NAHU's Concerns with the Senate-Passed Legislation

In addition to NAHU's detailed analyses and formal letter of opposition, the following are the most serious concerns NAHU has with H.R. 3590, as amended:

• A minimum loss ratio requirement that applies to all fully insured plans including grandfathered plans as of January 1, 2011, which will negatively impact coverage choice and affordability, especially during the transition time prior to 2014 when insurers will have all of the same expenses they have today plus transition expenses. The MLR in this bill is now set 85% for large-group plans and 80% for individual and small-group plans (100 and below). This rate must be lowered to 75% at least in the individual market to allow an adequate transition period.

• New annual health insurance premium taxes of over $6 billion per year to be enforced on 2010 contracts that have already been priced and sold prior to the enactment of the bill and taxes. This means that the taxes were not included when pricing plans. In 2011, there will be a new tax liability. So when pricing health insurance for 2011, consumers will be hit with taxes for two years at one time.

• A completely ineffective individual mandate requirement that will make it more financially advantageous for many healthy Americans to forgo coverage until they are sick and then utilize the guaranteed-issue protections to temporarily obtain coverage and then drop it again. • Strict modified community premium rating requirements (including age bands of 3:1) that now apply to all fully insured plans. This means all fully insured groups are required to abide by the modified community rating provisions, regardless of their size.

• State-based exchanges that create costly and confusing layers of dual regulation. The exchange structure proposed in the bill gives too much authority to the secretary of Health and Human Services and makes the exchanges unnecessarily complex for consumers and costly to for states administer.

• New employee voucher provisions to allow choice between employer coverage and the exchange, but which could actually hurt participation in employer-based health insurance plans. These provisions will require employers to give vouchers to use in the individual market or exchange to certain lower-income employees who would normally be ineligible to purchase subsidized coverage through the exchange instead of participating in the employer-provided plan.

• An expansion of the federal Medicaid program to individuals up to 133% of the Federal Poverty Level. This will be financially crippling in the long run to our already struggling state governments, displacing millions of Americans from private coverage and further exacerbating the public program cost-shift to privately insured Americans.

• The creation of a huge new federal long-term care program that threatens the private long-term care insurance market and is inadequately financed. There is widespread and bipartisan agreement that the CLASS Act will be a financial albatross for our nation once it is fully implemented.

• Financing mechanisms that would significantly, and negatively, impact the health care industry, consumers, employers and our overall economy. • The 40% federal excise tax on high-cost health plans ($8,500 for individuals and $23,000 for families) is not properly indexed for inflation, and this bill does so little to control the medical care costs that are the true drivers of health insurance premiums that eventually all plans may fall under this excise tax umbrella.

• Massive proposed cuts in funding to Medicare, particularly the Medicare Advantage program.

Source: Washington Update from NAHU 12-23-09

New COBRA Subsidy Provisions Signed into Law

On Monday, December 21st, President Obama enacted legislation extending certain provisions of the American Recovery and Reinvestment Act of 2009 related to the COBRA continuation coverage subsidy.

The new provisions do the following:

• Change the end date of eligibility for the COBRA ARRA subsidy from December 31, 2009 to February 28, 2010 (a two-month extension)

• Expand the ARRA premium subsidy to 15 months (an increase from the nine-month period under the original provisions);

• Allow for a 60-day period for the retroactive payment of premiums for assistance eligible individuals ("AEIs") (i.e., individuals who were entitled to the subsidy) whose subsidy period expired on November 30th and who failed to pay their premium for December coverage. The period will commence the day the provision is signed into law by the president, or, if later, 30 days after provision of the special notice (described below). The same refund/credit rules under the original bill will apply to any assistance eligible individual ("AEI") whose subsidy expired in November and who has since paid the full COBRA premium;

• Require a special notice describing the new subsidy provisions to all AEIs who are on COBRA on or after November 1, 2009 or whose qualifying event is an "involuntary termination" of employment occurring on or after November 1, 2009;

• Conditions eligibility for the COBRA subsidy on only one factor: a qualifying event that is an "involuntary termination" of employment occurring on or before the new February 28, 2010 sunset date. The previous version of the subsidy also took into account when the COBRA coverage period actually began. This means that employees who are involuntarily terminated before February 28, 2010 but still receive coverage subsidized by employers that defers the COBRA start date to a date later than February 28, 2010 will still be able to receive the subsidy.

