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AHIP Statement on House Passage of H.R. 3962
Washington, DC – Karen Ignagni, President and CEO of America’s Health Insurance Plans (AHIP), released the following statement today on House passage of H.R. 3962.
“Health plans strongly support comprehensive health care reform, and we have contributed to this discussion by proposing a complete overhaul of how health insurance is provided. Earlier this year, we proposed guaranteed coverage, elimination of pre-existing condition exclusions, no longer basing premiums on a person’s health status or gender, and an effective personal coverage requirement to get everyone covered. We also have proposed far-reaching administrative simplification reforms that will improve efficiency, reduce costs, and free up time for physicians to focus on patient care.
“The current House legislation fails to bend the health care cost curve and breaks the promise that those who like their current coverage can keep it. A new government-run plan will cause millions to lose their existing coverage and draconian Medicare Advantage cuts will force millions of seniors out of the program entirely.
“This bill imposes inflexible mandates before getting everyone covered and new regulations that duplicate what is already in place at the state level. Many of these reforms begin in 2010 after employees have already chosen their plans and contracts have been negotiated. The result will be increased costs and massive disruptions in the quality coverage individuals and families rely on today.
“Recent polls have shown that Americans are increasingly concerned about the impact of rising health care costs. Yet the current health care reform discussion has, until recently, ignored the cost issue. Without real and effective measures to bend the cost curve, families and employers will not be able to afford coverage and health care costs will rise at a rate much faster than the overall economy is able to sustain.
“Health plans will continue to advocate for bipartisan reforms that cover everyone, improve quality, and make health care coverage more affordable.”
POLL VAULT
Polls show Americans Do Not Support Current House Reform Plan http://bit.ly/1djoAG
FACT: Administrative Costs’ Contribution to Premium Increases Is Declining
Medical benefit costs have grown at a faster rate than administrative costs over the long term. In fact, the cost of benefits has nine times the impact of administrative costs on the growth in health insurance premiums.
AHIP LETTER ON HOUSE LEGISLATION
Last week, AHIP sent a letter to Capitol Hill expressing opposition to the Affordable Health Care for America Act. Below are a few excerpts and here is a link to the full letter: http://bit.ly/2KzzFX.
Creating disruptions in 2010: The House bill “would immediately in 2010 implement certain market reforms, such as new rules for pre-existing condition exclusions, a ban on lifetime limits, an extension of COBRA coverage, new benefit mandates, and allowing individuals through age 26 to remain on their parent’s coverage as dependents – before taking the crucial step of bringing all Americans into the system…..these reforms would force the reopening of existing contracts and increase the cost of coverage for American families by promising new benefits that cannot be supported by current premium levels.
Creating instability in rate approval: “The bill would establish a federal premium justification process, beginning in 2010, that would duplicate processes that already are in place at the state level, leading to regulatory confusion and higher administrative costs……Although health plans already have submitted their 2010 rate proposals to state insurance regulators, they would need to refile these rates, creating confusion and uncertainty for consumers……A new and additional review process that would be added at the federal level based upon undefined and subjective criteria would at best be costly and confusing and at worst…”
Ignoring cost drivers: “While the House bill requires health insurance plans to justify premiums, it does not require clinicians, hospitals, pharmaceutical companies or others to justify the medical costs that determine premium levels…the bill does not address in any meaningful way the fact that the United States spends significantly more per unit of service than every other industrialized country…..Not taking on this challenge will ensure that subsidies are not sufficient to keep pace with rising health costs and that health cost trends will continue to outpace the ability of the economy to absorb them.”
Arbitrary caps on administrative costs: “..we are concerned about imposing arbitrary caps on administrative costs through proposed medical loss ratio (MLR) requirements…..these provisions would be counterproductive…..will require considerable expenditures that are accounted for as part of “administrative costs.” In addition, there will be significant new compliance costs as a result of the passage of health care reform legislation, which also would be captured under administrative costs.”
Opposition to a government-run plan: “We share the concerns that providers, employers, and patients have raised about the significant disruption a new government-run plan would have on the current health care system. A new government-run plan would bankrupt hospitals, dismantle employer coverage, exacerbate cost-shifting from Medicare and Medicaid, and ultimately increase the federal deficit. By contrast, strong market rules and consumer protections will ensure that nobody falls through the cracks and will do so without disrupting the coverage of Americans who like and want to keep their current health plans.”
Complex and duplicative regulation that will drive up costs: “…the House bill creates a new federal agency and Commissioner with broad authority to oversee and regulate many aspects of health insurance that are currently the subject of extensive state regulation (e.g., coordination of benefits, external review, prompt pay, and consumer appeals and grievances) as well as federal oversight (e.g., ERISA requirements for employer-sponsored coverage). The establishment of dual and overlapping regulation will not be transparent to consumers and only will increase the cost of coverage. In addition, the House bill would delegate open-ended authority to the new Health Choices Commissioner – including authority to make changes to rules relating to the existing employer market, regardless of whether that coverage was offered in the exchange – and establish a regulatory structure for the new Health Insurance Exchange that replicates functions now being carried out by state insurance commissioners.”
Breaking the promise that people can keep their existing coverage: “Since the beginning of this debate, the American people have been promised that health care reform will allow them to keep their current coverage if they like it… the grandfathering provisions of the House bill would not preserve the existing coverage of many Americans who are currently satisfied…..the age bands in the House bill would undermine existing coverage for younger families by placing a large burden on them to subsidize the higher costs of older workers…..the actuarial values that the bill would establish for benefit packages would be significantly higher than the coverage options that many people choose today, creating another potential source of coverage disruption.”
CLASS Act concerns: “…we are concerned that this program, in its current form, proposes an inadequate premium structure and benefits that cannot be maintained….in a relatively short time period, the program will either need increased premiums and/or significant benefit reductions.”
Eliminating health care choices for millions of seniors: “…we are deeply concerned about the harmful impact such reductions would have on health care choices and benefits for the 10 million Medicare beneficiaries who rely on Medicare Advantage plans to meet their health care needs. An October 21 memorandum by the Chief Actuary of the Centers for Medicare & Medicaid Services (CMS)….estimates that by 2014, when the Medicare Advantage funding cuts would be fully phased in, enrollment in Medicare Advantage plans would decrease by about 64 percent…”
