Transcript URGENT BRIEFING S.1955 and the Preemption of State

URGENT BRIEFING
S.1955 and the Preemption of
State Mandated Benefit
Statutes
For Presentation to:
National Chiropractic Legislative
Conference 2006
Prepared by:
John Falardeau,
ACA VP Government Relations
Richard Miller,
ACA Consultant/Lobbyist
MARCH 2006
CORE CONCERN:

Proposed federal legislation (S.1955)
would abolish state enacted consumer
and provider protections – including ALL
state insurance equality, any-willingprovider, and chiropractic specific
mandates relating to small group and
individual health insurance markets
IMPACT:

It is estimated that as many as 68
million people are covered by some
type of state mandated protection or
benefit (not just chiropractic)

All of the above would lose state
enacted protections
Background:

In the mid-1990’s the ACA helped lead a
multi-year effort to enact a Patients Bill of
Rights (PBR) to help address the negative
impact of managed care

Eventually, various versions of PBR legislation
(that would have amended ERISA) separately
passed both the House and Senate
Background Continued:

Critical mass needed to enact PBR legislation
peaks in the late 1990’s and then begins to
fade

REASONS: 1) manage care companies begin
cleaning up their act; 2) Strict HMO model
loses appeal; 3) 2000 election of George W.
Bush means any substantive PBR bill will be
vetoed
Background Continued:

During debate over PBR legislation, the
small business lobby seeks to advance
the Association Health Plans (AHPs)
concept

PBR fades as an issue – but small
business lobby keeps AHP issue alive
What are AHPs…?

Association Health Plans are intended to
function as a new mechanism (type of health
plan) that would allow small businesses to
more easily afford health insurance for their
employees

The concept is to allow small businesses and
trade associations to form and access health
plans that would not be subject to state
regulation – including so-called “costly” state
mandated benefits
AHPs Continued:

IMPORTANT: ERISA’s preemption of
state law would be extended to AHPs

IMPORTANT: Small businesses and
associations would be allowed to join
together to form SELF-INSURED plans
not subject to state regulation
AHPs Continued:

AHPs emerge as a “Republican” concept in
the 1990’s – pushed by the National
Federation of Independent Business (NFIB),
U.S. Chamber of Commerce, Realtors, and
other small-business friendly groups

On several occasions over the past several
years the Republican controlled House of
Representatives has passed some form of
AHP legislation (Most recently HR 525 –
passes in 2005)
AHPs Continued:

Although proponents are easily able to
repeatedly pass AHP legislation in the
Republican controlled House – the issue
(for nearly 10 years) never gains
traction in the U.S. Senate
Additional Background on
AHPs:

A “strange bedfellows” coalition
develops in the late 1990’s to oppose
AHPs and continues to function
effectively today. ACA participates as
an active member

The principal driving force behind the
coalition is Blue Cross/Blue Shield
Additional AHP Background:

Blue Cross/Blue Shield spends millions to
block advancement of AHPs

WHY…? Blue Cross tends to dominate
existing small group insurance marketplace.
AHPs represent a competitive threat – as they
would function as SELF-INSURED plans that
escape state regulation. The Blues plans
would remain under state regulation,
including “costly” mandates, and would have
a competitive disadvantage. Impact on risk
pool also a factor of concern for Blue Cross.
Additional AHP Background:

Major tactic of anti-AHP coalition in the past:
1) work to limit number of House Democrats
that support the bill, while fully realizing
AHP's can’t be blocked in the Republican
controlled House; 2) Limit support for the
concept in the Senate – depending largely on
the opposition of Senate Democrats and
select Senate Republicans; 3) Maintain
opposition to the concept by the National
Association of Insurance Commissioners and
others
Significant Tactical Change
Takes Place…

Senator Mike Enzi (R-WY), Chairman of
the Senate Health, Education, Labor,
and Pensions Committee (HELP)
develops alternative proposal to AHPs
and introduces S.1955 in November of
2005
S.1955 Background:

Proposal differs from AHPs in some
ways. Overall, is more ambitious than
AHP proposals as it intends to also
overhaul state insurance regulation via
the development of federal
“harmonized” standards relating to
ratings issues, etc. (Title III of S.1955,
as originally introduced)
S.1955 Continued:

General reaction to S.1955: Proposal is
complicated, “over the top” and probably not
workable as introduced

IMPORTANT: Despite extra features and
baggage, core of Enzi Bill still depends on
preemption of state mandates – and still
allows for the establishment of SELFINSURED plans
S.1955 Background
Continued:

Enzi works behind closed doors to
rework his proposal – and to respond to
objections raised. Provider and
consumer groups largely excluded from
the table during this process. National
Association of Insurance Commissioners
(NAIC) consulted – mainly as technical
advisors
S.1955 Continued:

By February 2006 revision process well
underway, but still fluid -- with ENZI’s
proposed changes to S.1955 remaining
confidential.

