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Life Health > Health Insurance

3 startling HAFA sessions (with video)

By Allison Bell

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B. Ronnell Nolan said today here in New Orleans, at the annual meeting of Health Agents for America, that she started HAFA in 2012 to give agents a clear voice in Baton Rouge when there was talk that the state might prohibit Affordable Care Act exchange plans from paying agent or broker commissions.

This main focus of the group is still to make agents’ and brokers’ voices heard in Washington and in state capitals. “I don’t think I’m competition” to the bigger, older producer groups, Nolan said. “I’m the cherry on top.

This year, she said, one small but concrete victory was to get Louisiana lawmakers to pass a bill that will require health insurers to give producers at least 90 days’ notice before making material changes in compensation arangements. Now, HAFA is trying to play a role in shaping the draft bill that will be based on an ACA alternative proposal recently released by House Speaker Paul Ryan.

Related: Republicans’ new ACA replacer, dissected

The HAFA meeting also featured a series of blunt speakers who talked about ACA financial and compliance issues.

Related: Broker: ACA is distracting  us from health

For a look at some of what the speakers said that seemed to surprise at least some of the agents in attendance, read on:

Jim Napoli

(Photo: Allison Bell/LHP)

1. Jim Napoli

Jim Napoli, a partner in the Washington office of Seyfarth Shaw LLP, talked about a twist in the Affordable Care Act’s employee counting group rules that’s even more complicated and more obscure than many of the other employee counting rules: the control group rules.

The ACA now requires “applicable large employers,” or ALEs,  to offer affordable coverage with a minimum value to most of their full-time employees or else pay a “shared responsibility” penalty. The actual size of the penalty depends on the number of full-time employees who lack access to employer-sponsored health benefits, but the government takes other types of employees into account when deciding whether an employer is an ALE.

The control group provision, which is a cousin of control group provisions for other federal benefits laws that involve employer size cut-offs, affects employers that may intentionally, or unwittingly, own what the federal government thinks of as stakes in other employers.

If, for example, a restaurant owner owns all of one restaurant and half of another restaurant, federal regulators might include the number of full-time equivalents in both restaurants when deciding whether the restaurant owner should comply with the ALE requirements.

If a doctor employs 49 full-time equivalents in a medical office, and a household worker at home, it’s possible that, under some circumstance, the household worker might put the doctor’s company over the 50-employee ALE cut-off. The employees of a spouse or other relatives could also turn a small-business owner client into the unwitting co-controller of a control group.

Napoli recommended that agents and brokers get legal advice about the issue but consider simply bringing up the issue with a question on a list of questions.

The form could ask an employer client, “Are you a member of a controlled group?” Napoli said.

Napoli said brokers could give a client that asks, “What does that mean?” a very general, standard response along with advice to ask a benefits lawyer.

“It’s your job to know that the control group rules exist,” Napoli said. ”You have to touch this base with your small business client.”

If a broker does raise the issue, and a client gets into trouble by turning out to be an accidental co-controller of a control group, “they’re going to sue you, because you didn’t ask the question,” Napoli said.

But, if a broker gives any actual advice about the control group issue, that could expose the broker to liability that would not be covered by a standard errors and omissions policy, Napoli said.

“The further you go down that rabbit hole, the deeper you’re in,” he said.

He said the best approach is probably to mention the existence of the rabbit hole and have the client go to a lawyer for any additional information about the issue. 

Related: Experts worry about IRS pitfalls

Wade Perrin, a Marrero, Louisiana-based agent in the audience, said in an interview he thinks the accidental control group issue really will come up from time to time for agents who advise employers.

“Every agent needs to ask clients that question,” Perrin said. “You don’t know the other things they’re involved with.”

Michael Bertaut

(Photo: Allison Bell/LHP)

2. Michael Bertaut

Michael Bertaut, the chief economist at Baton Rouge-based Blue Cross and Blue Shield of Louisiana, startled even agents who follow bad news about health insurers’ bad individual health results closely with huge individual health loss and rate increase numbers for several large Blue Cross and Blue Shield plans.

In Louisiana, the new Affordable Care Act exchange plan enrollees were 3.5 times more likely than small-group plan enrollees to have HIV, and about 2.5 times more likely to be frequent emergency room users, Bertaut said.

Louisiana Blue originally tried to protect itself against ACA exchange plan enrollee claim risk by setting rates 20 percent higher than what the federal government suggested, but the company really should have started with rates that were 80 percent higher, Bertaut said. The company lost a total of about $200 million on ACA exchange enrollees in 2014 and 2015, even though just 11 percent of its enrollees were exchange plan enrollees.

From one perspective, the money Louisiana Blue spent on those enrollees is a good thing, Bertaut said.

“We had money in the bank,” he said. “Somebody got well, got better, with that money. It fits with our mission to improve lives.”

But even Louisiana Blue can’t accept seeing those kinds of losses continue, he said.

He said policymakers need to adopt changes, such as tightening of special enrollment period eligibility rules and the rules for the ACA individual and employer shared responsibility penalties, to improve the health insurance risk pool, and avoid changes that sound nice to consumers but would weaken the risk pool, such as efforts to eliminate either the individual coverage or employer coverage mandates.

One problem with the individual shared responsibility penalty is that “few are paying,” Bertaut said. “This fine has no teeth.”

Related: Reports hint at pent-up exchange plan demand

Jim Donelon

(Photo: Allison Bell/LHP)

3. Jim Donelon 

Jim Donelon, Louisiana’s insurance commissioner, said that colleagues were speculating the the Affordable Care Act would wipe out competition in the individual health market in much of the country, and that that prediction appears to be coming true.

“I wish I could bring you better news,” he said. “I recognize that these challenges fall on your lap.”

Rates are higher mainly because the ACA includes many provisions, such as the ban on annual benefits limits, that increase claim costs, Donelon said.

Donelon said he believes that Louisiana will still have some competition in the health insurance market in 2017 but may end up with a de facto single-payer system. Alabama and Mississippi seem to be on track to end up with single-payer individual health markets sooner, he said.

 
 

Related:

Do the ACA math

Cancellation rules now a headache for state commissioners

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