Senate Bill HR 3590 Released Last Evening

As you may know, Senate Majority Leader Harry Reid (D-NV) released a merged version of the Senate comprehensive reform legislation last night, the Patient Protection and Affordable Care Act, or H.R. 3590. NAHU is in the process of reading through the 2,074-page bill and will include a detailed analysis in tomorrow's edition of Washington Update. In addition, we will provide talking points and materials you can provide to your clients.

Some of the key provisions in H.R. 3590 are:

• A government-run public plan option to be sold through the exchanges with the opportunity for states to opt out. Payment rates to providers would be determined by HHS and capped at the average rate of private plans. In addition, start-up funds are provided for the creation of co-ops and states are allowed to offer their own public programs for those between 133% and 200% of the Federal Poverty Level (FPL).
  
• State-based exchanges beginning in 2013 and limited to individuals and small groups until 2017, when large-group participation will be allowed.
  
• The inclusion of agents and brokers to sell policies through the exchanges.
  
• An employer mandate for groups of 50 or more to provide qualified coverage with a $750 fine, indexed for premium growth, for non-covered employees.
  
• An individual mandate to obtain qualified coverage with a fine that begins at $95 in 2014, rises to $750 by 2016, and is indexed for inflation. Exemptions include hardship waivers and those for whom the cost of coverage will exceed eight percent of their income.
  
• Subsidies through the exchanges up to 400% of the FPL, with a 2.8-7% cap on beneficiary costs as a percentage of income.
  
• An expansion of Medicaid up to 133% of the FPL.
  
• Market reforms that include guaranteed issue and renewability of all policies, no preexisting condition limitations or lifetime or annual limits, prohibitions on rating based on health status and gender, and only allowing rating factors of age (3:1), tobacco use (1.5.1), family status and geography.
  
• The minimum allowable actuarial value has been reduced to 60% as determined by HHS, which should accommodate most consumer-directed account-based plans.
  
• Improvements to employer-sponsored wellness programs to allow for discounts of up to 50%.
  
• A limited small-business tax credit to help the smallest of businesses with low-income employees with the cost of coverage.
  
• The creation of a new opt-out federal long-term care program (CLASS Act provisions) with a limited daily benefit.
  
• A variety of financing mechanisms including the fees imposed on the individuals without insurance and employers not providing insurance, a 40% excise tax on high-cost insurance ($8,500 individual/$23,000 family), taxes on medical devices, pharmaceuticals and the health insurance industry, and a Medicare tax increase to 1.96% for individuals earning over $200,000 per year and families earning over $250,000. In addition, the bill contains $464 billion in cuts to Medicare that include: permanent reductions in the annual updates to Medicare’s payment rates for most services in the fee-for-service sector of $192 billion; $118 billion in cuts to Medicare Advantage; $43 billion in DSH cuts; and $23 billion in unspecified cuts by the Medicare Advisory Board.
  

Cost of the Legislation
The Congressional Budget Office has determined the initial cost of the measure to the federal government to be $849 billion. However, CBO notes that the bill includes two significant provisions that will likely alter the true cost of the bill. Medicare participating providers are assumed to get a 23% payment cut in 2011, which would carry into subsequent years. Fixing the rate cut, which is historically and politically likely to happen, would cost $247 billion. Additionally, the CLASS Act provisions, which address the creation of a new federal long-term care program, generate $72 billion over the budget window because fees are collected initially for five years before any claims would be paid. Once the program is fully implemented, it is estimated to run at a significant deficit. According to the Senate Republican Budget Committee, when these factors are accounted for, the legislation is $189 billion in the red. It would also put the real cost of the bill at over a trillion dollars.

