Health care reform legislation unveiled by the Senate Democratic leadership last week includes a "public plan" that states could reject, but raises some concerns about preserving the ability of insurance agents to sell all types of coverage offered under the new system.
At the same time, however, it does not contain any language giving the Federal Trade Commission authority to oversee or even write reports about the insurance industry, either limited to the health care industry or to all insurers. There is also no language limiting the antitrust exemption now accorded to health and medical malpractice carriers under the McCarran-Ferguson Act.
Legislation passed earlier this month by the House contains both provisions.
However, an amendment that would repeal the antitrust exemption for health and medical malpractice insurers is expected to be introduced during debate on the Senate floor. The amendment will be the language contained in S. 1681, which was reported out last month by the Senate Judiciary Committee. The bill has 16 cosponsors.
Of key interest to agents is that the legislation would require the Department of Health and Human Services to establish an advisory board that would have to include "individuals and entities with experience in facilitating enrollment in qualified health plans" to assist the agency in clarifying the requirements for the state exchanges set up for consumers to shop for coverage.
But what concerns industry lawyers the most, is the fact that the HHS secretary is required to "establish procedures under which a state may allow"–but is not required to permit–"agents and brokers to enroll individuals" in exchange plans, according to one analysis.
Another potential concern is the authority of the HHS secretary to issue "rate schedules for broker commissions paid by health benefits plans offered through an exchange," rather than permitting such commissions to be negotiated in the marketplace, the legal analysis said.
"This bill has a long ways to go before it becomes something that we can support," said Joel Kopperud, a director of government relations for the Council of Insurance Agents and Brokers. Specifically, he said, it allows brokers to sell products in the exchanges, "but still risks defining us as a conflict of interest."
Mr. Kopperud said that CIAB's "biggest concern is the authority it grants HHS to determine compensation rates on brokers working through state-based exchanges."
He said the proposed public option would do significant damage to employer-provided benefits, and that "the weak individual mandates make the market reforms difficult to support–when they will result in higher premiums.
The bill also limits flexible medical spending accounts to $2,500 (the limit is $5,000 today), and does not index that limit for inflation. It includes language from the House bill that would create a long-term-care entitlement program.
The Patient Protection & Affordable Care Act unveiled last week by Senate Majority Leader Harry Reid, D-Nev., would impose new regulations on insurers, extend coverage to 31 million people who are not covered and add new Medicare benefits.
Among the taxes that would be levied to pay for the bill would be one on so-called "Cadillac health plans." The provision in the bill that will go to the Senate floor would kick in at $8,500 for individuals and $23,000 for families. The bill would also levy annual fees on health insurers.
Under the bill, most people would be required to carry insurance. A person without coverage could be required to pay a financial penalty, starting at $95 in 2014 and rising to $750 in 2016, with a maximum of $2,250 for a family.
The Senate bill would not explicitly require employers to offer health insurance. But if an employer with more than 50 workers does not offer coverage, and if any worker qualifies for a federal subsidy, the employer would have to pay a penalty–typically $750 for each employee.
It creates a government-run health insurance plan similar to that included in the House legislation. The proposal is called a "community health plan," and would be available only through state-based insurance exchanges that would be created under the legislation. It offers states the flexibility to opt-out, and would subject the plan to the same laws and requirements as those applicable to other health plans.
Other market reforms include guaranteed issue; no lifetime or "unreasonable" annual coverage limits; a ban on pre-existing conditions limitations and rescissions; guaranteed renewals; non-discrimination standards; network provider standards; and mandatory extension of family coverage to older dependents. These mandates mirror those in the House bill.
A significant difference is that it mandates state-by-state creation of health insurance exchanges through which individuals and small employers can purchase a so-called "qualified health benefits plan." By comparison, the House bill establishes a single national exchange.
Another difference is that no new federal agency would be created under the Senate bill to oversee this new system, although HHS would be required to establish and operate a state-based exchange in any state that fails to establish such an exchange on or before Jan. 1, 2014.
The Exchanges initially would be limited to employers of fewer than 101 employees. States would have the option to reduce this to employers with less than 51 employees; starting in 2017, a state also would have the option of expanding its exchange to accommodate larger employers.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.