Health care reform legislation that the insurance industry could support took a giant step forward last week when the Senate Finance Committee rejected two amendments that would create a so-called “public option” to compete with private insurers.
The industry also won another key victory even before the Senate Finance Committee began marking up the bill Sept. 22, when the basic markup document was modified to say specifically that insurance agents would be allowed to sell insurance to individuals and businesses purchasing health insurance through the exchanges proposed in the legislation.
But the industry still has many concerns with the Senate Finance Committee version of the legislation, which is regarded by analysts and congressional staffers as the one whose principles are most likely to emerge in any legislation reforming the health care delivery system.
The markup was scheduled to be completed by the end of last week, but most observers were doubtful. [See our website at www.lifeandhealthinsurancenews.com for updates.]
And, in the House, where there is stronger support for a public option, work continued on legislation melding health care bills drafted by three separate committees. It was also unclear when work on a final House would be completed and a floor vote scheduled.
As for concerns with the Senate bill, for example, America’s Health Insurance Plans wrote a letter to the committee on Sept. 24 saying that new taxes that would be imposed on insurers through the health care reform legislation would undermine the purpose of the proposed legislation.
The letter talks about a $6.7 billion annual fee proposed in the chairman’s mark that is described “as an annual fee on health insurance providers.” The letter explained that the new tax would have the effect of increasing premiums by roughly 1%, citing Congressional Budget Office estimates.
The letter also voices concern about the decision of bill writers to narrow the age band to 4-1. If age bands are narrowed too much, the letter says, premiums will rise significantly for individuals under the age of 35. Moreover, this age group is the fastest growing segment of the uninsured.
The letter notes that the bill’s original age band of 5-1 already reflects compression, relative to the natural distribution of underlying health care costs across age groups.
“If age bands are narrowed or compressed too much, premiums will rise significantly for these individuals, making coverage unaffordable, and resulting in a smaller and less stable pool, and higher premiums for everyone,” the letter says.
Health insurance agents remain concerned about the rules regarding cooperatives and exchanges contained in the bill, which was drafted under the direction of Sen. Max Baucus, D-Mont., chairman of the Finance Committee.
Janet Trautwein, CEO of the National Association of Health Underwriters, said the trade group still has problems with some of the bill’s provisions even though changes made to the original legislation address many agent concerns.
These concerns include the fact that many of the essential benefits mandated by the legislation “are too rich in certain areas,” Trautwein said.
“We haven’t had any luck winning support for an amendment” that would deal with this issue, she added.
As an example, dental and vision must be included in any base health policy, regardless of the actuarial level, for children up to age 21, she said.
“This will dramatically increase the cost of health insurance coverage,” she said.
Other concerns include provisions dealing with affordability waivers; ability to keep current coverage; market reform rating rules; and retaining a “level playing field inside and outside of the exchanges” that would be created through legislation, Trautwein said.
But the industry did regard the rejection of the two public option amendments as critical.
In a 15-8 vote on Sept. 29, the panel rejected an amendment by Sen. John D. Rockefeller IV, D-W.Va., that would have paid doctors, hospitals and other health care providers based on Medicare fees for the first two years after the health care plan goes into effect in 2013. They would have to participate if they accepted Medicare patients. After 2014, reimbursement rates would be negotiated.
After another debate, the panel also rejected, 13-10, an amendment by Sen. Charles Schumer, D-N.Y., that would have authorized the government to negotiate rates levied by doctors, hospitals and other healthcare providers immediately when the plan went into effect in 2013.
“We are pleased by the rejection of both the Rockefeller and the Schumer amendments containing public plan options,” said Tom Currey, president of the National Association of Insurance and Financial Advisors.
“But we will continue our educational efforts. There are currently three other reform proposals with government-run options, and lawmakers need to understand the negative consequences. A strong private health insurance system is best equipped to provide options for families and businesses,” Currey said.