In addition, the CBO report says, “Under the legislation, federal outlays for health care would increase during the 2010–2019 period, as would the federal budgetary commitment to health care.” The coverage expansion would drive a net increase in government spending on health by $160 billion over 10 years. CBO scored the bill as reducing the deficit by $130 billion over FYs 2010-2019.

Process Moving Forward
The Senate will consider existing scheduled business all day today, and we expect that Senator Reid will also file his cloture motion later today to proceed on H.R. 3950 and start the Senate floor debate. The cloture vote process takes three days -- file on day one; day two is an intervening day; and the vote occurs on day three. That means the soonest a vote can be taken on the motion to proceed on H.R. 3950 would be Saturday, November 21, and all 60 Democratic Caucus votes will be needed for the measure to pass. Otherwise, the measure cannot be considered on the Senate floor.

It's not clear that Senator Reid has the 60 votes needed to move forward at the moment, because three moderate Senators, Blanche Lincoln (D-AR), Mary Landrieu (D-LA) and Ben Nelson (D-NE) have not given their commitments. Nelson and Landrieu are said to be leaning towards allowing debate to start (while stating publicly that supporting a procedural vote to move forward is not the same as supporting the measure overall) but Lincoln has remained tight-lipped about her plans. Also, Senator Max Baucus (D-MT) has been called away from Washington, DC, to attend to a family emergency. We expect that the motion to proceed efforts may happen on Saturday, but could also extend into next week. Then, during the week of November 30, the Senate will begin to consider health care reform on the floor and the lengthy amendment process will begin.

NAHU will continue to keep you informed of any breaking developments as they occur. If you have any questions, please feel free to contact our government relations department staff.

www.nahu.org 703-276-0220

Health Care Reform Discussions - It's all about how it's done...

Neil Crosby

CAHU Vice President of Public Affairs

As I am reading about the most recent casualty of a Health Care Reform gathering Wednesday night in the LA area where a portion of a person's finger was bitten off by a demonstrator from MoveOn.org, which is a group focused on pushing for the type of reform that President Obama is calling for and who would really like to see more government involvement, I am more convinced than ever that we need to push harder than ever for the type of reform that will indeed help the health care system, not destroy it. However I also feel stronger than ever that it is all about how it is done.

The people pushing hardest for the type of health care reform that has been written in the House bill, and/or those who want even deeper reform such as a single payor system, use very emotional issues and dialogue to push their side of the discussion. For example, how can a country as rich as ours allow 47 million people to be uninsured. A very emotional point, until you calmly point out that nearly 1/3 of the uninsured qualify for an already existing public program, or that another 1/3 make enough money, according to studies, to purchase insurance coverage but have not, or that some people make a conscious decision not to purchase the financing mechanism that would help them pay for their health care when they need it, health insurance.

They also bring up how this country spends more on health care than many other countries and has less to show for it when it comes to outcome studies, lifespan, etc. Well those may be true statistics, but again we can calmly point out that many of those other countries don't have a fast food restaurant on nearly every major corner, and that most households in other countries may not be able to afford X-Box or have that big plasma TV that can be so alluring, to me as well. That many of our outcome statistics could be improved by lifestyle changes, diet, exercise, smoking and other improvements, and that tearing down what works about our current system and replacing it with more government bureaucracy is not the sensible answer.

As we have also heard, proponents of more government involvement of health care reform have been dismissing the public's more recent reluctance to support the administrations efforts as being created by the far right talk show hosts, etc. Therefore it is more essential than ever that people calmly correct them by pointing out that I believe what I am saying to be true, that no one put words in my mouth or made me say them, I am speaking out as an American that I want to keep what works about our system.

