Filed Under:Agent Broker, Coverage & Policy Issues

Healthcare Reform: What Now?

Now that the healthcare reform bill with of its final changes has been signed into law, what will its impact be on professional insurance agents and their customers?

As with anything this new and complex--and because many of the details of how changes will be implemented remain to be worked out--it is too early to definitively answer the question, "What does it mean?" In addition, things may change.

Read an AA&B Web exclusive: "The new healthcare law: What it means for agents and brokers?"

When considering the impact of the new law, bear in mind that it is being challenged in court on constitutional grounds by, as of this writing, 19 state attorneys general. In addition, key Republicans say their party will run in the 2010 elections with a pledge to repeal the law.

How likely is it that a court challenge would be successful? The odds seem against it, but when it comes to trying to figure out what the courts will do, there's no way to make an accurate prediction.

How likely is it that the Republicans will win enough seats in the House or the Senate to succeed in passing a repeal bill? Again, predicting election results is a risky business. But here's something to consider: Even if the GOP were to seize control of both chambers of Congress, it would not likely be by veto-proof margins, and any repeal bill could be vetoed by President Obama. Also, in a Republican-controlled Senate, the filibuster shoe would be back on the other foot: Republicans would need 60 votes to pass most bills.

So as it stands now, the healthcare reform bill is the law of the land, until something is determined otherwise by either the judicial branch or the legislative branch. In the meantime, the changes that the new law mandates have already begun.

Read a March feature "What will healthcare reform do to independent agencies?"

Implementation
The Dept. of Health and Human Services (HHS) is spearheading the implementation process and the writing of regulations on the federal level. Because the insurance exchanges to be created in 2014 will be state-based, and because state-based regulations concerning health insurance have not been repealed (although some may be superseded by new federal requirements), state departments of insurance will remain involved in the regulatory process. In addition, the National Assn. of Insurance Commissioners (NAIC) has certain responsibilities specified under the new law.

States will be at the center of many of the changes. The level of changes that consumers will see depends on a large extent on their state's engagement--or more specifically, the nature of state engagement. Some states are challenging the new healthcare law on constitutional grounds. But others are not doing so, and are moving speedily to get on board. This places some state insurance regulators--especially those in states challenging the new law--in the delicate position of taking steps to implement a federal law that their state leaders oppose.

In a recent interview, Kansas Insurance Commissioner Sandy Praeger, chair of the NAIC Health Insurance and Managed Care Committee, said despite the threat of lawsuits, insurance regulators will start implementing reforms where they are required to do so.

Meanwhile, back in Congress, what may be the first post-healthcare bill was introduced. The final legislative enactment did not include a provision for rate regulation. Now, Sen. Diane Feinstein (D-Calif.) has introduced a bill that would give the HHS secretary the power to review premiums and block "any rate increase found to be unreasonable." Under her bill, the federal government could regulate rates in states where state officials did not have "sufficient authority and capability" to do so.

The reason for the Feinstein bill? Michael T. McRaith, director of the Illinois Dept. of Insurance, told legislators April 20, "There is a distinct possibility that less responsible companies will raise rates to price out people who are sick or might become sick between now and 2014." McRaith said he and Illinois Gov. Pat Quinn "unequivocally support state-based insurance regulation," because local officials comprehend local markets. McRaith endorsed Sen. Feinstein's bill, saying it would "provide an impetus" for states to regulate premiums if they did not already do so.

Coping with the new law
Now that the new federal healthcare reform law has been enacted, professional insurance agents are beginning the process of coping with the changes. What makes this difficult is that while some changes will occur soon, others won't happen for years, but insureds have questions now--some of which may have no answers yet.

Many specifics about what will happen in the health insurance market won't be known until specific regulations are written. This can put agents in a difficult position when they get questions from their clients. The best approach may be to focus on what is known now, while providing information on what may change down the road.

An approach that is not really a viable option is to assume that the new law will be repealed or declared unconstitutional. While either could happen, providing advice to clients based upon assumptions is not prudent. Clients and their agents need to deal with what is happening, not what might happen but cannot
be predicted.

"As a practical matter--like it or not--as of now, health care reform is the law of the land, and we must deal with that reality in a way that protects the business interests of independent agents," said PIA National Executive Vice President & CEO Leonard C. Brevik, noting that since the health care law was enacted, "the action has focused on two tracks--the politics and the practical."

"Any time massive changes such as this are attempted by the federal government, three things are certain: it will cost more than initial estimates, it will take far longer than anticipated to implement and there will be unintended consequences," Brevik said. "It is our job to figure out what those consequences will be and work to protect the interests of professional insurance agents."

It should be noted that private-sector insurance agents will continue to be able to sell health insurance policies under the new system. A new provision was included that guarantees licensed agents can participate.

Unintended consequences
We already are beginning to see some unintended consequences of the new law. Because the debate went on for more than a year, the public is very much aware of it. But public awareness of the specifics of the law is less clear.

Enter scam artists, looking to take advantage of the situation. Several states are reporting that individuals posing as insurance agents or as representatives of the federal government selling bogus insurance policies under the new healthcare reforms.

HHS Secretary Kathleen Sebelius has sent letters to state insurance regulators and prosecutors about the new schemes. She warned consumers to beware of deceptive policies that are time limited, offer limited benefits or advertise themselves as required by health insurance reform.

What's next?
It is still too soon after the enactment of healthcare reform legislation to judge its full impact. But despite the fears that Congress was going to radically transform our healthcare system into one where the federal government owns and runs everything, that didn't happen.

In the end, the healthcare sector was not given over to socialism, defined as government ownership.

Will there be more regulation? Yes. But despite what some had feared, our healthcare system will remain in the private sector.

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