Agents' Roles In Health Benefits Delivery Uncertain; Many Proposals Have Impact

Provisions in health care reform legislation now being drafted in various congressional committees signal major changes in how health care is delivered in the United States–changes that will likely impact insurance agents, as well as health insurers and self-insurance groups.

Concern over the potentially broad impact to agents–as both employers and sellers of health insurance products–was evidenced by a recent "fly-in" of more than 1,000 agents and brokers to D.C. (See NU, July 20, p. 8).

Among the proposals that could shape the future of agents' roles in the health care benefits' delivery are the following:

o Health Choices Administration proposal.

This proposal being considered in the House of Representatives would create a Health Choices Administration as an independent federal agency headed by a commissioner appointed by the president.

While the insurance industry has expended great resources to escape federal oversight through the proposed Consumer Finance Protection Agency, this new agency would have strong consumer protection authority over health issues.

o "Navigators" proposal.

This provision, contained in legislation passed by a Senate committee, would create "Navigators," which would help consumers decipher the information provided through Internet "gateways" or "exchanges."

The program is based on the system developed to provide universal health care in Massachusetts by helping consumers pick out the best options for their health care needs.

These "gateways" would provide access to all health care options, qualified health benefit plans as well as a "public" system.

The industry has been successful in winning language in the provisions that specifically add "other licensed insurance agents and brokers" to those authorized to provide such information.

The industry also won language in the provision mandating that any information given to consumers who access the system is provided by "qualified, and licensed, if appropriate," personnel.

Other proposals would impact underwriters and self-retention groups.

o Insurer taxes, increased costs.

One Senate proposal would impose a $100 billion tax over 10 years on health underwriters.

This is being considered by the Senate Finance Committee, which is drafting what is expected to be the ultimate base bill–the document to be used as the starting point for negotiations on final legislation.

A House bill also calls for the health insurance industry to absorb the largest single cost of paying for the program, a decrease in payments to private health insurance plans operating under the Medicare Advantage program, projected as $157 billion over 10 years by the House.

Another Senate proposal that emerged late last week would impose a tax on insurers and employers that provide so-called 'Cadillac plans" to help pay for the expensive overhaul. Typically, the term has been used to describe union plans that have minimal or no co-pays or cost sharing and fairly open networks.

o Proposals impacting self-insureds.

One provision in a Senate bill would pre-empt a 1986 law exemption which self-retention groups have from some state oversight, while another gives the Health and Human Services Department authority to levy a per-subscriber tax on all health plans, both self-funded and fully insured.

This "fair share" requirement is aimed at raising $375 million annually to fund comparative effectiveness research.

o Public option.

Other provisions, included in both the House bill and in legislation approved by the Senate Health, Education and Labor Committee, would create a "public option" that is considered the most controversial provision. The government-run health insurance plan being proposed is designed to compete with private insurance companies and force them to provide better service at lower prices.

According to the Council of Insurance Agents and Brokers, this provision "could have the intended or unintended effect of undermining the employer-provided and group health insurance marketplace."

o Long-term care entitlement.

In a study released late last week, the American Academy of Actuaries voiced concern over a provision in the Senate HELP bill that would create a new long-term care entitlement program administered by HHS. The actuaries' concern is that the provision will require premiums that may exceed affordable levels for those in the intended population and is unlikely to achieve broad participation."

"Due to its design and the high level of required premiums, the program is unlikely to cover more than a very small proportion of the intended population," said Eric Stallard, chairperson of the American Academy of Actuaries Federal Long-Term Care Task Force.

o Employer contributions.

Other controversial provisions would include a tax on the wealthy to pay for providing universal health care, as currently envisioned, and mandating employer contributions to the government to help pay for employees they decline to provide insurance for.

This provision, contained in a House bill, would impact agents as well as employers.

It provides an exception for small businesses. The House bill says that small businesses with 50 or fewer full-time workers could receive tax credits for subsidizing insurance coverage.

The bill says that all companies with more than 25 workers would be required to pay at least 60 percent of their workers' health insurance or face a $750 per full-time employee fee, with a reduced rate of $375 per part-time employee. The first 25 workers would be exempt under the provision.

STATUS OF REFORM

President Obama in several appearances last week appeared to be taking advantage of public anger at health insurers by restating that any health care insurance reform program must include a mandate for insurers to cover pre-existing conditions–something the industry has already agreed to do.

Change is not imminent, however.

Congress will leave by the first week of August unable to meet deadlines established by itself and the Obama administration to have comprehensive bills passed by both houses of Congress, setting up fall negotiations on final legislation.

In comments to investors last week, Washington Analysis, a buy-side investment analysis group, said, "It's very unlikely this can be accomplished by the August recess, no matter how much pressure President Obama puts on the Senate.

"This will push out passage until sometime in September, setting the date for a conference with the House bill in the fourth quarter," the note said.

"This would conform to our view that enactment of health care reform will not take place until the fourth quarter or the first quarter of 2010."