases
• ·         reconciling purchase card charges on the bill with receipts and supporting documentation
• ·         reconciling disputed purchase card charges and discrepancies with the bank according to the proper procedure
• ·         making purchase card payments promptly to avoid interest penalties
• ·         retaining records of purchase card transactions in accordance with standard government record keeping polices
• ·         utilizing direct payments to the bank when reimbursing employees for travel card purchases to ensure that travel card bills get paid
• ·         comparing items submitted on travel vouchers with items already paid for with centrally billed accounts to avoid reimbursing employees for items already paid for by the agency
• ·         submitting refund requests for unused airline tickets so the taxpayers don't pay for tickets that were not used
• ·         disputing unauthorized charges and tracking the status of disputed charges to proper resolution

-30-

Getting the U.S. economy back on track can be achieved by unleashing America's "vibrant entrepreneurialism," according to the President.  Taking him at his word, I agree the United States' free enterprise system has been "the greatest force for prosperity the world has ever known."

Yet, for the last two years, joblessness and deficits have climbed under the flawed theory that taking money away from the private sector grows jobs and creates wealth.  In 2009, the White House threw taxpayers under the bus with a failed effort to spend tax dollars and boost the U.S. economy.  The government stimulus package added hundreds of billions to the taxpayer's tab for what the President called shovel-ready projects that would save and create jobs and keep the unemployment rate below eight percent.  Yet, today, nine-percent unemployment persists.  And, an irresponsible pattern of reckless spending and excess has put the full faith and credit of the United States on the line.

Washington cannot borrow-and-spend our way to prosperity.  It creates a chilling effect on the free enterprise system.  Like a magician pulling a rabbit from a hat, it makes an illusion.  The trouble is, the other hand is reaching for your wallet because government doesn't create wealth.  It only consumes wealth.  In the real world, we can't out-innovate, out-educate and out-build the rest of the world if we are drowning in debt.  When the federal government borrows money, it siphons money out of the economy, crowding out affordable capital for start-ups and increasing the future burden on taxpayers.

That's why it's so important to cut back on government spending, keep Washington living within its means and let the American people create, earn and enjoy their prosperity.  Just after the new year began, and with a lot of fanfare, the President ordered a top-to-bottom regulatory review.  He ordered every federal agency to examine the red tape that chokes job growth and stifles risk-takers.  Just imagine if red tape were keeping the next American success story from launching a business, finding a cure or inventing the next-generation biofuel.  Revenue-hungry policymakers need to appreciate that burdensome regulations shrink the economic pie, stunt job creation and harm U.S. competitiveness.  Clearing the way for individuals and businesses to succeed and thrive will expand the economic pie and help Uncle Sam pay down the debt and pay the nation's bills.

The President's executive order sure sounded like a refreshing change.  But six months later, scant progress seems to have been made to remove outdated regulations that make our economy less competitive.  In fact, right after the President's order, officials at the Environmental Protection Agency were quoted in news stories stating that they were confident that none of the current or pending rules would need to be modified. 

The attitude of the EPA makes it difficult to believe in the administration's ability to strike the proper balance between protecting public health and safety and protecting small business owners, farmers and entrepreneurs from burdensome regulations and paperwork.  For years I've been fighting the EPA's proposed rule that would apply absurd federal regulations on the amount of field dust kicked up by a farmer's combine during the busy harvest season.  The cost and inconvenience to a farmer to comply with such a ridiculous regulatory burden - not to mention the potential for a neighbor's lawsuit, should "coarse particulate matter" blow across the property line - is inconceivable.  What's next?  Malpractice insurance for farmers to protect against the risk of dust floating through the countryside during harvest?

Iowans can be sure I will continue to try and knock some common sense into the EPA.  It is possible.  After an outcry, the EPA in April exempted dairy farmers from complying with a federal rule aimed at preventing oil from spilling into U.S. waterways.  Sounds puzzling because it was a real head-scratcher.  The EPA rule originally included milk containers under the "Oil Spill Prevention, Control and Countermeasure Rule."

Simplifying restrictive regulations would help refuel the U.S. economy without adding to the national debt.  Thousands of rules infiltrate every nook and cranny of American life and commerce.  Injecting common sense into the regulatory process can help wipe out job-killing rules that are preventing the U.S. economy from finding the on ramp.

During the economic downturn, the Obama administration has issued hundreds of new rules that add even more uncertainty to job creators in the private sector with thousands more still in the pipeline to implement overhauls of the U.S. health care and financial systems.

Let's hope the President makes good on his call for a regulatory system that strikes a better balance between protecting the public good and promoting America's prosperity.

Friday, July 22, 2011