Health Care Law Implementation Continues

Following passage of the health care overhaul law, the Big “I” continues to advocate on agents’ behalf as many problematic provisions from the 2,000-plus page bill are implemented. A few controversial issues that are going to have an immediate impact on insurance agents include the law’s Web portal mandate, the Medical Loss Ratio (MLR) definitions and a new Form 1099 requirement (see sidebar).
In compliance with the new law, this summer the U.S. Department of Health and Human Services (HHS) launched the first phase of a consumer Web portal, www.healthcare.gov. A second phase is slated for Oct. 1, 2010.

The first phase includes information on each state’s private plans, as well as Medicare, Medicaid, Children’s Health Insurance Program (CHIP) and the new high-risk pools. HHS compiled information from the states including every state-authorized health plan, a list of the plans’ network of providers, the ser­vices they offer, eligible requirements and how to sign up. The second phase is to include more detailed pricing and benefit information.

The Big “I” continues to be engaged on this issue and recently worked with industry partners to encourage members of the U.S. House of Representatives to sign a letter to HHS Secretary Kathleen Sebelius that includes recommendations on the structure of the website and the importance of profes­sional assistance provided by insurance agents. Twenty-five members of the House signed the letter, which says, “We strongly encourage you to include the ability for consumers to contact certified, state-licensed independent health insurance agents and brokers for assistance when comparing coverage options.”

A recent effort by the Obama Administration to accelerate an early deadline for a piece of the new law was slowed down when the National Association of Insurance Commissioners (NAIC) sent a letter to Sebelius informing her that it would not complete its work on the new MLR definitions early. The accelerated deadline was intended to give the insurance industry time to adjust to the new rules that are scheduled to go into effect on Jan. 1, 2011. In requesting more time, the NAIC emphasized the impor­tance of getting the definitions right, as an incorrect balance in the ratios has the potential to destabilize the insurance industry.

The MLR provision in the new law says that 80% (small group or individual) or 85% (large group) of premiums must be spent on medical costs, with the remainder allowed to go toward administrative expenses such as marketing and overhead. If insurance companies do not meet the ratios, then they must provide rebates to consumers.

During congressional consideration of the bill, the Big “I” raised concerns with the adoption of the MLR provisions, as they have the potential to diminish the quality of health care and unfairly impact agents and brokers. The Big “I” was able to successfully help shape the debate and obtained a reduction of the MLR ratios from the original 95%–90% to the final 85%–80% levels.

The association has advocated agent and broker issue positions with HHS and the NAIC throughout the rule-writing process in an attempt to ensure a fair and equitable final product. The Big “I” Capitol Hill team recently met with senior HHS officials to discuss MLR ratios as well as the new consumer Web portal.
The association finds it encouraging that the NAIC is taking such care in writing these critical defini­tions as it is vital that they are correct. At the same time, the sooner they are public, the sooner those affected can begin planning.

Margarita Tapia (margarita.tapia@iiaba.net) is the Big “I” director of public affairs.

Repeal Sought for 1099 Filing Provision

Unless Congress takes action, starting in 2012 all businesses will have to file an IRS Form 1099 for any business­to-business transaction for goods or services greater than $600 (cumulative throughout the tax year). Businesses will be forced to track and record the name, address and taxpayer identification number of each vendor to file a Form 1099 with the IRS at the end of the tax year and send a copy to each vendor.

The provision is expected to dra­matically increase the cost of doing business for entities of all sizes and hits small businesses hardest. Additionally, the increased costs at the IRS associated with enforcing this mandate with make any net revenue collected by the federal government negligible.
This provision is unrelated to health care and was only added in an attempt to partially offset the cost of the bill. The new reporting requirements attempt to close the “tax gap,” or the amount of money owed to the federal govern­ment but never collected. The Congres­sional Budget Office (CBO) scored this provision as raising $17 billion but many question this prediction since tax evad­ers will likely continue to be successful.

There has been growing momentum for repeal, with Senators Mike Johanns (R-Neb.) and Blanche Lincoln (D-Ark.) offering an amendment to a small business bill that would repeal the mandate. The Big “I” recently sent a letter to key Congressional leaders urging them to repeal the 1099 require­ment and is also working with the U.S. Chamber of Commerce, the National Federation of Independent Businesses (NFIB) and the American Society for Association Executives (ASAE) to fight this burdensome requirement.
—M.T.