After many months of wrenching debate, Democrats in Marchfinally succeeded in getting health care reform legislation to thefinish line.

|

On March 23, PresidentBarack Obama signed the reform package–the Patient Protectionand Affordable Care Act–into law. "Today, after almost a century oftrying, today, after over a year of debate, today, after all thevotes have been tallied, health insurance reform becomes law in theUnited States of America," he said during the signing ceremony.

|

But as the administration rolled out regulation after regulationto implement it–most crafted with input from the NationalAssociation of Insurance Commissioners–the bill continued togenerate concern and controversy.

|

Insurance agents were successful in shaping many provisions totheir liking during the legislative process, but once the bill wassigned, some were left to worry that the implementation of thehealth exchange system in 2014 would curtail their ability to servethe individual and small group markets–key markets for smallagents.

|

In the short term, they worked to moderate provisions dealing with so-called "mini-med" plans,which are defined as limited-benefit health plans that offerinsureds $250,000 or less in total annual benefits.

|

In spite of repeated attempts, agents failed, however, to persuade Congress to repeal aprovision that would require businesses that spend $600 or morewith a vendor to file a 1099 form with the IRS starting in 2012.The Independent Insurance Agents and Brokers of America called theprovision burdensome for small businesses.

|

After being denied an exemption from the so-called "medical lossratio"–a provision that goes into effect in January and is designedto limit administrative costs of health care–agentsgroups have said they will seek legislation in the nextRepublican-controlled House that would exempt commissions from theprovision. Agents do not want commissions to be treated as part ofcompany premium revenue for purposes of establishing MLRs.

|

MLR rules require individual and small-market group healthinsurers to spend 80 percent of their premiums on patient care andlarge group insurers to spend 85 percent. If an insurer fails tospend the required amount under the MLR, they are required to payrebates beginning plan year Jan. 1.

|

Producer groups fear that the MLR rules will put pressure oncarriers to reduce their commissions. The current interpretation ofthe law is that commissions must fit into the 15- or 20 percentadministrative cost window.

|

The Department of Health and Human Services did provide sometransitional relief for 2011 in its interim final rule in November and is asking for commenton whether it has the legal authority to grant an exception and onthe role agents play in the health care insurance process.

|

Summing up the agents' and brokers' overall reaction to thePPACA, Joel Wood, senior vice president of government affairs forthe Council of Insurance Agents & Brokers, said: "We didn't gethealth care reform this year. We got health insurance reform, theproduct of demonization and vilification of the industry that willdo virtually nothing to constrain the underlying costs of healthcare."

|

He said the MLR issue is the biggest concern to the brokeragecommunity. "While aimed at being a federal price control, it is aperverse disincentive for plans not to cut costs," Mr. Woodsaid.

|

"Excluding agent/broker compensation from the MLR will be ourtop legislative priority for 2011, and we support broaderRepublican efforts to replace the Act altogether," Mr. Woodadded.

|

The IIABA contends that agent commissions are passed 100 percentto third parties and therefore should not be included in theformula. "The IIABA is very concerned that the MLR provision of thenew health care reform law will have a devastating effect on theprivate marketplace and that consumers will be negativelyimpacted," said Charles Symington, IIABA senior vice president forgovernment affairs. "If, after hearing from various interestedparties, HHS does not fix this language before the rule is final,we hope that Congress will step in and revise the MLR formulathrough the legislative process," he said.

|

On the litigation front, challenges to the health care lawcontinued throughout the year. On Dec. 13, a federal district courtjudge in Richmond, Va., ruled that the provision of the health carelaw requiring people to buy insurance in 2014 is unconstitutional.Judge Henry Hudson opined that Congress lacked any power to compelan individual to involuntarily engage in a private commercialtransaction, as contemplated by the "Minimum Essential CoverageProvision" of the health care law.

|

The provision requires everyone to buy insurance in 2014, or paya small penalty for not doing so. This provision "is neither withinthe letter nor the spirit of the Constitution," Judge Hudson wrotein a 42-page decision.

|

His ruling is certain to be heard by the 4th Circuit U.S. Courtof Appeals. "As you well know, this is only one brief stop on theway to the U.S. Supreme Court," Judge Hudson said during oralarguments.

|

Healthcare for America Now, which supports the law, cautionedthat 14 federal district court judges have rejected lawsuitsseeking to invalidate the new law.

|

Meanwhile, property and casualty insurers writing commercialinsurance coverages with medical cost and liability components areseeing mixed signals about the impact PPACA will have on theirclaims experience.

|

Ties between workers' compensation medical fee schedules andMedicare reimbursement levels are on the radar screens of workers' comp insurers, as are thepotential benefits from a healthier population.

|

In the liability arena, some participants in the medicalmalpractice insurance market are prepared for the worst-case scenario of med mal suits emerging from a moreerror-prone, overburdened health care system. Others see theprospect of better or earlier care reducing claims severity and arescoping out opportunities for writing potentially growing classes,like physician's assistants and mobile clinics.

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.