We have heard so much about how the Public Option could be the answer. If I recall correctly, in California we have already been there done that with the Health Insurance Plan of California, the HIPC. Created in 1993 the HIPC was a public option where employers could go directly to the HIPC to purchase coverage for their employees. The HIPC did not allow brokers to represent employers in the beginning of it's existence. After only gaining low to moderate enrollment the HIPC decided to allow brokers to represent their employers, however broker commissions needed to be listed separately on the billing statement. In spite of the commission being listed seperately on the billing statement so many of the enrolling employers still choose to have a broker representing them that the HIPC did away with the separate listing of commission. As many of you may remember, the public option HIPC performed so poorly that eventually the decision was made by the state of California to morph the public option HIPC into the 'Co-Op' PacAdvantage, which was run by a not for profit co-op of very large employers called the Pacific Business Group on Health, PBGH. As even more of you will remember PacAdvantage struggled until it closed it's doors in December 2006. Are all of the perimeters of this previous public option and co-op plan exactly the same as what is being proposed, who knows. But one could calmly stand their ground and show the facts that we have already tried that idea, and it did not work, at least at the time.

There is another concept that is being pushed that just doesn't work when it comes to health care. As you have no doubt heard many a time, "we can combine our collective buying power to negotiate lower health care costs". This is another area where we can calmly discuss the fact that health care itself is not a bulk product. It is not a product or parcel that Costco can buy huge amounts of and mass market it under the Kirkland label. Health care is a very splintered service, it's a prescription over here, it's an office visit over there, it's a test over here, it's a counsel over there, it's a hospital visit over here, it's a hospice process over there, you get the idea. It's a potential of millions of different providers all giving service that they expect and deserve payment for. Other than a government system saying we are only going to pay you .15 - .35 cents on the dollar of what you would receive as a provider for an insured or cash patient how could you possibly combine buying power. Oh but wait, we do have that already don't we? Ask any hospital or medical group administrator about whether they could survive financially if it were only that level of government reimbursement that they were to receive. The ones I talk to now openly talk about the fact that they much cost shift to insured or cash patients to make up for the government reimbursement short comings already.

But again, these are emotional issues to those that want to see more government involvement in health care. So let me ask you, when you get into a discussion, argument or what ever you call it with a person that is all wound up over an issue is there anyway to win? It just escalates, names are called, fights break out, digits are bitten off, and no one wins. No one is actually listening anymore, in fact we have just lost all credibility by arguing, they have forgotten our valid facts. I'm not saying not to be involved and speak with passion, it's just going to get the point across, stay in their minds, be more credible if we speak the facts that we all know are true. It is more important than ever to speak those facts to your associates, your clients, your service club, your church group and your family and friends.

Do get involved, share what you know to be true, just do it in a way you will be proud of when it is all said and done, and let me know if I can help you in any way.

"NAHU may have saved Agents' Jobs!"

I am forwarding the e-mail below from CAHU member Ron Masters, that was issued as a result of today's NAHU orchestrated "Fly-In" to DC of 1000+ agents form several agent organizations in America. This news is indeed very inspiring !!!

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From: "Ron Masters" Date: Wed, 15 Jul 2009 12:04:38 -0700Subject: NAHU may have saved Agents' Job!
Friends,

Below is a message I sent to the EVA and CEO of NAHU. After you read it, I'm sure you will see why I felt compelled to do so. Her actions and that of her staff don't guarantee anything in the current, cut-throat Washington DC political arena, but getting agents placed in the system when they had been all but "written out" during the health care reform debate is extraordinary on every level.

For any who are not members of the National Association of Health Underwriters, I suggest you get out your checkbook and join now. Those that are, keep on paying your dues and make sure you contribute to the legislative efforts. It is through dues and donations that the health insurance agents' role is made known and supported by NAHU on your behalf.

Today a combined force totaling 1000 agents from , NAHU, NAIFA and the Independent Agents' Association are meeting in Washington DC with every Member of Congress from every state. And the event was orchestrated by NAHU with Janet Trautwein, NAHU CEO kicking the event off and giving the group its charge.

Less than 5% of those licensed for the sale of health insurance in the United States hold memberships and are paying for what the other 95 % are are benefitting from. Doesn't seem quite fair.

Members, do some arm twisting. Non-members join, you'll be glad you did.

