Health insurance representatives generally like the direction of the Republican health bill but are waiting for more legislation to address the issues that affect agents, such as commissions.
The American Health Care Act (AHCA) could be passed by the House of Representatives and the Senate before their members leave Washington on April 7 for the spring recess.
Highlights of this proposal include the removal of the individual mandate, allowing insurers to impose a 30 percent surcharge for not maintaining continuous coverage, providing tax credits based on age, eliminating cost-sharing subsidies, and making greater use of health savings accounts.
About the only things that the AHCA has in common with the current law is that both bills allow young people to remain on their parents’ policies until age 26, and forbid health insurers from denying coverage to those with pre-existing conditions.
How will health agents and brokers fare under the health care reform proposal?
Because House leadership is using the budget reconciliation process to work around a potential Senate filibuster on the bill, some high-priority issues for agents such as reforming the navigator program or removing agent compensation from the Medical Loss Ratio (MLR) aren’t even on the table, Ronnell Nolan of Health Agents for America said in an analysis of the bill. That’s because these issues do not have a direct impact on the federal budget. In addition, the bill would permit people who are eligible for tax credits to purchase their health insurance either on or off the exchanges that were established under the Affordable Care Act.
“We wish issues like reforming the navigator program or removing agent compensation from the MLR were included, but because the bill is being passed through the reconciliation program, those issues will have to be tackled through separate legislation,” she said.
The agent compensation issue also was a concern of the National Association of Insurance and Financial Advisors (NAIFA), which submitted comment on the health care replacement proposal. “What we submitted was that future stabilization rule-making should include removing agent compensation from both sides of the MLR — agent compensation doesn’t belong there,” said Diane Boyle, NAIFA senior vice president of government relations.
Boyle said she believes the agent compensation issue possibly could be addressed through regulation. In addition, she predicted there will be additional health care reform legislation introduced to address the issues that can’t be handled through the reconciliation process, so the MLR/agent compensation issue could be handled in future legislation.
The health care reform proposal essentially leaves employer-sponsored health insurance alone, which was good news for the National Association of Health Underwriters (NAHU), many of whose members serve the group health insurance market.
“We are pleased that the new plan to repeal and replace the ACA does not include a tax on American workers’ employer-sponsored health insurance,” NAHU CEO Janet Trautwein said in a statement. “The continuation of the employer-sponsored tax exclusion will allow working Americans to receive high-quality coverage at the lowest cost.”
The Cadillac tax on high-cost health plans — another concern of the agent/broker community — is not permanently repealed under the AHCA, although it is delayed.
“While we are disappointed that the AHCA does not permanently repeal the ACA’s Cadillac tax, we are pleased that it will be delayed until 2025,” Trautwein said. “This levy does nothing to rein in actual health care costs, the true driver of the cost of coverage.”
The delay of the Cadillac tax repeal means “we bought ourselves some time to revisit this issue,” Boyle said. But it still does not address the issue of affordability, which was another concern of the agent community.
“We were concerned that the ACA wasn’t providing affordable rates for anyone,” Boyle said.
The health care reform proposal takes a number of steps aimed at affordability. These include abolishing the “metal” tiered plans, as well as giving states and carriers more flexibility in the types of health plans that can be made available. In addition, under the AHCA, people will be able to make much higher contributions to tax-sheltered health savings accounts, to cover deductibles and copayments.
“One of the things we do like about this plan is that the tax credits, once they are put in place, will be available inside and outside the exchange or the marketplaces,” Boyle said. “Our argument all along was that if the creation of the marketplace was to create an enhanced offering, you shouldn’t tie someone to it. If it’s going to be a better option, let it occur naturally, but don’t force someone to go there. So that’s a positive result of this.”
Health Insurers — ‘A Lot to Like’
For the health insurance industry, “there is a lot in the bill to like” where the individual market is concerned, said Kristine Grow, senior vice president for communications with America’s Health Insurance Plans (AHIP).
She said the bill contains a number of proposals that would help stabilize the individual market during the 2018-2019 transition period. These proposals include continuing the premium tax credits through the transition, providing funding for states to help stabilize risk pools, giving states and carriers more flexibility in offering various types of plans, and ultimately offering more consumer choice.
However, AHIP’s leadership cautioned that several long-term structural changes to health care reform are needed to ensure a stable individual market.
“A stable market requires a good mix of all consumers to participate,” AHIP president Marilyn Tavenner said in a letter to the House Ways and Means Committee. “There is no question that younger adults are underrepresented in the individual market. Recalibrating and reforming the way in which the premium assistance is structured will encourage younger Americans to get covered.”
AHIP supports a tax credit formula that factors in both age and income. That formula includes age bands based on a 5:1 ratio while providing higher contributions for individuals with incomes between 100 and 400 percent of the federal poverty level. AHIP also favored tax credits related to age as well as income, asserting that this would ensure that more people would remain covered and would be the most efficient way to allocated taxpayer funds.
Is the AHCA an improvement over the health care law currently in place?
Boyle of NAIFA said it is a step in the right direction.
“We’re getting closer,” she said. “A lot will depend on how the carriers react and how long it takes to strengthen that individual market, because the individual market was decimated by the ACA. So the question becomes how long does it take to re-create that market and create some options and some competition?”