March 30, 2000

The Honorable Chester Culver
Secretary of State
State Capitol Building
L O C A L

Dear Mr. Secretary:

I hereby transmit Senate File 2203, an act relating to assignment of benefits under an insurance policy or contract, or health benefit plan to the provider of health care services.

I am unable to approve Senate File 2203 and hereby transmit it to you in accordance with Article III, Section 16, of the Constitution of the State of Iowa.

Senate File 2203 requires health insurance carriers and organized delivery systems (ODS) to accept written assignment of benefits from individuals covered under health benefit contracts. This assignment provides payment of benefits directly from the carrier or ODS to the health care provider.

There are distinct, competing views of the impact of this legislation. The proponent groups, which include physician and hospital associations, contend the bill provides consumer choice and efficiency in the billing process. The opponent groups, which include insurers, labor organizations, and Iowa Farm Bureau, contend the bill will increase cost to consumers and will cause consumers to be balance billed - having to pay the difference between the total provider bill and the amount covered by insurance.

I appreciate and support the need to improve efficiency and to ease the burden on consumers of dealing with what can be a very confusing billing process. I am, however, concerned about the cost increases that consumers could experience and the potential increased burden to taxpayers. I believe, based upon the information I have been provided, the potential cost of this bill outweighs the benefits of the billing efficiencies.

I have reviewed information received from other states that have enacted legislation similar to Senate File 2203. While that information is not conclusive, the potential adverse fiscal impact is troublesome. It could also negatively impact a consumer's ability to access health care due to lack of adequate provider networks.

I have also reviewed the fiscal note developed by the Legislative Fiscal Bureau as well as information developed by the Iowa Department of Management. The fiscal note states that the fiscal impact on the state can not be determined due to a lack of sufficient information and concludes that the bill could encourage state employees to access providers outside of a network at a possible higher cost. The Department of Management states that it is difficult to estimate the fiscal impact since it is unknown whether or not providers will continue their current contractual arrangements. It's unfortunate that legislators did not consider or discuss with me prior to passing this legislation the potential fiscal impact to the state budget.

Considering the demands on the general fund and the lack of information that can more accurately define the financial risk for both taxpayers and for consumers, it would not be prudent of me to sign this legislation. I want to acknowledge the efforts that parties on both sides of this bill have made the past few days to craft a solution to the above mentioned concerns. I remain open to discussing or reviewing legislation that will address the need for a more efficient billing system, would provide for a more equitable balance in the negotiation process between insurers and providers, and would eliminate the potential risks for consumers and the state budget.

For the above reasons, I hereby respectfully disapprove Senate File 2203.

Sincerely,

Thomas J. Vilsack
Governor

TJV:jmc

cc: Secretary of the Senate
   Chief Clerk of the House

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