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.
REVENUE IS UP SO WHY THE DRASTIC BUZZ?
October and November revenues came in better than expectations, $109 million more than anticipated for this fiscal year. For example, corporate taxes came in year-to-date (YTD) $863.1million or $86.1 million over estimate. Similar increases were seen in sales taxes ($4 billion YTD –$49.4 million over estimate) and inheritance taxes ($449.6 million YTD –$90.3 million over estimate). About on track were personal income tax collections ($4.2 billion YTD which was $10.8 million below expectations –0.3 percent) and taxes from cigarettes, malt beverages, and table games at $595.2 million YTD or 0.4 percent below estimate. Realty transfer taxes were 13.4% less than estimate, underscoring the slower recovery in the real estate sector.
Why is this important? Earlier, on November 13, the Independent Fiscal Office (IFO), created by the General Assembly in 2010 to give the legislature a separate tool for State Budget analysis, released a report that said PA is in for hard fiscal times. (https://www.ifo.state.pa.us/Releases.cfm ) The report said that the State Budget for the fiscal year beginning July 1, 2015 could not use the $619 million one-time devices and $572 in non-recurring revenues used by the Corbett Administration to balance this year’s budget and so the deficit would be $1.85 billion in FY 2015-16. Part of that analysis included an IFO prediction that PA would have $171 million less than expected this fiscal year — and that figure may be questioned given the better than estimate revenue numbers reported above. IFO, the Corbett Administration and the incoming Wolf Administration all agree that the Commonwealth will be challenged but there is disagreement as to the causes (pensions?) and obviously whether or not the Corbett Administration got Pennsylvania out of a Rendell fiscal hole or into a new one.
The Governor’s Budget Office’s December 3 briefing recognized the fiscal shortfall. Budget Secretary Charles Zogby said that “we’ve faced these sorts of deficits every year in this administration” and they are due to mandated costs exceeding revenues. For FY 2015-16, Zogby said that there would be spending increases in debt service (interest), corrections, pensions, and in the Department of Human Services (formerly Department of Public Welfare). He also cited lower than expected lottery revenues and a $14 million drop in cigarette tax revenue due to a new law allowing Philadelphia to increase its own cigarette tax. He urged major pension reform to reduce the state’s contribution and privatization of state liquor stores, two items where the new administration may differ from the get-go.
Governor-elect Wolf’s transition team issued an advance statement December 2 which said:
– The FY 2014-15 Budget was built on one-time revenue sources
– Prediction: PA will be cash-flow negative from January-March 2015.
– The state has maxed its line of credit
– PA is 50th in the nation in job creation.
HHS ISSUES REMINDER DATES for EXCHANGE
The Obama Administration issued a number of dates of which insurance producers and consumers need to be aware. December 15 is the date to enroll or change plans in the federally facilitated exchange in order for coverage to begin January 1, 2015. December 31 is the date on which 2014 exchange plan coverage ends. February 15 is the last day a person can enroll in 2015 coverage. For a list of licensed insurance agents and brokers marketing the exchange, please consult www.nahu.org agent locator.
ENROLLMENT BEGINS IN PA MEDICAID EXPANSION
Governor Corbett’s Healthy PA alternative to the original Medicaid expansion under the Patient Protection Affordable Care Act (PPACA) began enrolling people December 1 with coverage starting January 1. Under Corbett’s plan, 600,000 Pennsylvanians are expected to be eligible. CMS granted the Corbett Administration a waiver which allowed it to make significant changes in Medicaid and utilize private sector carriers to provide the insurance. The state’s resource page for Healthy PA is https://www.healthypa.com/ On December 6, Governor-elect Tom Wolf joined a bipartisan group of governors-elect from five other states to meet with President Obama. At the meeting was HHS Secretary Sylvia Burwell. It is unclear as to whether or not reversing Governor Corbett’s approach to Medicaid expansion was discussed by Wolf and federal government officials.
REGULATORY UPDATES
- The Independent Regulatory Review Commission (IRRC) issued its 2015 meeting schedule. The next meeting is February 26, 2015. Details: https://www.pabulletin.com/secure/data/vol44/44-48/2489.html
- Texas-based stock casualty Stonington Insurance Company is seeking Insurance Department approval to redomesticate to Pennsylvania.
- Patient Safety Authority is meeting December 9 at Central Penn College in Summerdale, PA. Details: 717/346-0469
PREVIEW of 2015 LEGISLATION
As of December 7, twenty-one members of the PA House issued sponsorship memos for sixty pieces of legislation while 29 Senators distributed 107 sponsorship memos. Sometimes, the legislation is a commemoration of an historic event but mostly, these were substantive proposals dealing with criminal, tax, and State Budget issues. There were several insurance-related bills and several dealing with tort reform issues. Some of these include:
– Statute of Repose (time when a lawsuit can be filed) by Rep. Rob Kauffman (R-Franklin)
– Right to file discrimination claims in court from Rep. Mark Cohen (D-Phila.)
– False Claims Act (penalties for those who make false claims who have government funding — for example, insurance carriers having a contract with Medicaid, a local school district, etc.) sponsored by Rep. Brandon Neuman (D-Washington)
– Doctors’ MCARE medical malpractice insurance assessments may be paid in four installments by Senator Stewart Greenleaf (R-Montgomery)
– Health insurance mandated benefit for diabetes-related pain treatments from Senator Matt Smith (D-Allegheny)
– Repealing Pennsylvania’s Inheritance Tax from newly-elected Senator Michelle Brooks (R-Mercer)
– Making use of a hand-held mobile device while driving an offense with a fine of $50 for the first, $100 fine for the second, and $150 files thereafter — sponsored by Senators John Wozniak (D-Cambria) and Rob Teplitz (D-Dauphin)
INSURANCE NOTES
- The November 17, 2014 Insurance Journal published its list of the top 50 Personal Lines leaders in the US. One PA firm, Odell Studner Group based in Radnor, PA, made the list.
- This is the final opportunity for the US Congress to pass an extension of TRIA, the terrorism reinsurance mechanism first enacted in the wake of 9-11. TRIA’s authority expires December 31 unless extended by Congress.
Please JOIN US IN SHOWING SYMPATHY for Rep. Eddie Day PashinskI (D-Luzerne) who lost his wife Millie in November.