Cost And Access Issues Will Push 2004 Health Insurance Agenda
After the difficult battle over Medicare reform in 2003, the health insurance industry expects to see more congressional debate on private insurance in the upcoming legislative session.
“We expect to be working a lot on cost and access issues,” says Mohit Ghose, a spokesman for the Washington-based AAHP-HIAA, the association formed by the merger of the American Association of Health Plans and Health Insurance Association of America.
Ghose says AAHP-HIAA will be engaged both on Capitol Hill and in the political campaigns on issues aimed at access to health care.
For example, Ghose says, AAHP-HIAA hopes to see support for a targeted tax credit that will make it easier for people, particularly the working uninsured, to purchase health insurance.
AAHP-HIAA also would like to see expansion of Health Savings Accounts, Ghose says, the savings vehicles created by the Medicare reform bill.
HSAs allow individuals to place up to $1,000 annually, or $2,000 for couples, into a health savings account. Money put into the account is tax-deductible, the interest is accumulated tax-free, and the money can be withdrawn tax-free to pay for qualified medical expenses.
But Greg Scandlen, a health care policy expert with the Galen Institute, Alexandria, Va., says he believes the issue with HSAs is how quickly they evolve in the marketplace.
He says he does not see a lot happening in the employer market immediately, due to the time it takes for employers to change health plans. Also, he says, it will take about 6 months for product development and for the Department of Health and Human Services to issue a regulation on HSAs.
Scandlen says he expects a lot of activity in the individual market, probably by the middle of 2004.
As far as increasing access, Scandlen says, the issue, in general, is how far the White House will go. He says he expects the administration to propose some type of expanded tax credit for displaced workers, but the extent is unclear.
In addition to access, Ghose says, it is important for Congress to address the factors driving up health care costs, such as the tort system.
AAHP-HIAA, he said, hopes to see class-action reform move early in the year and also hopes for action on medical liability reform.
Another issue that AAHP-HIAA hopes Congress will address involves quality of care, Ghose says. In particular, he says, health insurers hope Congress will establish rules that will allow transparency and public reporting of quality concerns.
In other news, the American Council of Life Insurers says preemptive federal standards for state regulation would be complicated, difficult to enforce, unlikely to create genuine uniformity, and more of an affront to states rights than optional federal chartering.
In a letter to Rep. Richard Baker, R-La., who chairs the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, ACLI Senior Vice President Gary E. Hughes says federal legislation falling short of OFC might jeopardize the ultimate goal of modernizing state insurance regulation.
Preemptive federal standards are being promoted by some opponents of OFC, particularly the Independent Insurance Agents and Brokers of America, a property-casualty agents group, as the best way to achieve insurance regulatory reform without creation of a new federal regulatory office.
But Hughes says the federal standards concept has garnered little support from ACLI member companies due to its many shortcomings.
For example, he says, so many aspects of the present system must be made uniform, substantially modified or otherwise modernized that a standards approach would likely be more controversial and difficult, both practically and politically, than OFC.
In addition, Hughes says, it is unrealistic to believe Congress can put in place a series of key federal standards and expect the states to enforce them. Without a federal enforcement mechanism, he says, it is all but inevitable that day-to-day interpretations and other ongoing regulatory matters would continue to be brought to the Financial Services Committee.
“The only practical means of enforcing these standards would be to assign that task to a new federal insurance agency, at which point we would be better served by simply creating a federal regulator to administer a federal charter option,” Hughes says.
He adds that widely disparate interpretations by the states of identical laws is a major problem for the industry today.
“Consequently,” Hughes says, “federal standards would not result in uniformity the industry so desperately needs.”
Hughes says a federal standards approach also could compromise solvency oversight. Most insurance regulation, he says, relates directly to solvency oversight, which is the ultimate consumer protection.
“If, through the enactment of federal standards, key matters such as product approval and market conduct regulation were divorced from state solvency oversight, the ability of states to prudently assure company solvency would be seriously compromised,” Hughes says.
Hughes adds that federal standards would lack flexibility. “If significant aspects of insurance regulation were embedded in statute through the use of federal standards, the ability of the industry and its regulators to adapt regulatory requirements to changing market or economic conditions in a timely manner would be significantly limited,” he says.
Reproduced from National Underwriter Life & Health/Financial Services Edition, January 2, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.