08/2001: State Legislative Update

Published August 1, 2001


This year’s legislative session was a mixed blessing for the state’s residents.

Every one of the proposals for expensive, unfunded health insurance-related mandates failed to pass, so we can expect a stabilization of health insurance premiums and the possibility of more health insurance competition moving into the state.

Unfortunately, a proposal to re-open the state’s long-shuttered high-risk health insurance pool failed.


Governor George H. Ryan signed into law two bills that provide Illinois women with help in their battles against breast and cervical cancers. House Bill 25 expands Medicaid coverage for women with breast and cervical cancer, and Senate Bill 866 requires coverage for breast reconstruction after a mastectomy.

“We want to make sure that low-income women are able to get treatment for the battle against breast and cervical cancer,” Ryan said in a July news release. “We also want to make sure that once they are treated they are given every opportunity to get on with as normal a lifestyle as possible. Lieutenant Governor Corinne Wood pushed hard for these bills and deserves to be commended.”


The Gramm-Leach-Bliley (GBLA) privacy bill was sent to the governor for his signature. The legislation closely follows mode legislation from the National Association of Insurance Commissioners (NAIC), but it does not cover health insurance or medical care-related information.

Another bill waiting for signature is H.B. 4113, which creates a long-term care insurance premium deduction equal to 100 percent of the premium.


The 91st General Assembly is adjourned, but a special legislative session will be called in September to address the issue of a new prescription drug program. The very tight state budget recently signed by Governor Bob Holden contains $63 million in tobacco litigation money earmarked for funding a new prescription program for seniors.

The governor also signed legislation raising the allowable income level for disabled Medicaid beneficiaries. Under the new law, Missourians can earn up to 2-1/2 times the federal poverty level and still qualify for taxpayer assistance. The new law allows income and asset limits to be calculated without regard to a spouse’s income and assets. A disabled person earning up to $100,000 a year could qualify for Medicaid in Missouri.


The long-term care insurance tax incentive (L.B. 332) was not enacted this session, and neither was a measure to require prompt payment of health insurance claims, also known as “clean claims” legislation.

In the “if it ain’t broke, don’t fix it” department, L.R. 91 was approved and clears the way for a study to determine whether or not “clean claims” legislation is even needed.

New Hampshire

The individual health insurance bill deregulating the free market passed and goes to Governor Jeanne Shaheen for signature. This bill eliminates guaranteed issue in the private individual market and creates a high-risk insurance pool for residents with uninsurable medical conditions. Two thumbs up for the New Hampshire legislature!

North Carolina

Numerous health care-related bills survived the “crossover” deadline, meaning they passed either in the House or the Senate and will be back to haunt legislators in the 2001-2002 session. Among them: H109, for the reimbursement of marriage/family therapists; H1232, for prescription drug assistance to seniors; and, we love this one, H1048, a moratorium on health insurance mandates.

On the Senate side, legislators passed S199, a managed care patients’ bill of rights, and S714, amending certificate-of-need laws.

State legislators may propose cuts in the health benefits package offered to state employees and increase premiums in an effort to bridge an estimated $730 million shortfall in funding. It’s a classic economics principle at work: When people think they are getting something for “free” or “cheap” they use more of it. In time, the needs become infinite, while someone else’s money becomes finite.

And, speaking of other people’s money, the governor’s office has announced a plan to use part of the tobacco litigation settlement to pay for prescription drugs for the elderly.


H.B. 131 was signed into law and provides enabling legislation to put the state in compliance with the Gramm-Leach-Bliley Act (GLBA) requirements. The bill also prohibits using group-size as a defining characteristic when dealing with such HIPAA compliance requirements as guaranteed issue or guaranteed renewability. This section of the law may be challenged in the courts, as HIPAA is quite clear and uncompromising on its definition of group-size.


The state health plan was expanded to include Oregonians with incomes up to 185 percent of the federal poverty level while creating two tiers of benefits. The most vulnerable will receive the full benefits of the current plan. Single, healthy adults will get trimmed benefits and will pay premiums and co-payments. The plan is contingent on the new Center for Medicare and Medicaid Services (the old HCFA) granting the state a waiver of regulations on the use of federal health care money. Lawmakers created a state subsidy for low-income seniors to obtain prescription drugs if they do not have prescription insurance coverage. They also approved a modified plan giving doctors authority to choose a lower-price drug for their patients if that drug is equivalent to a costlier name-brand drug.


The state-run health care plan, TennCare, is a pickpocket in search of deep pockets. A proposal to set a uniform sales tax rate of 8.5 percent, which would increase the tax on big-ticket items, was defeated by the state Senate as House members began considering a new income tax plan.

Meanwhile, Sen. Jim Kyle (D-Memphis) said a continuation budget approved June 29 could end up as the legislature’s permanent answer to the budget problem because senators remain gridlocked.

The continuation budget keeps the troubled state health care plan, TennCare, barely intact and minimally funded for only necessary health and public safety programs but little else in improvements. Nose counts among the Senate’s 33 members show no plan–neither an increase in the state sales tax nor creation of a state income tax–has the 17 votes it takes to pass.

In an effort to save TennCare, legislators may impose “pay or play” mandates on the state’s business community, forcing them either to offer health insurance to their employees or pay TennCare to help cover the cost of insuring them.

State Rep. Gene Caldwell (D), chair of the state Joint TennCare Oversight Committee, told the Chattanooga Times and Free Press, “We have anecdotal evidence that a lot of small companies have dropped insurance so their employees can get on TennCare. We don’t think that’s right.” He added, “The pay or play plan is the way the state might push business into participating.”

Dave Goetz, president of the Tennessee Association of Business, responded, “Businesses are not (failing to offer) health care because they’re bad people. They’re not offering health care because they can’t afford it. The idea that somehow all you have to do is pass a law and you will force companies to do something is really nonsensical. What you will force them to do is leave Tennessee.”

State Sen. David Fowler (R) warned the proposal could “stifle entrepreneurship” and introduce “bankrupting costs.”

Sources: The Council for Affordable Health Insurance (CAHI) and its member companies provided information for this State Legislative Update. Contact CAHI at [email protected]. Additional material was provided by the National Association of Health Underwriters (NAHU), http://nahu.org/government, http://bizjournals.com, and http://stateline.org.