April 5, 2013

AHIP/BCBSA Healthcare Reform News

AHIP Supports Senate Legislation to Repeal the ACA’s Health Insurance Tax

America’s Health Insurance Plans’ (AHIP) President and CEO Karen Ignagni released the following statement in support of the Jobs and Premium Protection Act introduced by Senators John Barrasso (WY) and Orrin Hatch (UT) to repeal the Affordable Care Act’s (ACA) health insurance tax:

“Taxing health insurance makes it more expensive, and that is the opposite of what health care reform was supposed to accomplish. This tax alone will mean that next year individuals purchasing coverage on their own will pay $110 in higher premiums and small employers will pay an additional $360 for each family they cover.  Families and small businesses simply cannot afford to pay an additional $100 billion sales tax on their health insurance at a time when they are already struggling to keep up with rising medical costs.” 

What You Need to Know about the Health Insurance Tax:

  • Starting next year the reform law imposes a new $100 billion tax on health insurance. The tax will start at $8 billion in 2014, increasing to $14.3 billion in 2018, and will continue to increase each year. 
  • The health insurance tax is larger than the device tax and the prescription drug tax combined.
  • According to an analysis by Oliver Wyman, this tax alone will mean that next year an individual purchasing coverage on his or her own will pay $110 in higher premiums, small businesses will pay an additional $360 for each family they cover, seniors enrolled in Medicare Advantage will face $220 in reduced benefits and higher out-of-pocket costs, and state Medicaid managed care plans will incur an additional $80 in costs for each person enrolled.
  • The health insurance tax is greater than the minimum penalty for those who choose not to buy health insurance – further incentivizing young, healthy people to forgo purchasing insurance until they need medical care. 

Proposed Rules on 90-Day Waiting Periods
The Departments of Health and Human Services, Labor, and the Treasury released draft Proposed Rules on the ACA provision that limits waiting periods before coverage can begin to no more than 90 days. The Departments previously issued guidance on the 90-day waiting period requirements in 2012 (Technical Release 2012-01) and health insurers and group health plans may continue to rely on the prior guidance through the end of 2014.

Key issues addressed in the Proposed Rules include the following:

  • Health insurance or self-funded group health plan coverage must begin no later than 90 days after an individual is first eligible to enroll.
  • Group health plans may impose substantive eligibility conditions (e.g., achieving job-related licensure requirements) as long as the requirements are not intended to circumvent the 90-day waiting period limitations. For example, eligibility conditions based solely on the lapse of a time period are permitted for no more than 90 days.
  • Group health plans may condition eligibility on an employee’s completing a number of cumulative hours of service provided the total does not exceed 1,200 hours.
  • Health insurers will be permitted to rely on an employer’s representation regarding terms of employment and other factors governing the imposition of waiting periods.

Walden Bill Addresses Impact of ACA Taxes
In March, Rep. Greg Walden (R-OR) introduced a bill H.R. 1205, which would require Summary of Benefits and Coverage documents to disclose information about how certain taxes and fees impact health insurance premiums.

This requirement would apply specifically to provisions of the ACA addressing the new health insurance tax, fees associated with the new Exchanges, reinsurance contributions, risk corridor payments, and risk adjustment charges.

The proposed requirement would apply to plan years beginning on or after Jan. 1, 2016. The Walden bill also would direct the Comptroller General to conduct a study on methods of calculating how the following ACA provisions will impact premiums: guaranteed issue and community rating reforms; age rating restrictions; coverage of preventive services for women; and the essential health benefit (EHB) requirements.

House Hearing Focuses on ACA Tax Provisions
The House Ways and Means Subcommittee on Oversight held a hearing in March to examine the tax provisions of the reform law. Subcommittee Chairman Charles Boustany (R-LA) emphasized in his opening statement that the ACA’s health insurance tax threatens to “stifle small business growth” and that he has introduced legislation, H.R. 763, to repeal this tax.

Boustany also raised concerns about the health insurance tax and its impact on premiums throughout the Q&A portion of the hearing. Following the hearing, Boustany told reporters that comprehensive tax reform may include efforts to repeal the health insurance tax, the medical device excise tax and other ACA tax provisions.

The hearing included testimony from Douglas Holtz-Eakin, President of the American Action Forum, who stated that the health insurance tax is the “worst designed tax” he has ever seen. He expressed particular concern that the tax is not deductible, does not treat all insurers equally, and will put upward pressure on premiums.

In his written testimony, Holtz-Eakin noted that consumers ultimately will bear the cost of the health insurance tax, and he further suggested that if insurers were to “eat the tax,” this would limit their ability to make future investments in health information technology programs, wellness initiatives, and disease management tools.

Congressional Report Examines ACA’s Impact on Premiums
In March the Republican staff of the House Energy and Commerce Committee, the Senate Finance Committee, and the Senate HELP Committee released a report discussing the impact of the ACA on health insurance premiums in the individual and small group markets.

The report compiles data from more than 30 studies and analyses that examine the impact of various ACA provisions, including the market reforms, the essential health benefit requirements and the new taxes and fees.

Included among the analyses cited by this report are the Oliver Wyman study on the costs associated with the ACA’s health insurance tax, the Milliman study on the impact of guaranteed issue and community rating reforms adopted in eight states in the 1990s, and AHIP’s case study examining Washington state’s experiment with guarantee issue in the absence of an individual mandate. The report also includes a table providing state-by-state estimates on the ACA’s likely impact on health insurance premiums. 

Report conclusion: The ACA “will make coverage dramatically more expensive and unaffordable for individuals and families” and “breaks its core promise to make health care coverage affordable as Americans across the country swallow higher premiums.”

HHS Announces Approval of Additional State Partnership Exchanges
Secretary of Health and Human Services (HHS) Kathleen Sebelius recently announced that four additional states – Iowa, Michigan, New Hampshire and West Virginia – have received conditional approval to operate State Partnership Exchanges.

This brings the total number of states that have been conditionally approved to partially or fully run their Marketplace to 24 states and the District of Columbia. The following is a link to AHIP’s updated Exchange Activity Map indicating the decisions states have made with respect to Exchange implementation.


Blue Cross Founds Educational Coalition on Healthcare Reform
Blue Cross and Blue Shield of Louisiana has stepped up to be the founding partner of a new group called the Louisiana Healthcare Education Coalition (LHEC). The Coalition was formally launched in late March with a series of press conferences in Baton Rouge, New Orleans and Shreveport. Mike Reitz and Dr. David Carmouche were featured speakers at these events, along with some of our Coalition partners.

LHEC’s mission is to provide unbiased educational information on health, wellness and healthcare reform to our fellow Louisianians. A recent Kaiser Family Foundation poll showed that three years after President Obama signed the healthcare reform law, 67% of uninsured people younger than 65 don’t understand how it will affect them. And 57% of the total population doesn’t understand the impact.

Many Blue Cross employees will help support the work of LHEC and promote it through speakers bureaus and community meetings. The Coalition’s website address is www.lhec.net. Check out the utube highlights reel here: http://youtu.be/ltchx6qSS74. To read more about each of the press conferences below: