January 2009 brings with it the inauguration of the 44th President of United States, Barack Obama, who will begin the daunting task of leading our country out of the economic crisis, trying to resolve and bring to a peaceful ending of the wars in Iraq, Afghanistan and the fighting in the Middle East.  One of the big domestic issues on the new President’s agenda will be Healthcare Reform and with Senator Edward M. Kennedy as a key and powerful proponent for reform, this issue will receive a great deal of attention for sure.  In many respects, the Massachusetts healthcare reform law will be used as a basis for national healthcare reform.  Many of our sister-associations from around the country are asking us about the Massachusetts healthcare reform law and its impact on insurance brokers and agents.  I am sure that when we descend upon Washington at the end of March to attend NAHU’s 19th Annual Capitol Conference, the subject of healthcare reform will be front and center – both at the national level and in Massachusetts.

Speaking of Massachusetts, the Legislature has begun its new biennial session.  In light of the economic crisis that has gripped the nation and Massachusetts, the Patrick Administration and the Legislature is facing another $1Billion dollar shortfall in the FY 2009 Budget on top of a $1.5 Billion dollar shortfall back in October of 2008.  Needless to say, this budget shortfall and the overall economy will take up a considerable amount of the Legislature’s time during this year’s session.

MassAHU will be busy putting forth its legislative agenda.  Certainly the on-going implementation of Healthcare Reform law will be monitored very closely.  We have filed three pieces of legislation this year – two that involve healthcare and one with long term care.  The first bill, filed by Representative Ronald Mariano, would add a representative from MassAHU to the Health Connector Authority’s Board of Directors.  The Connector was created under the healthcare reform law to insure the uninsured population and its Board makes decisions on the types of products to be sold through the Connector as well as making decisions on minimum coverages required.  MassAHU believes that there should be a member of the Board that has an insurance background, and who has a pulse on what is happening in the health insurance marketplace.  Who better to serve on the Connector Board than a member of MassAHU, who is on the front lines, so to speak, day in and day out.  A MassAHU representative will be able to provide invaluable insight and ideas to the decision making process as healthcare reform moves forward.

The second bill that MassAHU has filed that relates to health insurance is a bill that would expand the Insurance Partnership (IP) program.  The IP program was created to help businesses and employees purchase health insurance.  This bill, filed by Representative John Fresolo, expands the Insurance Partnership program by allowing employers with 50 or more employees to participate in the program and it also removes what is commonly referred to as a “6 month crowd out” provision which expands the number of employees who would be eligible to participate in the Insurance Partnership over a two year period.  So, employees who are currently insured in their employer’s health plan and fall below 250% in 2009 and 300% in 2010 of the federal poverty level will now be able to participate.  By expanding the Insurance Partnership Program, we believe that it would save the state money, especially in these tough economic times.  Expansion of the program would transfer some of the costs away from Commonwealth Care, Premium Assistance and the uncompensated care pool, in which there still remains 40,000 people in the Commonwealth.  The legislation would encourage employers to maintain health insurance programs for their employees at a minimum of 50% contribution level and would provide a more equitable treatment for similarly situated people in the state.

Finally, Tobe Gerard, CLTC, MBA, MLS, a MassAHU Board member who deals exclusively with LTC insurance and myself have been working with Senator Harriette Chandler and her staff on long term care insurance legislation.  The Senator has been a strong proponent of long term care insurance and she will be filing again a bill, based upon the NAIC Model LTC act, which would establish standards for long term care insurance and would enhance the role of the Division of Insurance in evaluating rate adequacy and reporting requirements by insurance carriers.

A third bill, that MassAHU has filed, directly relates to long term care insurance and addresses the issue of rate increase requests by LTC insurance carriers.  Due to aggressive rate increases, many Massachusetts residents are being priced out of a product they purchased with a great degree of foresight, not even 10 years ago.  Long term care insurance (LTCI) which covers home care, assisted living care, adult day care, nursing home care, and hospice care, has become a critical coverage because of the gap left by traditional health insurance and Medicare.  Some LTCI companies have raised rates on existing policies as much as 60 percent.  Considering skyrocketing health care costs, it is understandable that insurance companies would seek increased rates.  The cost of long term care itself has more than doubled in the past two decades.  In Massachusetts and bordering states, the average annual cost for a semi-private room in a nursing home has risen from $77,000 to $98,000 in one year alone.  But while a 20 percent increase in LCTI premiums may be considered reasonable, 60 percent seems excessive – especially for existing policy holders.

This legislation, filed by Representative Charlie Murphy, seeks to stabilize premiums on existing LTCI policies by capping rate increases at an amount not to exceed the premium charged on a newly issued insurance policy based upon the insured’s age at the time of application for long term care insurance or not to exceed 30 percent of the rate increase on the insured’s existing long term care policy, whichever is lower, except to reflect benefit differences. 

If you have questions on any of these bills, please contact Dan Foley at 508.634.2900 or 800.972.9312 or email: dfoley@massagent.com