Insurers, Small Businesses And ER Care All Affected By Overhaul

News outlets consider the impact of health reform on insurers — who are seeking flexibility on mandates — as well as changes to premiums, small businesses and emergency room care.

The Hill: Insurers are planning to lobby lawmakers to avoid some provisions of the health overhaul. "An internal memo to members of America's Health Insurance Plans (AHIP) obtained by The Hill offers health plans three suggestions for 'strengthening and clarifying' regulations regarding grandfathered plans. Or in other words: ways to remain exempt from key reforms." AHIP suggests that insurers ask regulators tasked with watching changes to insurer plans for greater "permissible cost-sharing changes" because "the regulatory threshold of 15 percentage points plus medical inflation doesn't keep up with rising medical costs." It also suggests lobbying to allow routine changes to prescription drug plans and to ask for more guidance and flexibility in new regulations (Pecquet, 8/11).

Bloomberg: The new health law is also being used to limit tax deductions for executive pay for insurance company executives. "The rule applies to UnitedHealth Group Inc., WellPoint Inc. and other insurers that earn 25 percent or more of premium revenue from health plans, cutting the deduction to $500,000 from $1 million on income per employee. This change, plus the elimination of a provision on performance-based payouts, will translate into higher payroll taxes for this sector, according to data compiled by Bloomberg. … The measure is expected to raise $600 million over seven years, according to Congress's Joint Committee on Taxation. … The provision also removes longstanding exemptions for most performance-based pay, such as stock options and annual cash bonuses, and tax-deferred compensation. The size of these payouts varies each year, depending on whether management achieved certain financial goals." The average pay for health insurance company CEOs in the U.S. in 2009 was $11.5 million (Smith, 8/11).

Politico: A handful of Democratic lawmakers has written to Health and Human Services Secretary Kathleen Sebelius seeking to influence an upcoming decision about what insurance company expenses can be counted toward a calculation of insurance companies' medical loss ratio, or the amount of premium revenue that is spent on medical care. The new health law "says that 'federal and state taxes and licensing or regulatory fees ...' should be excluded from the premium revenue number, or the MLR denominator. (Essentially: counted as medical costs.)" But Democrats, who are concerned that the National Association of Insurance Commissioners, who are working on draft language about this issue for HHS, "are now saying that their intent when writing the bill was that the only the federal taxes and fees 'that relate specifically to revenue derived from the provision of health insurance coverage that were included in the PPACA' should count as medical expenses." Industry officials say such a view would create problems for insurers (Haberkorn and Kliff, 8/12).

Los Angeles Times: Lawmakers in many states have little control over increases in health coverage premiums. Only 19 states have "prior approval" authority to agree to rate hikes before they're instituted. "In many states, it is the insurance industry that largely controls the regulatory process, funneling money to key state lawmakers and squelching efforts to expand government oversight of premiums, a review of state regulations and campaign donations shows." States like California and Illinois don't have prior approval authority but "Washington, Colorado and Delaware have recently passed laws to give insurance regulators prior-approval authority. New York this year restored that authority after insurers successfully weakened state regulation in the 1990s."

"Although the Obama administration's healthcare overhaul is designed to ultimately change that, many consumer advocates fear the new law may not break insurers' stranglehold on state capitals soon enough" (Levey, 8/12).

The (Gaithersburg, Md.) Gazette: Small businesses, too, are worried what the launch of insurance exchanges mandated by the health law will mean for the help they and their employees get in affording health insurance. "House Majority Leader Steny H. Hoyer (D-Dist. 5) of Mechanicsville met with small-business leaders Aug. 5 at the Belair Mansion in Bowie to educate them about the upcoming Maryland Health Insurance Exchange, one of the state programs established in the legislation to allow group purchasing power for insurance plans. Maryland will provide four types. The new law also requires businesses with 50 or more employees to provide health insurance or pay $2,000 per full-time worker if any employee obtains premium tax credits through the health insurance exchanges; the first 30 employees are exempt. Businesses with fewer than 50 employees face no new insurance requirements." In Maryland, about 160,000 individuals buy plans on the individual market and 400,000 buy it through the small group market — which covers up to 50 people or employees (Robbins, 8/11).

In other reform news, The Columbus (Ohio) Dispatch reports that the health overhaul will mean that emergency rooms will be more crowded "because they won't have easy access to family doctors, whose numbers are dwindling," the nation's ER physicians say. "The prediction is based in part on what's happening in Massachusetts, which has had a similar reform law since 2006. There, preventable and avoidable emergency-room visits increased 13 percent from 2004 to 2008, according to a recent report from Massachusetts health officials. A survey by the American College of Emergency Physicians found that 71 percent of emergency doctors expect ER visits to increase despite the passage of health-care reforms." Compounding the problem are predictions about continuing and worsening shortfalls of family physicians (Hoholik, 8/11).

This is part of Kaiser Health News' Daily Report - a summary of health policy coverage from major news organizations. The full summary of the day's news can be found here and you can sign up for e-mail subscriptions to the Daily Report here. In addition, our staff of reporters and correspondents file original stories each day, which you can find on our home page.