Enzi’s proposed changes remain confidential,
until shortly before a new version is unveiled
prior to mark-up in the HELP Committee in
early March 2006
S.1955 Continued:

Enzi’s new version of S.1955 (not available
electronically as of the date this presentation
was prepared) includes many changes from
Nov. 2005 version

Proposal is scaled back and modified in such
a way as to address many of the concerns
raised by NAIC
S.1955 Continued:

IMPORTANT – Small businesses no longer
allowed to form SELF-INSURED plans. All
plans now must be FULLY INSURED. This
change makes the proposal less objectionable
to many elements within the insurance
industry, including Blue Cross

IMPORTANT – Core of proposal would still
wipe out state insurance mandates
S.1995 Background
Continued:

Senate HELP Committee approves
measure on party-line vote March 15,
2006. All Republicans vote “Yes”, all
Democrats vote “No”

Democrats on the committee attempt
numerous amendments during mark-up.
They all fail.
S.1955 Bottom Line:

The Bill is SO BAD that it must be
prevented from passing the Senate

The Bill is SO BAD that it probably can’t
be fixed (made palatable) by
amendment. It must be defeated…!!!
Defeating S.1955:
Possible scenarios to defeat the bill:
1)
2)
Create so much opposition the Republican
leadership is deterred from bringing the bill
to the floor (threat of filibuster and/or
embarrassment of likely defeat)
Democrats object (filibuster) “motion to
proceed” to consider of S.1955. The
measure is “blocked” before it ever comes
to the floor
Defeating S.1955:

Possible defeat scenarios continued:
3) Democrats allow S.1955 to go to the floor for debate.
However, they file numerous amendments to the
measure (some dealing with Medicare and other
extraneous health issues). Debate on these
amendments is time consuming and bogs down the
Senate. Senate Majority Leader Frist files a Cloture
Motion attempting to cut-off further debate. 60 votes
are required to invoke cloture – 41 votes prevent
imposition of cloture. Democrats muster and
maintain 41 votes to continue debate on the bill. As
the Senate is now bogged down considering endless
amendments, Frist is forced to “pull” the bill off the
floor. The bill is effectively “killed” via the
amendment process.
Which of the three will be the
most likely scenario…?

Can’t say for sure at this time – but we
believe the most likely scenario to
defeat the bill is #3: Democrats allow
the bill to come to the floor but try to
kill it by offering an endless series of
amendments – most of which prove
embarrassing for Republicans to vote
against…
A Main Danger:

Not enough Democrats dig in their heels in
opposition to the bill…

In an election year, some of the Democrats
may be satisfied with merely forcing
Republicans to vote against popular
amendments – and whether the final bill
passes or not becomes less important to
them than scoring points against Republicans
Are there viable alternatives to
S.1955?

AHP legislation identical to House AHP legislation a
possibility, but probably less viable than S.1955 in the
Senate, and just as bad for us

Main Democrat alternative is Durbin-Lincoln Bill
(S.637) – but because it is a “Democrat” alternative,
it probably isn’t viable in a Republican controlled
Senate. There is problems with it as well, in terms of
preemption. Durbin-Lincoln creates a plan for small
businesses that would be based on FEHBP benefit
package.
What if the Senate passes
S.1955…?
Measure could go to “conference” with
previously passed House AHP bill. Bill
would get worse, not better
 House could take up Senate passed bill
and pass it unchanged, bypassing
conference process. Based on prior
vote for AHPs in the House, S.1955
would probably pass without difficulty

What about a Presidential
Veto…?

A non-starter. Simply not an option.
Bush is committed to enacting
insurance relief measures for small
businesses.
ACA Activities to date:
Active (multi-year) participant in
coalition opposed to AHP concept
 Alert Bulletins in opposition to House
AHP plan
 Urged coalition to oppose S.1955 – both
original and updated versions
 Direct lobbying of key Senate offices on
issue – coordinated with coalition

ACA Activities continued:




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Targeted bulletins to BOG, HOD (Alts), ACC,
states prior to March mark-up
Background materials to ACA website and
leadership
Initiated “Emergency” conference call with
state associations to issue warning
Priority focus at NCLC – BOG, HOD and
participants
Issued two Alert Bulletins to ACA database
(electronic) post Senate mark-up
Current ACA Action Plan:



ACA to help fund enhanced communications
capability for COCSA
Profession-wide Alert Bulletin (early April)
ACA TODAY (60,000 pieces), calls with state
associations to track Hill activities and state
progress
Regular series of conference calls with ACA
Delegates to monitor state level progress
ACA Action Plan Continued:







Continued coordination of targeted Hill
activities with coalition
Database for ranking Senate members (pro or
con, leaning for or against)
Regularly updated talking points, sample
letters, etc. via ACA website
Circulation of updated drafts of “patient”
letters/petitions
Feedback form for NCLC participants
Coalition panel at NCLC
Proposed authorization of ACA Reserve Funds
for enhanced activities
Major Tasks for campaign:




State Associations must generate substantial
grassroots pressure on respective Senators to
get them to commit to vote “No” on S.1955 –
to the point of “filibuster” if necessary
Ensuring “champion(s)” who will commit to a
filibuster
Good intelligence collection, situational
analysis and rapid response
Ultimate defeat of bill for this session
Suggested State Activities
include:




Activate friendly contacts in state legislatures
to vocally oppose the bill
Where chiropractic profession has good
relations with insurance commissioners,
governors and AGs -- activate them as well to
become vocal opponents of S.1955
Not all states are the same – states tailor
campaign to fit individual state
situation/capabilities
State cooperation with coalition counterparts
Timing Issues:

When will S.1955 likely come before the
Senate?
Could be anytime between now and the
presumed end of this Session of
Congress (October 2006) -- Could
come soon
Concluding Advice:
The most important thing state
associations can do is to generate
massive grassroots pressure on the
Senate – and to continue to apply the
pressure until advised otherwise by the
ACA.
[End]