Understanding the Impact of PPACA’s Health Insurance Premium Tax

Beginning in 2014, many Americans will start paying for a new tax on health insurance that will be assessed against health plans and insurers but will actually be paid through increased premium rates, according to several prominent insurance and financial experts. Buried within the Patient Protection and Affordable Care Act (PPACA), Section 9010 requires individuals, families, and others to help pay a total of $73 billion over five years.  Implementation of this provision is generating mixed reviews by various stakeholder groups.   

2012 PPACA Implementation Highlights

The implementation train for the Patient Protection and Affordable Care Act (PPACA) continues to pick- up speed with a number of important implementation dates in 2012. 

Keeping up with the pace can be challenging. To assist, the U.S. Department of Health and Human Services (HHS) offers  a website that helps track the major reform efforts, titled “What’s Changing and When.” Also useful is an online article posted by the White House that gives a year-by-year overview of the PPACA timeline.    

Here’s a snapshot of some 2012 milestones:

Accountable Care Organizations

Health Insurers Facing New Financial Pressure Points under Emerging Reforms: MLR Restrictions & ICD-10 Conversion Add to Complexity

The Patient Protection and Affordable Care Act (PPACA) is not only forcing health insurers to undergo fundamental changes in the way they do business, but the law is requiring new infrastructure investment while also mandating Medical Loss Ratios (MLR) that limit the amount insurers can spend on administrative costs.   

U.S. Congressional House Subcommittee Holds Hearing on Medical Loss Ratios – Concerns Expressed about Broker Role

Last Thursday, the U.S. House of Representatives Small Business Subcommittee on Investigations, Oversight and Regulations held a hearing on the issue of the Medical Loss Ratio (MLR) in Washington, D.C. Titled “New Medical Loss Ratios: Increasing Health Care Value or Just Eliminating Jobs?,” the hearing was a forum for views on how the MLRs mandated by the Patient Protection and Affordable Care Act (PPACA) could impact the health care insurance industry. Most individuals testifying expressed concerns about how the MLR formula as currently structured could greatly hinder the ability of brokers and agents to support consumers and business owners when purchasing health insurance.

States Given Responsibility of Defining Essential Benefits

In a press release issued today (December 16, 2011), the U.S. Department of Health and Human Services has announced that state exchanges will now determine their benchmark for essential benefits based upon use of the most popular plans in their region and the ten benefit categories of care that were originally defined in the health care reform regulations. This change to move the responsibility of essential benefits to the state level will give states the flexibility to match their exchange plans to be equal to those offered by a typical employer in the state. Further, those states that have a broader based health care coverage mandate will not be penalized for incorporating their states mandates into their definition of essential benefits.

HHS Announces Medical Loss Ratio Rule

The Department of Health and Human Services (HHS) just released its final Medical Loss Ratio rule, and the outcome does not bode well for the broker/agent community. In the ruling HHS has rejected the NAIC recommendation to exclude broker/agent fees from insurance companies’ allowed administrative costs.

Under the rule beginning this year, individual and small group market insurance plans will be required to spend 80% of the premiums on medical care and health care improvement. Only the remaining 20% will be allowed towards administrative costs. Much the same, large group plans will have an 85% of premium requirement.

Additional Details on NAIC MLR Resolution While HHS Continues to Process State Waivers

Last week, BenefitMall reported on a hotly debated resolution adopted by the National Association of Insurance Commissioners (NAIC) to adjust the Medical Loss Ratio (MLR) formula to recognize the role of professional health agents and brokers. (To read the blog, click here).

HHS Publishes Proposed Rule on Exchange-Based Risk Adjustments

With on-going implementation of the Patient Protection and Affordable Care Act (PPACA), actuaries and other experts have expressed concerns about how the new state-based insurance exchanges, which are geared to the small group and individual markets with dedicated subsidizes, could distort the broader health insurance market. For example, what if insurance carriers place the burden of individuals with higher health risks on qualified health plans (QHPs) participating in the insurance exchanges and keep the better risks outside of the exchanges?

New HHS CO-OP Rules Promise More Choices for Consumers, Small Businesses

More proposed reforms to the nation’s healthcare system were released last week as part of the Patient Protection and Affordable Care Act (PPACA). This time a proposed rule authorizes the creation and funding of Consumer Operated and Oriented Plans (CO-OPs). These new private, non-profit, consumer-governed health insurance plans are designed to help increase competition and give consumers and small business additional affordable health insurance choices. On July 18, the 56-page proposed regulation was released for public comment by the Center for Medicare and Medicaid Services of the U.S. Department of Health and Human Services.

NGA Hearing on State Exchanges: Governors Continue to Focus on Budget Shortfalls

A variety of pressing economic and health issues were addressed at the National Association of Governors (NGA) annual 2011 meeting held in Salt Lake City, including elements of the Patient Protection and Affordable Care Act (PPACA) as well as state budgets. 

Hearing on Exchanges