#FullRepeal Daily Digest

The Tennessean: BlueCross requests rate increase of 19 percent in 2015

• Meanwhile, Cigna is requesting an average rate increase of 7.5 percent in 2015, while Kentucky-based Humana would like to boost marketplace rates by an average of 14.4 percent…In 2014, the least-expensive version of the silver plan — the most popular of the exchange plans — was $160.62 a month in Davidson County. At a 19 percent increase, the new rate would be $191 a month.
• BlueCross has the majority of health insurance marketplace members in Tennessee by far — 88 percent.
• [RELATED] Kaiser Health News: Florida's Biggest Health Insurer Signals Rate Hikes Ahead
  • Florida Blue, the state’s dominant health insurer, snagged more than one in three consumers on the health law’s exchange this year, but many could face rate hikes as the carrier struggles with an influx of older and sicker enrollees, said the company’s top executive.
  • Florida Blue would not reveal its proposed 2015 rates, which were submitted to state regulators last month. State officials are expected to disclose the rates for the nearly dozen carriers in the marketplaceat the end of July. Open enrollment begins Nov. 15 and goes through Feb. 15.

The New York Times: To Prevent Surprise Bills, New Health Law Rules Could Widen Insurer Networks

• The Obama administration and state insurance regulators are developing stricter standards to address the concerns of consumers who say that many health plans under the Affordable Care Act have unduly limited their choices of doctors and hospitals, leaving them with unexpected medical bills.
• Federal officials said the new standards would be similar to those used by the government to determine whether Medicare Advantage plans had enough doctors and hospitals in their networks...Under federal regulations, an insurer must have “a network that is sufficient in number and types of providers” to ensure that “all services will be accessible without unreasonable delay.”
• In a recent memorandum to insurers, the Obama administration said it would focus on “those areas which have historically raised network adequacy concerns, including hospital systems, mental health providers, oncology providers and primary care providers.”
• Under the new standards, insurers will generally be required to have contracts with at least 30 percent of “essential community providers” that treat “low-income, medically underserved individuals” in their area. These providers include community health centers, clinics for people withH.I.V./AIDS and family planning clinics.
• Some states are setting higher standards. Monica J. Lindeen, the commissioner of securities and insurance in Montana, said she had told insurers on the federal exchange that they must strive to include 80 percent of essential community providers in the state.
• [RELATED] Politico Pro: Obamacare challenge: Choice of doctors
  • Anger over limited choice of doctors and hospitals in Obamacare plans is prompting some states to require broader networks — and boiling up as yet another election year headache for the health law.
  • It’s not just a political problem. It’s a policy conundrum. Narrow networks help contain health care costs. If state or federal regulators — or politicians — force insurers to expand the range of providers, premiums could spike. And that could create a whole new wave of political and affordability problems that can shape perceptions of Obamacare.
  • So far, just a handful of states have moved to ratchet up their standards. They’re mostly blue states that built their own Obamacare exchanges, including Connecticut, New York, Washington and California. But since the beginning of 2013, more than 70 bills have been introduced in 22 states to clarify the network rules, according to the National Conference of State Legislatures.
  • Obamacare didn’t create the trend, but it did highlight it, as insurers sought to make premiums as attractive as possible in the new market. About 70 percent of the lowest cost exchange plans were built on narrow networks this year, according to the consulting firm McKinsey, and on average they cost 13 percent to 17 percent less than comparable plans with broader networks.

Mercatus Center (George Mason University): Do Certificate-of-Need Laws Increase Indigent Care?

• During the period covered by this study 36 states and the District of Columbia had certificate-of-need (CON) regulations, which prohibit hospitals and other health care providers from offering new services without approval from regulators. The original intent was to reduce health care costs by keeping providers from over-investing in facilities and equipment; regulators believe they can keep costs down by limiting new services to those with a clear public need.
• In practice, though, CON regulations attempt to create a quid pro quo. Government agencies keep new competition out of the health care market, likely increasing the profitability of established providers. In return, providers are expected to subsidize unprofitable medical services for the poor.
• While certificate-of-need laws significantly reduce available health care services for everyone, they do not lead to an increase in care for the needy.
  • Certificate-of-need programs prevent new medical providers from competing with existing hospitals. As a result, the price of medical care is likely higher than it would be without these laws.
  • States with certificate-of-need laws have far fewer hospital beds and less medical equipment than states without them.
    • On average, certificate-of-need states have 99 fewer hospital beds per 100,000 residents.
    • CON laws also decrease the availability of MRI services and CT scanners, and the provision of optical and virtual colonoscopies.

Forbes: Tax Reform, Not Tax Inversions, Will Rescue The U.S. Pharma, Bio, and Medical-Device Companies

• A Goldman Sachs research note explains the stakes in the current spate of tax-inversion deals by U.S. firms taking over foreign targets. Most of the listed firms in the pharma, bio, and medical-device industries have over half their sales outside the U.S. Because of our horrific corporate tax code, they end up with incredible chunks of cash overseas.
  • Eli Lilly, for example, has 89 percent of its cash overseas. Edwards Lifesciences EW -0.53%, Amgen AMGN -0.51%, Merck , Varian, Covance, Baxter, and Abbot all have at least 80 percent of their cash offshore.
• Because they cannot bring the cash back home without greedy politicians getting their hands on it, these firms’ ability to invest in the U.S. is limited. The solution, many appear to be discovering, is “tax inversion,” whereby the U.S. firm consolidates with a foreign company, and establishes its head office abroad…Given the required size of the target, large U.S. companies have a limited number of candidates. [as the author notes there are requirements that makes these actions difficult, e.g. A minimum 20% foreign ownership to qualify for tax inversion].
• In short, the tax-inversion strategy has a limited lifespan. Without U.S. corporate tax reform, U.S. based pharmaceutical, biotech, and medical-device companies will find it increasingly impossible to grow their U.S. operations using this tool. All that cash stored overseas will be put to work overseas, and not due to comparative or competitive advantage of other nations, but our anti-competitive tax code.