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Producers, Insurers React To AHFA Vote

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WASHINGTON BUREAU — Insurance industry groups are taking note of some changes made in the Senate Finance Committee health bill that they like but worrying about many of the provisions that are still there.

Producer groups won important victories when the committee was marking up its version of the chairman’s mark of the America’s Healthy Future Act bill: The bill now contains a provision which says that insurance agents can sell insurance to individuals and to businesses through any health insurance exchange system.

Drafters of the AHFA mark want to use health exchanges to negotiate low rates for high-quality coverage for individuals and small groups, and to get premium subsidies to eligible individuals and groups. Agents worried that the original version of the health exchange provision appeared to shut them out.

Tom Currey, president of the National Association of Insurance and Financial Advisors, Falls Church, Va., has welcomed the Finance Committee’s move to open the exchange system to producers.

“Reforming the American health care system is no easy task,” he says in a statement. “We are pleased that, at each step of the way, agent priorities have been included in the proposals. Paramount for NAIFA, of course, is recognition of the critical role agents play in servicing consumers.”

But “NAIFA still has a number of concerns that need to be addressed before final passage” of any health bill, Currey says.

NAIFA would like to see the provisions requiring individuals to own health coverage to have more teeth, Currey says.

“Weak mandates could devastate affordable insurance,” Currey says. “If people can carry insurance only when they’re sick or injured, the price of insurance will skyrocket for everyone. This is a very difficult problem that Congress must resolve.”

Similarly, NAIFA understands that finding new tax revenue to pay for health reform and coverage expansion will be difficult, but it believes there is growing opposition in the House to the Senate’s ideas of proposing a “luxury tax” on expensive health insurance, Currey says.

Meanwhile, Currey says, a House proposal to pay for part of the cost of health reform by imposing a surcharge on high-income Americans is also drawing growing opposition.

Peter Stein, a vice president at the National Association of Health Underwriters, Arlington, Va., is more critical of the version of the AHFA mark approved by the Finance Committee.

A successful health reform program should keep premiums affordable and ensure that people can keep the private coverage that they like, Stein says.

But the Finance Committee made a “number of significant changes” during the mark up that would interfere with achieving those goals, Stein says.

NAHU is particularly concerned, Stein says, about committee moves to weaken a mandate that would require individuals to own health coverage; impose tens of billions of dollars in new insurer fees and taxes; and impose constraints on age rating and minimum benefit levels that would make private health insurance unaffordable for many Americans.

Some analyses suggest implementing all of those provisions at the same time could double the cost of health coverage for the youngest third of the population, Stein says.

Over at America’s Health Insurance Plans, Washington, efforts to react to the AHFA proposal have made news of their own.

AHIP moved Monday to release results of a program review it commissioned from PricewaterhouseCoopers L.L.P., New York.

The PricewaterhouseCoopers analysts found that the AHFA proposal would impose hundreds of billions of dollars in new health care taxes and would provide an incentive for people to wait until they were sick to purchase coverage.

AHIP President Karen Ignagni said AHIP agrees with the health reform bill drafters’ objectives and will continue to work with members of Congress on health reform.

But the White House and some Democrats on the Finance Committee blasted AHIP’s release of the PricewaterhouseCoopers proposal analysis.

The PricewaterhouseCoopers analysis “is a self-serving analysis from the insurance industry, one of the major opponents of health insurance reform,” the White House says in a blog entry. “Even the company hired to produce the report has issued a statement saying they produced a skewed report that analyzes only part of the bill because that is what the insurance industry paid them to do.”

Ignagni said today that the PricewaterhouseCoopers analysis shows that the AHFA proposal provisions it analyzed “will cause health care costs to increase far faster and higher than they would under the current system.”

“We believe these issues can and should be addressed,” Ignagni says.

Health plans already are offering to eliminate pre-existing exclusions and stop basing prices on health status, but making those changes affordable requires that the government make coverage universal, to ensure that healthy people stay in the insured population, Ignagni says.

The Council for Affordable Health Insurance, Alexandria, Va., argues that the Finance Committee proposal would drive up premium costs far more than PricewaterhouseCoopers analysts predicted in the individual market.

The group insurance market is already mostly a guaranteed issue market, but underwriting helps hold individual rates down in most markets, according to CAHI Executive Director Merrill Matthews.

The kinds of changes the Finance Committee has proposed could increase individual rates 65% to 95% in just a few years, Matthews says.

If the underwriting restrictions were imposed and individuals did not have to own health coverage, then the price of coverage would be at least twice as high as it is now, Matthews says.