If anyone suggests that you are bugging them, just tell them some old NAHU guy was nagging you. I guess I am.

All the Best,,,,,
Ronald W. Masters RHU

*******************************************
Sent 7.14/2009
Janet,

As I get my play by play from Paula Wilson and Art Jetter, I read with great enthusiasm of your triumphs and that of your staff and the great NAHU you have worked so hard to guide in the past several years as EVP and CEO.

As you and your 1000 new best friends of the "FLY-IN" take the fight to their doors tomorrow please know that you all are not alone. Those of us who have gone before are right there with you in heart, mind and spirit. I only wish I could be there in person.

I read the following 7/14 posting on Alan Katz's Health Care Reform Blog (accessible from the CAHU website homepage):
"Thanks in large part to the hard work of Janet Trautwein and her team at the National Association of Health Underwriters, brokers are highly likely to be explicitly permitted to sell products inside the exchange. The Senate Health, Education, Labor and Pensions Committee is refining their legislation which includes a “gateway.” This morning they accepted an amendment offered by Senator Orrin Hatch specifically identifying brokers as eligible to sell products within the gateway. Considering the Senate HELP Committee is staking out the most liberal position in the Senate, this is an important and significant development.:"

Janet, Alan states this is significant, I will add to it and say it is "Landmark" and will be known for years to come as one of of the finest legislative advocacy actions health insurance agents and the American people will ever benefit from. Senator Hatch has been a great friend to the Health Underwriters for over 20 years. I remember how kind and patient he was with me as I told him what Health Underwriters was and that we were concerned about Ted Kennedy's bill. That was October 31st 1988 when Dwight Mazzone and I met him in Salt Lake City. Under your stewardship, that relationship has continued and flourished, and it may well be that the each and every American will be standing in line to thank you.

Janet, because of you and NAHU, you have shown Congress and more than likely the White House, that Health Insurance Agents........are necessary.

Go get em,,,you and 1000 of your new best friends,

All the best,

Ron

Ronald W. Masters, RHUSanta Ana, CA 92706ronmasters8@gmail.com
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AB 23-AGENT & BROKER Q & A FROM DOI

The recent federal stimulus plan provides for a 65% reduction in COBRA premiums for eligible individuals for up to nine months. Assembly Bill 23 (AB 23) requires insurers to mail a notice of the right to elect Cal-COBRA health insurance coverage to everyone who was laid off between September 1, 2008 and December 31, 2009. This includes current Cal-COBRA recipients and allows them to choose the 65% reduction as well.

How is AB 23 different than the American Recovery and Reinvestment Act of 2009 (ARRA) signed into federal law on February 17, 2009?
AB 23 requires insurers to extend federal premium assistance of 65% reduction to Cal-COBRA premiums to employees who were involuntarily terminated between September 1, 2008 and December 31, 2009 and worked for an employer with fewer than 20 employees that offers health care coverage.

Which segments of the business community does this affect?
This bill impacts small businesses (2-19 employees) that offer health care benefits and would notify their health insurers of involuntarily terminated employees.

What are clients that are members of this segment of the business community responsible for?
These employers are still required to promptly notify their health insurer of all employees who are involuntarily terminated. In addition, they must respond promptly to their insurer’s requests for employee verification of the involuntary termination. If they involuntarily terminate(d) employees between September 1, 2008 and December 31, 2009 they must sign a “Verification of Involuntary Termination Form.” These forms will be supplied by the insurers to verify the involuntary layoff.

If my clients have former employees that enrolled in Cal-COBRA after September 1, 2008, what are they eligible for?
These employees must complete a “Request for Treatment as an Assistance Eligible Individual Form.” If eligible, they can obtain premium assistance back to March 1, 2009 or later. If an employee is currently enrolled under Cal-COBRA, they are eligible as of March 1, 2009.

