WASHINGTON UPDATE

Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Tom Harkin (D-IA) said at a committee hearing Tuesday that he intends to mark up legislation (S. 3078) this year allowing the Department of Health and Human Services (HHS) to block health insurance premium increases deemed “unreasonable.” Senator Harkin said the legislation is needed in light of recent announcements by insurers of large premium increases that may continue until the Patient Protection and Affordable Care Act (Pub. L No. 111-148) is fully implemented in 2014. Harkin and the full Senate would have to move the legislation over the objections of health insurers and many Republicans, who said at the hearing they oppose the measure. They said instead that increased oversight and regulation of the insurance industry in the new health care reform law should be given time to work before additional legislation is enacted. Insurers argued that medical inflation, not profit-taking by health insurers, is behind recently announced double-digit increases in health insurance premiums in the individual market. The bill’s sponsor in the Senate, Sen. Dianne Feinstein (D-CA), told the committee that without her legislation, insurance companies will continue to implement double-digit premium increases on individuals in the private market while at the same time recording billions of dollars in profits. The bill, the Health Insurance Rate Authority Act of 2010, has been introduced in the House (H.R. 4757) by Rep. Jan Schakowsky (D-IL). It would not preempt state health insurance rate reviews, but it might prompt states to toughen their laws, Michael McRaith, director of the Illinois Department of Insurance, told the committee. About 30 states now conduct some sort of rate review of insurance premiums. The new health care reform law includes a rate review provision for insurers in which they must submit their proposed premium increases to state authorities or the federal government for review, although it does not allow HHS to block them. Private insurance advocates point to many instances in the new health reform law where insurance rates are subject to oversight or review. Galen Institute president and hearing panelist Grace-Marie Turner noted that capping premiums without recognizing the forces that are driving up costs “would be like tightening the lid on a pressure cooker while the heat is being turned up.” McRaith countered that regulators consider the financial health of insurance companies when reviewing rates.

 

	HHS Announces Consumer Information, Insurance Oversight Office
HHS announced in the Monday Federal Register (75 Fed. Reg. 20,364) that it is establishing the Office of Consumer Information and Insurance Oversight to implement the provisions of health system reform that address private health insurance. According to the register notice, the Office would consist of the following components: Office of the Director―Provides executive direction, leadership, and support to the entire Office. Office of Oversight―Responsibilities include implementing and enforcing new rules governing the insurance market and medical loss ratios; performing rate reviews; and issuing rate review grants to states. Office of Insurance Programs―Tasked with administering temporary high-risk pool programs and associated funding to states and the early retiree reinsurance program. Office of Consumer Support―Responsibilities include compiling comparative pricing data for the HHS web site; providing consumer assistance with the new health insurance system, and issuing consumer assistance grants to states. Office of Health Insurance Exchanges―Responsible for developing and implementing policies for state-based exchanges; issuing planning grants to states; and overseeing the operations of exchanges.

 

	New Government Studies on Impact of Health Care Reform
The Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) released estimates this week that about 21 million non-elderly residents will be uninsured in 2016, but the majority of them will not be subject to the individual mandate penalties under the health care reform law. Illegal immigrants, for example, are exempted from the mandate to obtain health insurance. Others will be subject to the mandate but exempted from the penalty, because they will have income low enough that they are not required to file an income tax return, because they are members of Indian tribes, or because the premium they would have to pay would exceed a specified share of their income (initially eight percent in 2014 and indexed over time). Individuals may also be granted waivers from the penalty because of hardship and may be exempted from the mandate on the basis of their religious beliefs. In total, about 4 million people are projected to pay a penalty because they will be uninsured in 2016 (a figure that includes uninsured dependents who have the penalty paid on their behalf). CBO and JCT estimate that total collections from those penalties will be about $4 billion per year over the 2017-2019 period. Meanwhile, the chief actuary of the Centers for Medicare and Medicaid Services (CMS) released this week an updated analysis of the newly enacted health reform law, citing it would raise projected health care spending by about one percent over 10 years. That increase could get bigger, however, since the report also warned that Medicare cuts in the law may be unrealistic and unsustainable, forcing lawmakers to roll them back.