Pragmatism is clearly replacing anxiety and opposition as the health insurance industry pivots at a feverish pace to implement health care reform legislation.
While clearly disappointed that they were not able to shape the legislation to their advantage, the entire industry is mobilizing to adjust its activities to the reality that some of the provisions will quickly go into effect.
Agents are especially concerned about the new law.
An official with a Washington trade group who works closely with the National Association of Insurance Commissioners and who asked not to be named, said agents are concerned that the implementation of the Health Exchange system in 2014 will curtail their ability to serve the individual and small group markets.
“The concern is that the exchanges will exclude them,” the official said. “And the fear is that the perception that agents ‘only look out for themselves’ will grow down the road.”
Asked to comment, Gwyn Dilday, with CIGNA Public Relations in Glendale, Cal., said, “CIGNA believes that brokers bring expertise to individuals seeking insurance and can help people better select the best plan for their health insurance needs.”
“To the extent that regulations allow, we support the continued use of brokers,” Dilday said. “Currently, we use brokers to sell our individual products in the 10 states that we offer individual coverage,” she said.
One of the key products sold by agents that will be affected by the new law will be the Medicare Advantage program.
Under the reconciliation bill signed by President Obama on March 30, payments to Medicare Advantage plans in 2011 would be frozen at 2010 levels. Additional cuts to the program will be phased in beginning in 2012.
Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, said “This version of the legislation will end Medicare Advantage as we know it.”
“All parts of Medicare-including Medicare Advantage-should be reviewed to find savings. But these cuts go way too far. Under this plan, millions of seniors will lose their current Medicare Advantage benefits and be forced to pay higher out-of-pocket costs,” Zirkelbach said.
“We’re in a major pivot from the politics of health reform to its implementation,” said Joel Kopperud, a director of government affairs at the Council of Insurance Agents and Brokers.
“The Council is aggressively giving our members the tools and resources they need to service both existing and new relationships,” Kopperud said. “The demand for clarity is huge.”
Tom Currey, president of the National Association of Insurance and Financial Advisors, added, “The insurance industry, in all its facets, is a remarkably creative and resilient industry.
“Once the dust settles, insurance companies will find ways to work in the new landscape and NAIFA stands ready to help our members thrive in the new world of health care delivery.”
Specifically, Jessica Waltman, senior vice president of government affairs for the National Association of Health Underwriters, said NAHU is holding several webinars to provide information to its members on the legislation, especially on the provisions that must be implemented promptly.
Waltman said “we get hundreds of questions” at these sessions.
She also said that in some cases, several agents are listening at one location, so, effectively, “thousands of agents are involved on these calls.”
Waltman made clear that NAHU is hopeful it can secure changes in the legislation to deal with provisions it fears will have a major impact on agents going forward, but that will require a whole different makeup in Congress after this November’s election.
However, noted Ira Loss, a Washington healthcare analyst for institutional investors at Washington Analysis, “that’s just not politically feasible.”
He added, “It’s futile. Opponents won’t have the votes, and they don’t have a president who will support major changes.”
Waltman acknowledged that. “While we will be seeking legislative changes to provisions that we would be hard to live with, there are some that go into effect immediately or almost immediately that we must deal with.”
A critical problem is that health insurance plans expire at the end of every month, and the market reforms that will be implemented in the near future affect the individual and small groups that are predominately served by agents. Also affected are self-insured plans, she said.
She noted that the April 1 date is important because under the new law, grandfathering provisions pick up immediately.
Specifically, under these provisions, insurers won’t be able to drop coverage for a person who develops a health problem, and no longer will be able to set yearly or lifetime limits on coverage.
Health insurers cannot make any changes to a policy besides adding or subtracting employees, or to reflect changes made through collective bargaining agreements, she said.
Additionally, “No regulations have been written, and it is unclear when they will be written,” Waltman said.
She also cited new legislation that includes a small employer tax credit. “While we are being told that only 12% of employers will be affected, it is still unclear how that credit will work.”
Other provisions that will go into effect promptly that must be dealt with in new contracts are preventive care at first dollar level, and how to deal with children who graduate in June who are on their parents’ plans. Since a provision allowing them to stay on their parents’ plans until age 26 will go into effect in October, it is unclear whether they should be advised to get individual plans or to wait until they can get back on their parents’ plans in October.
“There are a lot of questions,” Waltman said. “But, there are no answers yet.”
Kopperud of the CIAB said the CIAB members are the brokers and consultants to plans that cover tens of millions of Americans.
“We’ve been drinking from the firehose of questions about how employers will need to adjust to the legislation now and in the coming years,” he said. “There are a million moving pieces of health reform, and there’s not a single employee or employer who won’t be impacted by it,” Kopperud said.
“It’s gratifying to be reminded again about the essential, core value equation that sophisticated brokers bring to their customers at a time of confusion and anxiety.”
Other provisions that go into effect this year include creation of interim, high risk pools to help people who can’t get insurance because of costly, pre-existing medical problems. This provision will go into effect in July.
Under the provision, the Department of Health and Human Services must create a temporary high-risk pool program by the end of June. The caps this year on out-of-pocket costs for enrollees are $5,950 for individuals and $11,900 for families.
Another provision that goes into effect this year is that seniors who purchase prescription drug coverage under Part D of Medicare will get a $250 rebate this year if they reach a coverage gap, known as the doughnut hole, in which they pay as much as 100% of a brand-name drug’s costs. By 2011, seniors are to get a 50% discount on brand-name drugs they need during the coverage gap; by 2014, the gap is to be closed.
As for insurers, AHIP’s Zirkelbach noted AHIP’s support for “Enroll America,” a collaboration with Families USA. Enroll America is a 50-state enrollment and informational effort designed to get all uninsured Americans in one type of health plan or another.
“Our focus is on streamlining the enrollment process so people who are newly eligible can get coverage,” Zirkelbach said.
“We are also seeking to minimize disruptions in current insurance plans for the more than 200 million Americans that we serve,” he said.
AHIP is going to be doing a lot of work with its member companies to be a resource for them and provide information for them throughout this process, Zirkelbach said.
Regarding the exchanges, the Department of Health and Human Services has selected Jay Angoff, former Missouri insurance commissioner and former health regulator in New Jersey, as its liaison with the National Association of Insurance Commissioners.
A HHS spokesman confirmed Angoff’s appointment. “Jay Angoff, a former Missouri insurance commissioner, has been brought on as a senior advisor at HHS, and he’ll play a key role in a new office to be created that oversees the private insurance market,” said Nicholas Papas, an HHS spokesman.
According to several people who attended the quarterly NAIC meeting, Angoff spoke at both a public session and in a private meeting with the state regulators.