HEADS-UP Legislative Update - October 2011

HEADS-UP Legislative Update
October 2011

Upcoming Events

NAHU Capitol Conference 2012
Taking Care of Business: Our Response to Health Reform Moving Forward
January 23-25, 2012

Mark your calendars for this year’s Capitol Conference taking place January 23-25 at the Hyatt Regency Capitol Hill in Washington, DC. Our theme this year is Taking Care of Business: Our Response to Health Reform Moving Forward and will host a full day of health policy education and discussions followed by two days of various speakers focusing on containing health care costs and providing health care solutions that work. With the 2012 presidential and congressional elections looming, it is vital NAHU members from across the country join in Washington to educate lawmakers on the role of health insurance agents and brokers and advocate for our crucial position in the private market delivery system!

Government Relations Activity

Medical Loss Ratio and H.R. 1206 Update

• The NAHU-supported legislation, H.R. 1206, to amend PPACA by removing independent agent and broker compensation from the MLR requirement, has garnered 128 cosponsors including 17 Democrats. Thanks to grassroots outreach by NAHU members over the August recess, many additional legislators signed on to support the bill after returning to town in September. Remember, it’s not too late to help with outreach to your legislators—more are always welcome. Now is also the time to reach out to state insurance regulators to ask them to support the bipartisan legislation. To view whether your legislator has signed on, please click here.
• NAHU CEO Janet Trautwein testified before the House Energy and Commerce Committee’s Subcommittee on Health on September 15. The hearing, entitled “Cutting the Red Tape: Saving Jobs From PPACA’s Harmful Regulations,” served as an extension of the committee’s June hearing focusing on the harmful impact of PPACA regulations on the American economy, specifically those related to the MLR and grandfathered plan provisions. Janet’s testimony updated the committee on the adverse impact of MLR on the nation’s health insurance producers and called for immediate regulatory or legislative action. Watch coverage from the hearing here.
• A recent report issued by the nonpartisan Government Accountability Office (GAO) closely examined PPACA’s MLR requirement and its early effects on private health insurance. The report, “Private Health Insurance: Early Experiences Implementing New Medical Loss Ratio Requirements,” was based on anonymous interviews with health insurers performed between December 2010 and July 2011. The report’s findings highlight commission cuts to health insurance producers in an attempt to comply with the law’s 80 to 85 percent MLR standard as one of the largest consequences of the requirement. NAHU CEO Janet Trautwein referenced the report’s findings during her testimony before the House Energy and Commerce Committee.
• NAHU’s Federal Affairs team continues to work with a number of key Senate offices on a multi-pronged approach to move the MLR issue through regulatory as well as legislative action.
• September marked a busy month for states seeking adjustments to PPACA MLR requirements in their individual markets. North Carolina and Oklahoma submitted their waiver requests to the Department of Health and Human Services (HHS) last month, while Delaware became the second state after North Dakota to be denied its request for an MLR standard adjustment. Delaware was denied on the basis that immediately adopting the 80 percent standard would not destabilize their market and that the state’s insurers would remain profitable even after paying rebates to consumers.
• North Carolina and Oklahoma became the 16th and 17th states to apply for an MLR waiver from HHS. North Carolina is asking for a 72 percent standard this year followed by a 74 percent standard in 2012 and a 76 percent standard in 2013 before reaching 80 percent in 2014. Oklahoma has asked for a 65 percent standard this year, a 70 percent standard next year and a 75 percent standard in 2013 before also reaching 80 percent in 2014. Oklahoma is unique in the sense that their waiver application asked for an adjustment in the individual as well as small group market. This request comes after HHS clarified in its response to the territory of Guam’s waiver application that they only hold statutory authority to grant adjustments for the individual market. Despite this earlier declaration, Oklahoma Insurance Commissioner John Doak and their entire congressional delegation urged HHS to approve the waiver.
• State-level waiver applications now include 17 states that have requested the MLR adjustment with five states approved, two denied (Guam’s application was deemed unnecessary) and nine states still waiting to hear back on their pending applications.

State-Based Exchange Activity

• There was a lot of activity on the exchange front this past month as NAHU and other stakeholders worked to meet the September 28 deadline for public comments on the first wave of proposed regulations for the state-based exchanges created by PPACA. Shortly before the due date, HHS extended the comment period setting a new deadline of October 31. NAHU’s volunteer Exchange Working Group in conjunction with NAHU staff worked tirelessly throughout the summer to provide extensive comments to HHS on behalf of our membership and will be submitting them soon.
• September 23 served as the second-to-last application deadline for states seeking Level One exchange establishment grants. These grants provide up to one year of funding to states that have made progress under their exchange planning grant. At the end of that year, states can then apply for an additional year’s funding under the Level One grant if they need additional time to meet the criteria allowing them to apply for Level Two establishment grants. The Level Two grants are designed to provide funding for those states that meet set criteria and are further along in the establishment of their exchange. Level Two funding is available through December 31, 2014. Politico recently reported they expect to see some states applying for Level Two grants in the next few weeks.
• The six-city HHS listening tour wrapped up in late September after hearing feedback from various stakeholder groups in Portland, Denver, Atlanta, New York City, Sacramento and Chicago. The forums centered on key issues and provisions of exchange establishment and implementation. Several NAHU members, including State Affairs Director Pam Mitroff, were able to attend a few of the invitation-only meetings and represent the interests of health insurance agents and brokers at the sessions.
• Following a recent D.C.-based meeting of officials from 46 states, the District of Columbia, and two territories, HHS announced additional details regarding the framework of a federal exchange. The federal fallback exchanges will be comprised of partnership options between states and the federal government when operating the state exchange marketplaces. The plan, called the “Affordable Insurance Exchange Partnership Options Initiative” offers states the choice of a permanent partnership or a temporary one serving as a transition step to a fully functional state-based exchange. Under the proposed federal framework model, states may choose one of three options: state plan management, state consumer assistance or both plan management as well as consumer assistance.
• When choosing the plan management option, states will oversee the collection and analysis of plan information, monitoring and oversight of plans, and data collection and analysis. HHS would then coordinate with the state to handle plan oversight, including consumer complaints and any issues with enrollment reconciliation.
• States selecting the consumer assistance functions would be responsible for overseeing in-person consumer assistance, management of the navigator program and conducting outreach and education for the exchange. Other functions such as call center operations, consumer website activities and written communication with consumers assisting in eligibility and enrollment would be operated by HHS.
• HHS did make it clear that in states that adopt the federal framework, HHS would exercise the responsibility of ensuring the exchange meets all of the necessary standards.

