HHS Draft Regulations Include User Fees for Federal Exchanges
Health insurers that offer plans in federal health insurance exchanges under the Affordable Care Act must pay a user fee, according to draft regulations released by HHS on Friday, the Washington Post's "Wonkblog" reports.
Fee Details
The monthly fee -- which applies to plans in the federal exchange but not those that participate in a state-based exchange -- would begin at 3.5% of a plan member's premium in 2014. It would then change to an amount "specified in the annual HHS notice of benefit and payment parameters for the applicable benefit year," according to the draft guidelines (Kliff, "Wonkblog," Washington Post, 11/30).
The fee will cover the administrative costs of the federal exchange, which was designed to be self-supporting. HHS Secretary Kathleen Sebelius said the fees will be "sufficient to cover the majority of costs related to the operation of federally facilitated exchanges" (Pear, New York Times, 11/30).
The public has until Dec. 31 to submit comments on the draft regulations.
Fee's Effect on Insurance Costs
The insurance industry following the announcement said the fee will increase costs, which ultimately will be borne by consumers and taxpayers (Alonso-Zaldivar, AP/U-T San Diego, 11/30).
The Obama administration is predicting that insurers will pay the fee in order to access the millions of U.S. residents who will only be able to use their insurance subsidies to purchase plans on the government-run site, according to "Wonkblog" ("Wonkblog," Washington Post, 11/30).
Proponents of the user fee say it is more cost effective than the current method of using brokers and sales agents (AP/U-T San Diego, 11/30).
Claire McAndrew, senior health policy analyst at Families USA, said the fees would have only a "negligible effect" on insurance costs because exchanges will offer a more competitive market, which should lead to lower prices.
Jonathan Gruber, an MIT economist and board member of Massachusetts' Health Connector, said a similar surcharge on premiums in the state has not prevented residents from obtaining health coverage (Galewitz, Kaiser Health News, 12/1). Several other states -- including Connecticut, Hawaii, Oregon and West Virginia -- already have authorized charges to insurers participating in state-operated marketplaces, according to a Commonwealth Fund report ("Wonkblog," Washington Post, 11/30). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.