States Push Back Against Health Insurers’ Fee in the Affordable Care Act
Officials in several states are expressing concern about a health insurance providers fee under the Affordable Care Act, arguing that it amounts to a tax that could disrupt Medicaid programs and other state services, The Hill's "RegWatch" reports (Goad, "RegWatch," The Hill, 3/8).
About the Fee
Earlier this month, the Internal Revenue Service issued proposed rules implementing an insurer fee that would collect $8 billion in 2014 and $14.3 billion by 2018. The fee -- which would be due on Sept. 30 each year -- would vary in size based on insurers' net premiums. The fee also would carry penalties of $10,000 if deadlines are missed, plus $1,000 for every unmet day.
America's Health Insurance Plans has described the fee as an annual tax that would exceed $100 billion in the next decade, affecting most families that still are struggling to recover from the recession. The group estimated that the average cost of a family plan would rise by more than $300 next year and surpass $500 in subsequent years as a result of the proposed rules (California Healthline, 3/4).
A study commissioned by Medicaid Health Plans of America estimates that states that provide Medicaid managed care plans would have to pay as much as $15 billion over the next decade because of the fee. Joe Moser, executive director of the organization, said the fee would raise overall Medicaid costs.
In Louisiana, Department of Health and Hospitals Secretary Bruce Greenstein said the proposed levy discriminates against some plans, noting that those offered by not-for-profit insurers are exempt from the fee.
In Wisconsin, the private insurance market would face as much as $3 billion in additional costs over the next 10 years as a result of the fee, according to J.P. Wieske, legislative liaison and public information officer for the state's Commissioner of Insurance. Wieske said some smaller private insurers have signaled that they might modify their business model to not-for-profit status because of the extra costs ("RegWatch," The Hill, 3/8).
House Ways and Means Oversight Subcommittee Chair Charles Boustany (R-La.) has reintroduced a bill (HR 763) that would repeal the insurance fee (California Healthline, 3/4). However, the bill could face challenges in the Senate if it is approved by the House and a likely presidential veto if it reaches the White House, according to "RegWatch." The Obama administration has not yet responded to states' concerns about the fee.
The regulations are open for public comment for three months ("RegWatch," The Hill, 3/8).
State Roles Similar in Partnership, Federal Exchange Models
In other ACA news, some states that opted for a federally run health insurance exchange -- such as Ohio and Virginia -- might maintain more oversight of their insurance market than initially believed, Politico reports.
Observers say states with a federally run exchange could have approximately as much oversight as states that opted for a federal partnership exchange (Millman, Politico, 3/10).
Under the ACA, states must create exchanges to provide more affordable coverage options to individuals and small businesses. States can operate their own exchange, ask the government to run an exchange for them or partner with the government to operate an exchange.
Open enrollment in the exchanges is slated to begin in October, with the marketplaces launching in January 2014. Last month, all 50 states and the District of Columbia informed HHS about their exchange decisions. The government will run exchanges in 26 states, seven states will partner with the federal government and 17 states and D.C. will run their own marketplaces (California Healthline, 2/19).
According to Politico, HHS is in fact hoping that local insurance regulators will manage oversight of the federally run exchanges.
Joel Ario -- former director of the CMS Office of Health Insurance Exchanges and current managing director at Manatt Health Solutions -- said there are many similarities in states' roles in federally run and partnership exchanges. However, the "big difference â¦ is that the partnership is about collaboration and has a political connotation that states are uncomfortable with."
Caroline Pearson -- a vice president of Avalere Health who has been tracking the development of the exchanges -- said, "I can't discern any meaningful difference between a partnership where a state controls plan management and this (federal-run exchange) plan management option."
Meanwhile, states that opted to run their own exchanges would have to enforce new insurance requirements under the ACA or they could be forced to give up full regulatory control of their insurance markets to the government, Politico reports.
Ario said, "The idea that a state can get away from doing anything at the state level that has anything to do with interpreting and applying the [ACA] -- they can't," adding that the law "now permeates the regulatory arena" (Politico, 3/10).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.