New Developments in PPACA's Ongoing Legal Battle

• The Obama administration chose not to ask the 11th Circuit Court of Appeals to re-hear a pivotal health reform case brought by 26 states and the National Federation of Independent Business (NFIB). This decision marked the next step in what has been, and will assuredly continue to be, an extremely high-profile suit. This move positions the Supreme Court to potentially hear the case during the court’s next term which begins later this month.
• The suit is the largest challenge to PPACA and has now seen three circuit courts rule differently on the issue. The 11th Circuit Court of Appeals struck down the law’s individual mandate requirement in August leaving the Justice Department with the choice of pursuing an en banc review from the full 11th Circuit Court or directly asking the Supreme Court to review the constitutionality of the mandate. Some Washington pundits suspected the administration would pursue the en banc review in an effort to delay Supreme Court action on its signature health reform legislation until after the 2012 presidential election. Other experts argue that the administration has plenty of reasons to request Supreme Court action. For one, the issues surrounding the individual mandate have been well-argued to three separate courts, and perhaps more importantly, the uncertainty surrounding the law continues to influence the broader economy as many point to it as one of the largest obstacles employers face when considering hiring.
• The administration has until November to appeal the case to the Supreme Court. The court rarely rejects requests from the federal government to hear a case, especially when the issues involved have large political significance and contain multiple conflicting rulings. The timing of a final ruling on the mandate is left largely up to the justices, who may exercise caution about weighing in on such a high-profile, politically charged case.

Much-Anticipated Kaiser Family Foundation Employer Health Benefits Survey Released

• The health policy world was abuzz last week with the release of the Kaiser Family Foundation’s annual Employer Health Benefits survey. Data from the survey illustrated premiums for employer-sponsored health insurance plans rose between 8 and 9 percent to approximately $5,400 for an individual and slightly more than $15,000 for a family, marking a more than 3 percent increase from the 2010 figures. Kaiser analysts point out that the rise is in line with the average 10 percent premium increase going back to 2001.
• Opponents of PPACA declare that premiums have already risen by $2,213 during the Obama administration while the White House proclaims that encouraging signs about health care costs exist, such as the Bureau of Labor Statistics health insurance employer cost index hitting a 10-year low in the first two quarters of 2011. Other industry stakeholders weighed in on the Kaiser data, including America’s Health Insurance Plans, who urged state and federal policymakers to focus on all factors affecting premium increases such as rising prices for medical services, additional benefits and coverage mandates that add to the overall cost of insurance and modifications in the covered population resulting in an older and sicker risk pool.
• The survey also contained data revealing that less than one-third or 29 percent of small businesses with fewer than 50 employees that offer health insurance coverage have attempted to determine their eligibility for PPACA’s small-business tax credit. PPACA offers a tax credit of up to 35 percent of premium costs to small businesses with fewer than 25 full-time employees earning on average less than $50,000. The credit is offered to firms that pay at least half of each employee’s premium costs and lasts for two years. The deadline for applying for the credit occurred in mid-September.
• The survey found that approximately half of the firms surveyed that are not currently offering health insurance said they were aware of the tax credit, with 15 percent saying it made them more likely to consider offering coverage. These findings aligned with similar reports released in a January survey sponsored by PPACA supporter, the Small Business Majority, that found 43 percent of eligible small businesses were familiar with the tax credit compared to 56 percent that were either unaware or had little knowledge of it.

Association Health Plans (AHPs) Now Subject to Rate Review

• HHS released a final regulation in early September specifying that AHPs will be subject to PPACA’s rate review provisions that began last month. Health insurers that raise premiums more than 10 percent are now subject to heightened scrutiny by state insurance departments, or HHS if the state’s review process was not deemed stringent enough. HHS is conducting reviews in Alabama, Arizona, Louisiana, Missouri, Montana, Wyoming and in Pennsylvania and Virginia for group market rates.
• With the extension of rate review provisions to AHPs, HHS must now determine which states have the ability to review AHP plans without relying on federal support. States that may have authority to review premium increases in their individual and group markets may find that they do not pass in their ability to review AHP plans since the plans have not previously been reviewed as strictly as other products in some states.
• AHP provisions of the rate review requirements begin on November 1.

Watch for October 7 Release of IOM’s Essential Benefits Report

• The press office of the Institute of Medicine (IOM) recently announced that the much-anticipated essential benefits report will be released on Friday, October 7. The IOM is the group charged with undertaking a study that will ultimately result in recommendations to HHS on the criteria and methods for determining the essential health benefits package under PPACA. The October release falls slightly behind the group’s self-imposed deadline of the end of September.
• Lingering uncertainties remain as to when HHS will release the corresponding rule detailing exactly how the IOM’s recommendations must be utilized by employers and individual and small group health plans.
  

NAHU staff analysis of the essential benefits report will be included in the following Monday’s edition of the Washington Update.