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Health Insurance Industry Has Long Wish List

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The U.S. health insurance industry has a long agenda that it wishes the Bush administration and Congress to deal with.

In addition, sweeping changes in federal health care rules are being made by the Centers for Medicare and Medicaid Services in preparation for adding a prescription drug benefit to Medicare to 2006, and some of those changes affect insurers. Other regulatory issues for the industry are making health savings accounts more flexible and “new products to support consumer choice.”

On the legislative front, legislation to make health care more affordable is an industry priority, as is tort reform that the Bush administration also wants Congress to deal with quickly. The industry also will keep pushing for tax-law changes to make long term care insurance more attractive to consumers.

While it appears that Medigap insurance programs for prescription drugs will cease when the new Medicare prescription drug program goes into effect in 2006, the industry is optimistic the rest of its Medigap offerings will be sustained.

Time pressures also are involved. As Janet Trautwein of the National Association of Health Insurers puts it, “I think 2005 will be a very busy year.” She says the industry expects the 2006 off-year election to be as busy as the 2004 Presidential one. “That means anything substantive will be done in 2005.”

Karen Ignagni, president and CEO of Americas Health Insurance Plans, says the public and the industry want restrictions on medical malpractice lawsuits and affordable health care for the uninsured.

“Congress also is going to be monitoring HSAs to see what else it needs to do to encourage use of these kinds of products,” Ignagni says.

On the regulatory front, Ignagni and other industry officials are asking the Treasury Department for greater flexibility in using health savings accounts, for example, in rolling unused balances over from one year to the next, and in incentives to promote use of LTC products.

A number of trade groups have written a letter to the Treasury to revise a rule that has never been formally adopted which requires that all funds in FSA accounts be spent in the year in which they are contributed, or the participant loses the balance in the account at year-end.

Regarding other issues, Ignagni says, “There is a revolution going on in health care. Increasingly, middle class people are not only wanting to make sure they are protected for their acute care needs, but thinking ahead to long term care products.”

She explains that there are two stumbling blocks, saying Congress allows companies to deduct contributions to health benefits for their employees, but there are no similar deductions for LTC. Secondly, she says, in the area of flexible benefits, individuals cannot use flexible benefit dollars to purchase LTC.

Jim Nolan, a staff official at Mutual of Omaha, says his firm has not offered a prescription drug component under its Medigap offerings for several years but adds that despite the changes in the Medicare law effective in 2006, “from our perspective we believe a role remains for Medigap insurance.”

NAHUs agenda, Trautwein says, includes improving the plight of the uninsured, a variety of items that would make Health Savings Accounts work better, including employer tax credits for contributions, deductibility of HSA compatible health insurance policies, and some changes to the existing legislation to make these accounts available to more people.

Trautwein says NAHU and others in the health insurance industry are looking at various ways “of addressing how we cover the cost of high risk individuals in a way that will keep coverage affordable for the majority of people who are healthy.”

Trautwein says the industry also is seeking legislation that would address health insurance market changes, making coverage available across state lines (its filed separately by state right now) and other ways to make similar coverage available regardless of where you live. “Both the House and Senate are working on these measures and the President supports them as well,” she says.

The industry also is seeking repeal of a provision of a 1993 law that serves to make it difficult for new states to form long term care partnership programs. “We have about 19 states that already have passed legislation that would enact a program when the federal legislation is repealed,” Trautwein says. “A partnership program encourages people of moderate income to plan privately through the purchase of insurance for their long term care expenses. It allows them to buy a policy with perhaps a limited duration benefit like 3 years, and then if they still need care at the end of that period, Medicaid takes over.”

The carrot is that if they buy this coverage, “part of their assets are protected from Medicaid spend-down requirements,” Trautwein says. Other LTCI incentives the industry is seeking are above-the-line deductibility of premiums and making LTC available through Section 125 plans, she says.

Reproduced from National Underwriter Edition, December 16, 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.