Weekend Update

Federal employees have tomorrow off but Congress has given itself the whole week off to celebrate Presidents’ Day. The Hill’s Floorwatch reports that Congress has only four legislative days left to avoid the sequester that begins on March 1. The Hill also reports that the defense industry has resigned itself to the sequester starting but hopes for a grand bargain before the continuing resolution funding federal government operations expires on March 27. The sequester will hit Medicare (as the AMA wails) but it will not impact the FEHB Program according to a September 2012 report from the Office of Management and Budget (OMB, see page  134). That’s due to the fact the FEHBP is funded from a separate trust fund in the U.S. Treasury (Employee Health Benefit Fund).  Of course, whenever Medicare gets hit directly, the FEHBP gets hit indirectly as providers shift their sequestration and other Medicare related losses onto the FEHBP and other employer sponsored health plans.

Speaking of Medicare, the Hill reports that HHS has shared with OMB a proposed rule applying an 85% minimum loss ratio to Medicare Advantage and Medicare prescription drug plans effective next year. These plans reported also will be hit by a 2% sequester in the current fiscal year, just like doctors. The Gorman Health Group has explained that  “The Part D cuts will affect the direct subsidy and not low income subsidies or reinsurance.  We would expect plans to submit higher bids next year to make up the difference.  MA plans that include drugs will have a double hit.”

In Affordable Care Act News, last Friday was the deadline for states to announce whether or not they would create their own health insurance exchange or marketplaces next year. Kaiser Health News reports that

The Obama administration will be running new health insurance marketplaces in half the states— including the major population centers of Texas, Florida and Pennsylvania.
The federal government had hoped more states this week would agree to
form a partnership exchange—the deadline to apply was Friday—but the
offer was largely rebuffed. New Jersey, Ohio and Florida, several of the
biggest states that had not declared their intentions, officially said
no late in the week. * * *
For consumers, it should make little difference whether the new Internet
sites are run from state capitals or Washington, D.C. But federal
regulators hoped states would shoulder some of the work and stakeholder
groups such as hospitals and insurers wanted states to help as well. The
exchanges will open for business Oct. 1. 

Also the Washington Post reported that “Obama administration officials said Friday that the state-based “high-risk pools” set up under the 2010 health-care law will be closed to new applicants as soon as Saturday and no later than March 2, depending on the state.  But they stressed that coverage for about 100,000 people who are now enrolled in the high-risk pools will not be affected.” Congress appropriated $5 billiion for these pools in the ACA.

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