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CIAB Sees Health Bill Improving; AHIP, Not So Much

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WASHINGTON BUREAU – The Council of Insurance Agents and Brokers has become a little warmer toward H.R. 3590, the Senate health bill, but America’s Health Insurance Plans is still unimpressed.

Members of the Senate today voted 60-40 to set a 30-hour limit on debate on the amendment. That appears to set the stage for the Senate to pass the amendment and the full Patient Protection and Affordable Care Act bill as early as 7 p.m. Thursday – Christmas Eve.

All Democrats in the Senate, and both independents, voted for the manager’s amendment cloture motion, and all Republicans voted against it.

Now that Senate Majority Leader Harry Reid, D-Nev., and other Senate leaders have rounded up the votes they needed to win the manager’s amendment cloture vote and other procedural votes, “we have no doubt that the Senate Democrats have shored up the necessary support to get the healthcare bill out of the chamber by Christmas and to the House-Senate conference in January,” according to Ira Loss and Beth Steindecker-Mantz of Washington Analysis, Washington.

Given the fragile nature of the coalition supporting the bill in the Senate, the House-Senate conference committee that reconciles the differences between the House and Senate versions of the bill probably will have to stick closely to the Senate language to amass the 60 votes needed to get the conference report version to the Senate floor, Loss and Steindecker-Mantz write.

The analysts expect the conference committee to finish up work on the legislation in January 2010.

Officials at the CIAB say the Senate has deleted an H.R. 3590 provision that would have required the U.S. Department of Health and Human Services to regulate broker compensation for products sold through state exchanges.

The manager’s amendment would lower the minimum amount of insurer premium revenue going to pay health claims, rather than administrative expenses, to 85%, from 90%, for groups with more than 100 lives, and to 80% for individual policies and for groups covering fewer than 100 lives.

“While we are philosophically opposed to any such price controls, we believe the new percentages are more realistic and should relieve some of the pressure on plans to shortchange marketing of products,” CIAB officials write in the alert.

The CIAB had been concerned that the definition of “administrative expenses” would have included expenditures on prevention and wellness programs, CIAB officials write.

“We are pleased that there is now an exclusion for ‘any activity that improves health care quality,’ which is a big win for wellness initiatives,” CIAB officials report.

These changes and others appear to “have significantly improved the legislation,” CIAB officials write.

But the manager’s amendment would impose $70 billion in new health insurer premium taxes from 2011 to 2019, and “that will increase the cost of health care coverage for millions of Americans and fall primarily on small businesses and those who purchase coverage in the individual market,” according to AHIP, Washington.

The insurer tax would be based on the insurer’s share of annual net premiums received. The fee would not be tax deductible and would apply to commercial risk, Medicare Advantage and Medicaid health maintenance organization business.

The excise fee would not apply to the revenue companies get from administering self-insured employer plans on an “administrative services only” basis, and it would not apply to non-profit insurers with medical loss ratios over 92% that provide guaranteed-issue coverage to people unable to get coverage elsewhere.

The fee would be phased in over time. In 2011, total fee anticipated fee revenue would be $2 billion. Total fee revenue would rise to $10 billion by 2017.

According to officials at Washington Analysis, the original Reid bill would require all health insurers to start paying annual fees in 2010, with the total annual fee revenue amounting to $6.7 billion. The fee system in the original version of the bill would start in 2011, and it would apply to an insurer’s commercial risk business and 200% of its ASO fees.

Another section of the H.R. 3590 manager’s amendment would impose a 21% cut in Medicare physician reimbursement rates in 2010, according to the Congressional Budget Office.

AHIP officials say implementing the Senate bill and manager’s amendment as written would lead to “more cost shifting to patients with private coverage as providers are forced to make up for hundreds of billions in reduced Medicare payments.”

The manager’s amendment and bill also would impose new market and rating rules that would increase premiums for individuals and small businesses that already have coverage, AHIP officials say.