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Sebelius defends fed exchange user fee

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Insurers may be comfortable with the fees the U.S. Department of Health and Human Services (HHS) has proposed charging the carriers that sell coverage through HHS-run Patient Protection and Affordable Care Act (PPACA) exchanges.

HHS Secretary Kathleen Sebelius said today during a hearing on the HHS budget organized by the House Appropriations health and human services subcommittee that she has not seen much reaction to the 3.5 percent exchange user fee that HHS has proposed.

PPACA calls for HHS and states to make exchanges, or Web-based health insurance supermarkets, available to residents of all 50 states and the District of Columbia by Oct. 1. Some states are setting up their own exchange programs; others are depending on HHS to do some or all of the work.

HHS is calling the exchanges it will help run “federally facilitated exchanges” (FFEs).

When HHS shares the work with state agencies, the HHS-state exchanges are called “partnership exchanges.”

Rep. Jack Kingston, R-Ga., the subcommittee chairman, asked what statutory basis HHS has for imposing the user fee.

Sebelius reported that HHS is charging the fee because PPACA authorizes HHS to charge a fee, and requires each state’s exchange to eventually generate the revenue to pay for its own operations by charging user fees or coming up with some other source of revenue.

“So far as I know, there’s no litigation,” Sebelius said.

Insurers that sell coverage through the exchanges should be willing to pay for the exchange slots, because the exchanges will be helping them bring in new customers, Sebelius said.

In response to a question from Kingston about whether HHS will build each state’s FFE itself or hire contractors to do the job, Sebelius said HHS is designing the exchanges for each state it serves to sell local plans using a benefits package benchmark for that state.

“I’m not sure whether [consumers] will have any idea whether it’s a a Georgia [exchange] or run by the federal government,” Sebelius said.

At another point, Rep. Andy Harris, R-Md., a medical doctor, asked about an HHS regulation that will require group health plans sponsored by secular employers with owners who oppose birth control to include birth control benefits in the basic benefits package.

For employers, “imposing their religious choice on their employees is not really an option,” Sebelius said.

Harris said he believes that keeping the current regulation in place would force employers that opose birth control but also want to offer health benefits to make a painful choice.

“They would have to violate their ethical construct or they would have to send all of their employees to the exchange,” Harris said.

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