NU Online News Service, Nov. 19, 12:43 p.m.EST

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Health care reform legislation unveiled by the Senate Democraticleadership last week does not kill the federal antitrust exemptionfor health and medical malpractice carriers, but that step could betaken in an amendment during floor debate.

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The bill does not contain any language giving the Federal TradeCommission authority to oversee or even write reports about theinsurance industry, either limited to the health care industry orto all insurers.

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Nor does it include language limiting the antitrust exemptionnow accorded health and medical malpractice carriers under theMcCarran-Ferguson Act. Legislation passed earlier this month by theHouse contains both provisions.

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However, an amendment that would repeal the antitrust exemptionfor health and medical malpractice insurers is expected to beintroduced during debate on the Senate floor. The amendment will bethe language contained in S. 1681, which was reported out lastmonth by the Senate Judiciary Committee. The bill has 16cosponsors.

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The bill does include a "public plan" that states could reject,but raises some concerns about preserving the ability of insuranceagents to sell all types of coverage offered under the newsystem.

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Of key interest to agents is that the legislation would requirethe Department of Health and Human Services to establish anadvisory board that would have to include "individuals and entitieswith experience in facilitating enrollment in qualified healthplans" to assist the agency in clarifying the requirements for thestate exchanges set up for consumers to shop for coverage.

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But what concerns industry lawyers the most is the fact that theHHS secretary is required to "establish procedures under which astate may allow"–but is not required to permit–"agents and brokersto enroll individuals" in exchange plans, according to oneanalysis.

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Another potential concern is the authority of the HHS secretaryto issue "rate schedules for broker commissions paid by healthbenefits plans offered through an exchange," rather than permittingsuch commissions to be negotiated in the marketplace, the legalanalysis said.

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"This bill has a long ways to go before it becomes somethingthat we can support," said Joel Kopperud, a director of governmentrelations for the Council of Insurance Agents and Brokers.Specifically, he said, it allows brokers to sell products in theexchanges, "but still risks defining us as a conflict ofinterest."

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Mr. Kopperud said that CIAB's "biggest concern is the authorityit grants HHS to determine compensation rates on brokers workingthrough state-based exchanges."

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He said the proposed public option would do significant damageto employer-provided benefits, and that "the weak individualmandates make the market reforms difficult to support"–when theywill result in higher premiums.

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The bill also limits flexible medical spending accounts to$2,500 (the limit is $5,000 today), and does not index that limitfor inflation. It includes language from the House bill that wouldcreate a long-term-care entitlement program.

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The Patient Protection & Affordable Care Act unveiled lastweek by Senate Majority Leader Harry Reid, D-Nev., would impose newregulations on insurers, extend coverage to 31 million people whoare not covered and add new Medicare benefits.

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Among the taxes that would be levied to pay for the bill wouldbe one on so-called "Cadillac health plans." The provision in thebill that will go to the Senate floor would kick in at $8,500 forindividuals and $23,000 for families. The bill would levy annualfees on health insurers.

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Under the bill, most people would be required to carryinsurance. A person without coverage could be required to pay afinancial penalty, starting at $95 in 2014 and rising to $750 in2016, with a maximum of $2,250 for a family.

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The Senate bill would not explicitly require employers to offerhealth insurance. But if an employer with more than 50 workers doesnot offer coverage, and if any worker qualifies for a federalsubsidy, the employer would have to pay a penalty–typically $750for each employee.

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It creates a government-run health insurance plan similar tothat included in the House legislation. The proposal is called a"community health plan," and would be available only throughstate-based insurance exchanges that would be created under thelegislation. It offers states the flexibility to opt-out, and wouldsubject the plan to the same laws and requirements as thoseapplicable to other health plans.

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Other market reforms include guaranteed issue; no lifetime or"unreasonable" annual coverage limits; a ban on pre-existingconditions limitations and rescissions; guaranteed renewals;non-discrimination standards; network provider standards; andmandatory extension of family coverage to older dependents. Thesemandates mirror those in the House bill.

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A significant difference is that it mandates state-by-statecreation of health insurance exchanges, through which individualsand small employers can purchase a so-called "qualified healthbenefits plan." By comparison, the House bill establishes a singlenational exchange.

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Another difference is that no new federal agency would becreated under the Senate bill to oversee this new system, althoughHHS would be required to establish and operate a state-basedexchange in any state that fails to establish such an exchange onor before Jan. 1, 2014.

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The exchanges initially would be limited to employers of fewerthan 101 employees. States would have the option to reduce this toemployers with less than 51 employees; starting in 2017, a statealso would have the option of expanding its exchange to accommodatelarger employers.

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