10/2002 State Legislative Update

Published November 1, 2002

While preparing the November update, I kept running into the numerous convulsions over sharply increasing medical malpractice insurance rates.

In an effort to protect themselves, medical professionals are leaving their practices, leaving a hostile state for a state with reasonable award caps, or flat-out leaving their chosen professions at the peak of their careers. The end result begins to look like the queuing common to single-payer health care plans: fewer doctors for more patients mean less choice and compromised health care for consumers.

Until jurors begin to realize they are shooting themselves in the foot, state legislators are trying to do something. At best, they are scrambling to enact legislation to soothe malpractice insurance companies in states with demonstrated reputations for outlandish jury awards.

In Nevada, the state legislature was hastily summoned to a special session to address medical malpractice jury awards after Las Vegas’ only medical trauma center closed its doors.

New Mexico legislators enacted jury award caps in medical malpractice cases. New Mexico has the worst ratio of claims paid compared to premiums collected. Pennsylvania legislators also approved caps in medical malpractice cases in their regular session this year.

Legislators in West Virginia passed a law requiring an “expert witness” in medical malpractice cases and created a state-run malpractice insurance plan. Only one private medical malpractice insurer remains in West Virginia.

During a special session called by Mississippi Governor Ronnie Musgrove (D), the House passed a bill limiting damages for pain and suffering in medical malpractice cases to $1 million. The Senate passed a measure capping damages at $250,000; the Senate bill applies to civil actions against any business and also limits punitive damages in all lawsuits. The competing bills have created a deadlock in the legislature.


Arizona and Mexico signed an agreement to improve health conditions along their shared border. Health problems, including diabetes, tuberculosis, cardiovascular disease, and drug addition, along the border outpace those in other nearby areas.

Under the arrangement, the two states will receive more than $264,000 from the U.S.-Mexico Border Health Commission next year for a variety of projects. Of that amount, $31,000 will go to create and maintain a health alert network along the border to prevent potential bioterrorist attacks. In addition, the agreement calls for the localities to develop plans to cut obesity and infant mortality rates.


Governor Gray Davis (D) signed legislation requiring the state medical board to disclose physician malpractice settlements to the public on its Web site. The law represents a compromise between the California Medical Board, which wanted to make all settlements public, and the California Medical Association, which opposed any disclosure.

Two California Democrats have compromised on the specifics of separate online privacy measures in a move to pass online privacy legislation before this month’s election. But Amazon.com and AOL remain opposed to State Assemblyman Joseph Simitian’s legislation, saying it unfairly distinguishes online businesses from offline businesses collecting personal information and exempts state agencies, the legislature, and election campaigns from the bill’s privacy protections.


Central Florida hospitals have taken first steps toward HIPAA privacy rule compliance and are already enacting patient privacy safeguards in preparation for the upcoming HIPAA medical privacy rule compliance deadline. Orlando Regional Health System and Florida Hospital will soon stop releasing patient information to the media without patients’ written consent and are planning additional privacy measures.


Governor Tom Vilsack (D) criticized a plan proposed by gubernatorial candidate and former state Chief of Staff Doug Gross (R) to tighten income eligibility requirements for the state’s Medicaid program. Vilsack promised to “fight to make sure it doesn’t happen.”

Vilsack said the plan would limit Medicaid eligibility to residents with annual incomes less than 100 percent of the federal poverty level, or $8,868 for an individual. The income eligibility requirements for several Iowa Medicaid expansion programs exceed federal eligibility requirements.

In addition, Gross has said Vilsack “has driven Iowa’s Medicaid program into debt by promising more than it can deliver.” Vilsack approved a $61 million bailout of the state’s Medicaid program, and the state has estimated a $93 million deficit in the program next year.


The Walgreen Co. drug store chain said it would not make available to Massachusetts officials detailed information on how much it pays for certain prescription drugs. Lawmakers had called for pharmacies in the state to disclose the information during hearings on a proposed Medicaid reimbursement cut. The pharmacy payment cuts were expected to save the state about $60 million a year. (See related story, “Maine Rx Price Controls Violate Medicaid Law,” on page 9.)


Voters face a November ballot measure in Oregon that would establish a universal health care system. Under the measure, called the Oregon Comprehensive Health Care Finance Plan, the state would cover the cost of health care for residents through income and payroll taxes. Residents would be taxed up to 8 percent of income and a flat 11.5 employer tax would be levied on business. State residents would not pay premiums, co-payments, deductibles, or out-of-pocket expenses, and the measure would provide coverage for a “full range of physical and mental health services,” as well as long-term care and “alternative” treatments.

Officials from Associated Oregon Industries said the payroll and income taxes imposed under the measure would hurt individual taxpayers, cripple Oregon businesses, and cost Oregon jobs.

South Carolina

A Federal District Court judge dismissed a lawsuit filed by the South Carolina and Louisiana state medical societies challenging the constitutionality of the HIPAA privacy rule. In their suit filed last year, the plaintiffs argued the rule was expansive and “overly vague” and violated the separation-of-powers and due process clauses of the Constitution.


State officials asked HHS for $1 billion in additional Medicaid funds, based on a recalculation of nursing home reimbursements, but reduced their request to $235 million after negotiations with federal officials; HHS has offered the state $70 million. Doug Porter, the state’s Medicaid director, said $70 million “isn’t enough” and would “certainly not fix the problems we have.” Porter added the state may have to make “drastic cuts” in the program without the funds.


The state prescription drug assistance program for seniors took effect in September and about 42,000 low-income seniors are expected to receive SeniorCare program identification cards. More than 46,000 seniors have applied for the program since July 1. To qualify for the program, a couple must have an annual household income of $28,656 or less.

All participants will pay a $20 enrollment fee and depending on income level, some will be required to pay a $500 annual deductible. Participants also will pay $5 for each generic drug and $15 for each brand-name drug. About 177,000 of the 325,000 eligible Wisconsin seniors will enroll in the program. Approximately 1,100 Wisconsin pharmacies—in addition to 200 pharmacies in neighboring states—have agreed to participate in the plan.

The State Legislative Update is compiled from a wide range of news sources, including the Council for Affordable Health Insurance (CAHI) http://www.cahi.org; the National Association of Health Underwriters (NAHU) http://nahu.org; Bizjournals http://bizjournals.com; Stateline http://stateline.org; and Lexis/Nexis research.