If my clients have former employees that chose not to enroll in Cal-COBRA after September 1, 2008, can they enroll now and what are they eligible for?
If an employee was involuntarily terminated between September 1, 2008 and December 31, 2009, they should be eligible for the premium assistance assuming they meet the other federal requirements. The insurer has 14 days from the date AB 23 was signed by the Governor (May 12, 2009) to notify the former employees of their ability to enroll, similar to the notifications the employee received when employment was originally terminated but now it will include information about the federal premium assistance. The employee then has 60 days to enroll in Cal-COBRA and elect to receive the premium assistance.

What can be done if the former employer’s group health plan denies an application for the premium reduction for Cal-COBRA participants?
The applicant can appeal. The Secretary of the Department of Health and Human Services (HHS) is required to make a determination regarding an appeal within 15 business days after receiving a request for review. The Center for Medicare and Medicaid Services (CMS), which is part of HHS, will oversee appeals for federal, state, and local governmental employees, as well as appeals related to Cal-COBRA. CMS expects to begin processing appeals no later than May 1, 2009, and will provide further information regarding where to submit appeals in the near future.

Inquiries regarding Cal-COBRA subsidy appeals should be directed to :
NewCobraRights@cms.hhs.gov or the following address: CMS c/o COBRA APPEALS 7500 Security Blvd. Baltimore, MD 21244 Mail Stop C2-12-16
California Department of Insurance 1-800-927-HELP www.insurance.ca.gov

CAHU Plays a Major Role in Gutting AB 1521 & Also in Editing the Proposed New Language for This Bill by Assemblyman Dave Jones

For all CAHU Members who responded to our AB 1521 Operation Drumbeat E-Mail Action Alert...THANK YOU SO MUCH! We can't thank you enough for taking the time to respond to CAHU's Operation Drumbeat. YOUR pressure made all the difference in making it possible for CAHU to succeed in totally changing this bill! This past week, AB 1521 was gutted and amended to remove both the commission disclosure and additional fiduciary duties for Health insurance agents.

On Tuesday April 14th, 2009, the author, who is also the chair of the Assembly Health Committee, presented AB 1521 to his committee. The first vote left the author short of the necessary votes to move the bill out of committee and was put on call. After much personal lobbying of committee members by the author, the bill passed out with 10 votes which is just the minimum necessary to pass in this committee. Surprise!! The conventional wisdom had been that this bill would get out on a strong party line vote.

CAHU next met with the author at his request of CAHU on Friday morning, April 17th, to see if we could reach agreement on amendments to remove our opposition to the bill, but we concluded we could not. The bill was set to be heard in Assembly Insurance Committee on April 22.

On that same Friday in the afternoon, the authors office emailed a new proposal to CAHU- offering to remove all the language in the bill and submit new language on controlling commission payment practices by carriers in the individual and group market and additional disclosures by agents - IF CAHU would support this total new bill language. The proposed amendments were less harmful than the original language but still caused us a problem. But the author and sponsor, Health Access - a liberal advocacy group, indicated they were open to working with us on the language.

Negotiation continued over this past weekend (April 18 & 19) and right up to the hearing in Assembly Insurance on April 22, 2009. At last count we had met three times, gone through 15 plus different drafts, and finally had an acceptable deal. In the end the bill will put in statute some of the current commission payment practices of the carriers in the individual market only, which have been in place for years.

CAHU's Legislative Advocate, Steven Lindsay, persuasively debated with them that the language in their proposed new version unnecessarily included the small group market and that this language should be removed...and it was. Steven also was responsible for pointing out to them that their proposed new language would unintentionally have increased agent commission payments (in dollars), and thus also premiums, for "rated up" individual health polices, and he helped them rewrite that language (part of the reason for 15 drafts of this revised bill).

So this totally revised version of AB 1521 contains no additional duties or disclosures beyond what we currently are required to do and all references to the group market were stricken. Thus CAHU can now support passage of this revised version of AB 1521, which did pass out of the Assembly Insurance Committee on April 22nd.

CAHU Members - this is another in a very long list of great legislative advocacy accomplishments that CAHU is responsible for over the years.....and why your membership support (and renewal of your membership each year) is such a very worthy investment in protecting your clients and your careers in the health insurance industry!