Federal and State Healthcare Reform Activities
Federal and State Healthcare Reform ActivitiesJuly 10, 2017
Ken Ruotolo, Chief Operating Officer
At the Federal level, the Better Care Reconciliation Act (BCRA), the Senate’s version of healthcare reform, remains stalled, with conservative Republican senators asking for more extensive modifications to current law (the ACA), while moderate Republican senators are asking for fewer changes. Senate leader McConnell is amending the bill to address these concerns. After modifications are in place, the Congressional Budget Office will “score” the bill again to determine its impact on the number of insured, likely affect on premiums and on the federal budget. Senate watchers think that McConnell would like to put the BCRA to a vote before the Senate leaves for a month-long recess in August.
Other items being considered:
- An amendment to the BCRA that turns over to the states the decision as to whether insurance carriers must meet a medical loss ratio. This has been a big issue for brokers whose compensation must be classified as administrative expense, which is subject to an MLR cap. Without MLR in place, carriers may have the flexibility to increase broker compensation.
- A provision in the BCRA that would dramatically liberalize rules governing association plans making them widely available for small business. This provision mirrors the Small Business Health Fairness Act passed by the House in March. This Kaiser Family Foundation article describes the Senate’s provision and its potentially destabilizing effect on both the small group and individual markets and is a must-read for all brokers that transact in those markets.
- Separate from the BCRA – House Republicans are reportedly writing language into a spending bill that prevents the IRS from enforcing the individual mandate penalty. Most experts agree that if the penalty were no longer enforced, many healthy individuals would stop purchasing coverage in the individual market. If at the same time, carriers are still required to accept any individual regardless of health status and if they are still not permitted to set rates based on health status, then it is likely that carriers will exit, destabilizing the market or shutting it down altogether.
California Reform Activities
SB 562 – the Single-Payer bill – was put on hold by the State Assembly on June 22. Assembly Speaker Anthony Rendon, said the bill:
“…was woefully incomplete. Even senators who voted for SB 562 noted there are potentially fatal flaws in the bill, including the fact it does not address many serious issues, such as financing, delivery of care, cost controls, or the realities of needed action by the Trump Administration and voters to make SB 562 a genuine piece of legislation.”
With that action, the Assembly Speaker ended any chance that SB 562 would progress during the remainder of the 2017 legislative session. However, it was drafted as a two-year bill and proponents are expected to reintroduce it in 2018. Presumably, they will work on the bill’s shortcomings in the interim and if changes at the federal level threaten consumers’ ability to get or pay for care as enjoyed under the current system, the bill may garner much broader support next year.
AB 72 – the “No Surprise Bills” law – passed the legislature and was signed by Governor Brown in late 2016. It took effect on July 1, 2017. The law protects individuals from being balanced billed by out of network (OON) providers when receiving non-emergency services at an in-network facility. Individuals covered by private plans regulated by the California Department of Insurance or the California Department of Managed Healthcare are protected by AB 72, those covered by plans regulated by the Department of Labor (typically self-insured plans) are not protected by this new law.
Starting July 1, if an OON provider delivers services without advance consent from the covered individual (via a process specified in the law), the individual will only be responsible for their portion of in-network cost-sharing. No more surprise OON billing. The provider is reimbursed by the insurance carrier the greater of 125% of the Medicare rate for the service or the average contracted rate for that carrier in that region. This Kaiser Health News article illustrates how surprise balance billing can have a big impact on individuals and this Fact Sheet from Health Access and the California Labor Foundation provides an excellent, consumer-oriented description of the key provisions of the law.
If the law functions as intended, unapproved balance billing will be eliminated, brokers and agents will need to resolve fewer claims issues on behalf of clients and individuals will have a better experience with their health insurance product.
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