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.