Health Insurance Reform Update
David VanDelinder, Executive Director, IIAT (www.iiat.org)
Perhaps the most vulnerable part of the Patient Protection and Affordable Care Act is the mandate requiring individuals to be insured by 2014 or face a tax penalty. Several states have filed court challenges to the law on the basis of this requirement, including Texas. In Virginia, a federal judge refused to dismiss a suit on the constitutionality of the law. A ballot initiative stating that Missouri residents cannot be required to obtain health insurance coverage passed in that state with an overwhelming 71 percent of the vote. Voters in Arizona, Colorado and Oklahoma are expected to consider similar initiatives on ballots in November. The mandate is central to the law’s implementation and few expect Congress to change its mind, but 2014 is a long way off.
In Congress efforts are mounting to remove the new 1099 reporting provisions in the health care law. The law would require that in 2012 all businesses file a 1099 form for any vendor, including corporations, to whom they pay more than $600 for services or property in a given year, starting with the 2011 tax year. That means office supply stores, cleaning services, hotels all would generate new paperwork for businesses. This requirement would impact 40 million businesses and add hundreds of thousands of new tax filings. Even the IRS admits the change would impose a serious administrative burden on it and small business. Several legislative initiatives to rescind this provision are receiving bipartisan support. Sen. Harry Reid, the Senate Majority Leader, has agreed to allow a vote to repeal the provision. Want to express your objections to the proposed changes? Send a letter to your congressman. A sample is available at iiat.org > Governmental Affairs > Health Care Reform.
The National Association of Insurance Commissioners is charged with developing the Medical Loss Ratios for carriers called for in the law. These MLRs will establish thresholds for loss ratios, below which health carriers will have to return premium to policyholders. Several groups have argued that agents’ commission are part of the “quality services” allowed for in the definition of the MLR, and therefore, should be excluded from the expenses of the carriers. IIAT and other state associations have communicated with state insurance commissioners arguing that agents’ commission are not part of the “premium revenue” of the carrier to begin with and should not be considered as an expense. The MLR definition must be completed by the end of the year. This issue is critical to agents because higher MLRs could squeeze commission dollars out of the premium.
Finally, our own Sen. Kay Bailey Hutchison recently introduced the Patients’ Freedom to Choose Act, which would repeal two provisions in the PPACA. Under current law, starting in 2011, the PPACA will prohibit individuals from using either their Health Savings Account or Flexible Spending Account funds to purchase over-the-counter medication unless they have a prescription from a doctor. Starting in 2013, the PPACA institutes an annual FSA contribution cap of $2,500. The Patients’ Freedom to Choose Act strikes these arbitrary provisions from the law. Many individuals and employers will benefit from this important legislation. Over 80 percent of all large employers that offer an FSA to their employees include a limit over this $2,500 threshold. According to a report issued by America’s Health Insurance Plan, more than ten million Americans are insured with an HSA-compatible plan.