Health Insurance Report™ helps you track and analyze legal, legislative, and regulatory developments affecting the health-insurance industry throughout implementation of the Affordable Care Act...
By Sara Hansard
Oct. 17 --The head of the trade association that represents most U.S. health insurers Oct. 17 called for a two-year delay of the health insurance tax required by the Affordable Care Act.
“One of the largest and most important barriers to actually achieving more affordability is the health insurance tax,” Karen Ignagni, president and chief executive officer of America's Health Insurance Plans (AHIP), said at the organization's 18th annual State Issues Conference. AHIP represents nearly 1,300 health insurers that cover more than 200 million people.
“I think we have a window here to talk to members of Congress about a two-year delay” before the tax is implemented in 2014, Ignagni said. The tax is to be imposed on premiums of fully insured plans, which include individual market plans, employee plans sponsored by most small businesses, Medicare Advantage plans and Medicaid plans, she said.
Speaking to reporters after her remarks at the conference, Ignagni said the tax would cost families an average of $300 a year in higher premiums in 2014. She suggested the revenue from the tax could be made up from lower-than-expected health insurance premium increases as well as delivery reforms the industry is pushing. Premium increases have been lower than originally forecast by the Congressional Budget Office, which means the government will not have to spend as much on subsidies for health plans sold through the marketplaces.
The tax is estimated to raise a total of $15 billion over the period of fiscal years 2014 and 2015, and $100 billion over the next 10 years.
AHIP has pushed to repeal the tax. A majority of the House of Representatives is co-sponsoring H.R. 763, the proposed Jobs and Premium Protection Act, which would repeal the tax. Companion legislation (S. 603) has been introduced in the Senate by Sens. John Barrasso (R-Wyo.) and Orrin G. Hatch (R-Utah) .
Ignagni also told reporters she is optimistic that technical problems with the marketplaces can be solved, comparing the situation to problems encountered when the Medicare Part D prescription drug coverage was initiated in 2006. Insurers are working with the Department of Health and Human Services, she said. November and early December are likely to be the busiest period for enrollment, she said.
Under the ACA, most people who are not covered in 2014 are liable for “individual responsibility” payments, and enrollment must be completed by Dec. 15 in order for plans to be effective by Jan. 1. However, people are not fined for coverage gaps of less than three months. The initial ACA open enrollment period lasts through March 31, but people must enroll by mid-February to avoid the penalty .
In her remarks to the conference, Ignagni said data from the marketplaces show that the health insurance industry is building “high-performing networks to give consumers more options, to give consumers affordability.” Payment arrangements with providers and benefit structures are being changed “to encourage people who have chronic disease to get into the care system early, to keep getting involved and to stay in the care system” to improve their health, she said.
The marketplaces will “shine a bright light on the issue of cost containment” of underlying health costs that drive insurance premiums, Ignagni said. More attention needs to be given to hospital and pharmaceutical prices, she said.
The new payment and benefit structures being developed by the health insurance industry “can be leveraged to work in partnership with hospitals, with doctors, with others in the health-care system, to actually begin to bring prices down. If prices come down, then premiums come down,” she said.
But Ignagni warned that “across the country we're seeing a dangerous level of hospital consolidation,” which affects prices being charged. “It makes it very difficult to actually negotiate affordable premiums.” She pointed to California, where she said prices are “much higher” in Northern California, even though the same plans and benefit structures are in effect throughout the state.
Ignagni also cautioned against wide variation in practice patterns by providers across the country. “There's an increasing effort to turn back the clock on many of the innovations you've brought to the delivery system,” she told insurers.
Dan Crippen, executive director of the National Governors Association, said governors have some control over consolidation of hospitals and health systems, and they could require hospitals to be more transparent about their costs and pricing structure. With better cost information there could be more competition between hospitals that are close together, he said.
The NGA is also advising governors to look closely at the health-care workforce, Crippen said. “We expect a lot more demand” as a result of the ACA's Medicaid expansion and the marketplaces, “but no one is really undertaking expansions of supply that would anywhere meet what we think may be the upcoming demand,” Crippen said. Prices will go up, time lines will get longer, or rationing will occur because of the lack of provider availability, he said.
States can control the number of students in medical schools, the number of nurse practitioners, and the number of nurses and dental hygienists who can be trained, as well as the number of hospital and nursing home beds, Crippen said.
Crippen, who was an adviser to President Ronald Reagan and to Senate Majority Leader Howard Baker (R-Tenn.) in the 1980s, predicted that more states are likely to open their own health insurance marketplaces and expand Medicaid under the ACA over time. Only 14 states and the District of Columbia are operating their own individual marketplaces with the Department of Health and Human Services operating individual marketplaces in 36 states.
The concern in states that have not expanded Medicaid has centered on the future fiscal impact and regulatory rules, he said.
Governors that have not expanded marketplaces “believe that private insurance is an important piece of health care in their states,” Crippen said. States may move toward operating marketplaces after gubernatorial elections in 36 states over the next year, he said.
Governors also need to understand more fully what state responsibilities are even with the federal marketplaces, he said. “It looks like the state insurance departments are also going to be in charge of the financial integrity of many new insurance plans,” some of which have never managed medical risk before, are thinly capitalized or have only operated Medicaid plans, he said.
Some hospitals are complaining to the federal government that they have been left out of the narrow networks being offered by health plans being sold in the marketplaces, Crippen said, citing Mississippi as an example.
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