The Supreme Court Health Care Decision’s Impact on Agents

The recent decision by the U.S. Supreme Court means the sweeping health care reform measure, much of which the Big “I” opposed, remains the law of the land. Although Congress may revisit, revise or repeal the Patient Protection and Affordable Care Act at some future time, many constituencies, including agents and brokers, are either already facing the effects of the law or will soon be impacted.

Many agents and brokers are already feeling the adverse effects of PPACA’s medical loss ratio requirements. These requirements have produced cuts in agent compensation of up to 50% in some areas of the country and made it challenging for many agents to maintain the level of customer service and quality of advocacy traditionally provided at a time when such assistance is needed more than ever. Alarmingly, many of these professionals are considering leaving the health marketplace altogether. As agents are forced to make cuts, consumers, including many small businesses, will unfortunately pay the price.

Many PPACA opponents had hoped that the U.S. Supreme Court would strike down the law, or remove enough essential provisions to force Congress to make dramatic revisions. Unfortunately, this did not come to pass since the Court ultimately upheld most of the law (with the exception of the Medicaid expansion enforcement).

The most significant question the court faced was the constitutionality of PPACA’s minimum coverage provisions (also known as the individual mandate), which require nearly every American to obtain a minimum level of health insurance coverage. Beginning in 2014, those who do not obtain the specified level of coverage must pay an annual penalty to the Internal Revenue Service. This payment is described as a “penalty” within PPACA, but the court found it can be viewed as a “tax” on those without health insurance. This was the key to the court upholding the provision, and the tax was ultimately ruled to be within the power of Congress under the taxing and spending clause of the Constitution.

The bottom line of the ruling for agents and brokers is that implementation of PPACA will plow ahead as previously scheduled. However, individual states’ compliance with implementation is another matter entirely, especially when it comes to health insurance exchanges. State policymakers must quickly decide whether to create their own exchanges or allow the federal government to establish and run them. State exchanges must be fully operational by Jan. 1, 2014, and states that choose to operate their own exchanges must show that they will be operationally ready for the initial open enrollment period that will begin on Oct. 1, 2013, and first secure approval from the Department of Health and Human Services.

Last month, following the court’s June ruling, Republican leadership led an effort in the House to vote on a bill fully repealing PPACA. Although the bill passed, as did a similar effort earlier this Congress, floor consideration is unlikely in the Democrat-controlled Senate. The Senate Republicans could try to force a vote through an amendment or another parliamentary move, but the prospects for passage are bleak.

Many opponents of PPACA are optimistic that more sympathetic policymakers will win in the November elections. Until then, any effort to repeal PPACA will be almost impossible and any efforts to amend the law will face an uphill climb.

The Big “I” government affairs team continues to push an agenda of doing away with PPACA provisions that harm the association’s members and small business in general. A top priority of the association’s ongoing efforts is securing support for legislation that would exclude agent commissions from the MLR calculation.

The new law extends the NFIP for five years, until Sept. 30, 2017, and makes important reforms to modernize the program.

Changes that the association lobbied for and will soon be implemented include phasing out subsidies for many properties, raising the cap on annual premium increases from 10% to 20%, imposing minimum deductibles for flood claims, requiring the NFIP administrator to develop a plan for repaying the debt incurred from Hurricane Katrina and establishing a technical mapping advisory council to deal with map modernization. The new law also requires the Government Accountability Office to conduct a study on the prospect of adding business interruption and additional living expense coverages to the NFIP and would require the Federal Insurance Office to study and submit a report to Congress on natural disaster insurance issues and possible legislative solutions.

This legislation has been a top priority of the Big “I” for the last several years. Ultimately, a balanced, bipartisan bill that will protect both consumers and taxpayers was signed into law.

—M.T.