LEG REG REVIEW 2014, 15th Issue June 9, 2014

LEG REG REVIEW is a periodic newsletter produced by PHILLIPS ASSOCIATES, a professional lobbying and consultant firm located near the State Capitol.  It contains news on the legislative and regulatory scene in Pennsylvania that may be of interest to the Insurance and Business Communities.  It is a free member benefit for those who are members of the Pennsylvania Association of Health Underwriters (PAHU).  Subscription information may be obtained by contacting PHILLIPS ASSOCIATES at 717/728-1217 FAX 717/232-7005 or e-mail to xenobun@aol.com.  Please email jtrout2792@aol.com supplying both your name and e-mail address if you wish to be removed from or added to this list.


In somewhat of a surprise, the House Human Services Committee reported a bill 12-11 to expand Medicaid coverage in line with the Patient Protection Affordable Care Act (PPACA) to 133% of the Federal Poverty Level.  House Bill 1492 (DiGirolamo-R-Bucks) was reported out June 4 thanks to three Republican votes (DiGirolamo, Tom Murt (MontgomeryCounty) and Joe Hackett (DelawareCounty) plus all Democrats.  The bill pits several Republicans against House leadership which prefers to see how Governor Corbett’s ‘Healthy PA’ proposal flies with the Federal Government first.  House Republicans who have signed on as sponsors oh HB 1492 include DiGirolamo, Murt, Bob Godshall (Montgomery), Nick Micozzie (Delaware), and John Taylor (Phila.).  The bill is now in the House Rules Committee.


On June 4, the Senate Banking & Insurance Committee moved four insurance bills and one bill affecting credit unions.  Two bills (HB 1574 and 1575) allow HMOs to become limited liability companies (LLCs) and apply the Health Maintenance Organization Act of 1980 to those HMOs which are LLCs.  Both bills are sponsored by Rep. Tom Killion (R-Delaware).  The other two insurance bills regard personal lines insurance (auto and homeowner’s).  Sponsored by Senator Jake Corman (R-Centre), Senate Bill 1536 allows homeowner insurance carriers to move customers from one affiliate to another without going through the non-renewal process of having the existing policy terminated before the new coverage can begin.  Senate Bill 1537 does the same with auto insurance.  The non-insurance bill was House Bill 2009 (Schlegal-Culver – R-Northumberland).  It amends the Credit Union Code.


On June 4, the PA Senate approved Senate Bill 1023 47-1 (McIlhinney-R-Bucks) to upgrade the duties of the Uniform Construction Code Review and Advisory Council (RAC).  The RAC’s function is to issue recommendations for the PA UCC and assess whether changes in International Code are applicable to the Commonwealth.  This work includes examining proposed 2015 changes ads well as going back to assess 2012 changes in the International Construction Code.  Two items of particular interest to the insurance industry are:

  • The makeup of the RAC would now include an architect or engineer specializing in building energy efficiency.  The bill’s original language required two persons, a professor of engineering with a concentration or specialty in building energy efficiency and an architect specializing in energy efficiency.   Although not going as far as mandating a person with LEEDS “green building” expertise, the amended language recognizes the importance of building design energy efficiency standards in the construction code.
  • Any recommendations from RAC must meet or exceed the Uniform Construction Code provisions currently in effect.


Rep. Ryan Bizzaro (D-Erie) was assigned to the House Insurance Committee’s Democratic membership, replacing Ed Nielson (D-Phila.).  If you wish to congratulate him or submit insurance legislation ideas to him, his contact information is repbizzarro@pahouse.net, 717/772-2297 (Harrisburg) or 814/835-2880 (district).


Governor Corbett announced creation of a group (Patients First Leadership Team) which will facilitate conversations between UPMC and Highmark in their ongoing contractual dispute, given that the contract ends December 31, 2014 and there are unresolved patient access issues.  The Team includes Insurance Commissioner Mike Consedine and Health Department Secretary Michael Wolf.  Earlier, the Corbett Administration had promoted dialogue between the two parties and encouraged both to ceasefire the negative media and advertising campaign that had been taking place.


On June 2, Insurance Commissioner Consedine wrote to the US Department of Health & Human Services (HHS) to request a delay in the employee choice component of the federally-facilitated SHOP exchange.  The original PPACA design was to have small employers subscribing to SHOP have their employees choose between competing qualified health plans.  Thus, a firm of 25 employees might have five or more different plan choices made by the individual employees.  The Obama Administration delayed this provision until 2015, meaning that an employer entering into the SHOP exchange would make the choice for their employees just as it had historically done.  The Consedine letter asks HHS to hold off on implementing the employee choice for another year given feedback from four out of five major health plans that the move would result in higher carrier costs attributable to adverse selection “as individuals with greater medical needs may purchase benefit-rich plans, but pay insufficient premium dollars to cover their medical costs.”  The letter suggested that small businesses would bear the brunt of these increased costs and that “transitioning employee choice into the FF-SHOP after 2015 is in the best interest of Pennsylvanians and our insurance market”.

A link to the Department’s Affordable care Act page follows:



  • June 6: the Congressional Budget Office estimates that 4 million Americans will pay PPACA fines because they are non-compliant with the law’s Individual mandate.  This figure was a two million person decrease from original estimates because of the hardship and other exemptions granted by HHS.
  • June 5: HHS announced that it is revamping www.HealthCare.gov in an attempt to avoid the numerous technical snafus that plagued the roll-out of the exchanges.
  • June 5:  An Associated Press story cited an HHS slide presentation given to congressional committees which said that 2.1 million out of the eight million enrolled in tax-subsidized exchanges have inconsistent data between what individual enrollees supplied and what the Federal Government already had on file for them.  HHS said that most discrepancies were minor and could be resolved in the next few months.  Unknown is the number of individuals who will be requested to return tax subsidies to the IRS if they are found to have been ineligible for the subsidy to begin with.  An HHS spokesman was cited in the article as saying that the 2.1 million are only for those enrolled in federally-facilitated exchanges, not in states which have their own exchange.  This means that 2.1 million out of the 5.4 million signing up in the federally-facilitated exchanges have “inconsistencies”.  1.2 million have income discrepancies, 505,000 have immigration issues, and 461,000 have conflicts relating to citizenship issues.  (PPACA prohibits illegals from participating in the exchanges.)

HEALTH MARKET NOTE:  Recently there has been a flurry of blog and media (New York Times) activity on an employer strategy to give employees a defined amount which is said to be pre-tax and would be dedicated to reimbursing the employee for health insurance premiums.  Those exploring that approach might choose to review a FAQ issued by the IRS May 13 https://www.irs.gov/uac/Newsroom/Employer-Health-Care-Arrangements , IRS Notice 2013-54 and US Department of Labor Technical Release 2013-03 (www.dol.gov ), all of which specify that this is treated as taxable income to the employee.

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