Producers: Will Republicans Help Improve PPACA?

Senate Majority Leader Harry Reid, D-Nev., has said the Senate is unlikely to consider the bill.

The vote took place because "Republicans think it played well with their base," according to Alec Vachon, a health care analyst and former Senate Republican congressional health staffer.

"There was the vote, and that was the end of it," says Ira Loss, a buy-side health care analyst at Washington Analysis, Washington, which counsels institutional investors and hedge funds. "The Senate is unlikely to take it up; it has no legs."

House committees are trying to work on a replacement for the Affordable Care Act, and state officials and others have gone to court to try to declare the act to be unconstitutional.

The parties suing are focusing mainly on the constitutionality of a provision that, starting in 2014, would require most individuals to own a minimum level of health coverage or else pay a penalty.

Democrats contend that the act includes many technology provisions, consumer protection provisions, and other provisions that are popular even with Republicans who oppose the individual coverage ownership mandate and a few other provisions in the law.

The National Association of Health Underwriters (NAHU), Arlington, Va., has welcomed passage of the bill.

NAHU shares the concerns of House Speaker John Boehner, R-Ohio, about how little PPACA does to control rising medical costs, imposes new taxes on many Americans, and fails to embrace market-based mechanisms for guaranteeing access to affordable coverage for all, NAHU Chief Executive Janet Trautwein says.

"NAHU stands ready to work with policymakers to develop an affordable and responsible means of achieving the needed reform," Trautwein says.

The issue getting the most attention from producer groups is PPACA medical loss ratio (MLR) provisions that will require health insurers and health plans to spend 85% of large group premium revenue and 80% of individual and small group premium revenue on health care or quality improvement efforts.

NAHU says the MLR provision, which took effect, Jan. 1, is particularly unworkable.

Health insurance agents and brokers say their commissions have been cut 50%

starting this year because the MLR formula classifies commissions as an administrative expense.

Producers argue that the formula should exclude commissions, because customers pay the commissions, and health insurers collect commission payments merely as a convenience to the customers.

The MLR provision, which took effect Jan. 1, already is disrupting the small group market, says Joel Wood, a senior vice president at the Council of Insurance Agents and Brokers (CIAB), Washington.

"What angers us the most about the MLR is that as a cost control, it is actually a perverse disincentive for plans to restrain costs," Wood says. "The bigger the premium, the easier it is to hit the administrative percentage targets."

Many producers concede that repealing the Affordable Care Act might be impossible but would like to see Congress change specific provisions, such as the MLR provision.

Leaders of the Independent Insurance Agents and Brokers of America (IIABA), Alexandria, Va., say they hope the Senate will pass an Affordable Care Act repeal bill.

"But, in recognition of the difficulty of passing a full repeal in the Senate and overriding an expected presidential veto, we also urge Congress to quickly fix the most onerous of the new law's provisions," says Charles Symington, an IIABA senior vice president. "Some of the provisions that have taken effect, such as the MLR regulation, are so damaging that they are already hurting our fragile economy and costing jobs."

Diane Boyle, a vice president at the National Association of Insurance and Financial Advisors (NAIFA), Falls Church, Va., says House passage of H.R. 2 was expected.

"We are eager to work with Congress in a bipartisan effort to address targeted provisions to improve affordability and sustainability of private insurance choices, and to ensure consumers have access to professional services provided by licensed and regulated insurance agents," Boyle says.

For NAIFA, NAHU and the CIAB, removing producer compensation from the MLR formula is a top legislative priority.

"But we have high anxiety about what happens now," Wood says.

Democrats got the Affordable Care Act through Congress with only a few Republican votes, and many Republicans view it as the Democrats' responsibility.

"For them, this is crass, partisan politics, because they don't want this really to succeed," says Ethan Rome, executive director of Health Care for Americans Now, Washington, a group that supports the Affordable Care Act.

"Success would mean two things," Rome says. "First, this would take this away from them as a political issue, and, second, taking away important benefits and consumer protections that they know are important to their constituents and incredibly popular."

The CIAB has seen signs that some Republicans would prefer not try to improve the Affordable Care Act, Wood says.

"We're going office to office on the Hill, and find much sympathy for the spot we're in, on both sides of the aisle," Wood says. "But it's far too speculative to figure out how this is going to evolve through the year."