EServing UCLID MANAGERS the independent agent since 1976 ® A Legislative Review Service by Euclid Managers February 2011 EUCLID MANAGERS® has served the independent agent since 1976, offering a portfolio of group health, professional liability, individual life, health, annuity and long-term care products. We proudly represent many fine carriers including Group Products: UnitedHealthcare of Illinois Delta Dental of Illinois MetLife Individual Products: American General Life Companies AXA/Equitable Banner Life Genworth Financial Insurance Co. Guarantee Trust Life HumanaOne John Hancock Life Lincoln National Life MetLife Prudential Financial Transamerica West Coast Life …and many more! Contact Information Reflections Health Reform - Repeal Efforts and Other Developments Now that the new Congress has been seated, calls for a repeal of the Affordable Care Act (ACA) made during the campaign season will face the ultimate test. This issue of Reflections reviews these efforts. Meanwhile, the states have been moving ahead implementing ACA. Illinois has received a $1 million planning grant for an Exchange. This issue also reviews the recent webinar by Illinois’ Department of Insurance that provided an insight into Illinois’ plans regarding Exchanges. continued on page 2 A letter from Karen Knippen Even though there is talk of repeal, now is not the time to relax. Your clients will likely be more confused than ever. Just when they were beginning to understand health reform, everything is in play once again. So, it is more important than ever to remain informed, communicate with your clients and plan for the future as we understand it today. In the meantime, Euclid Managers is here with our unchanging commitment to superior service along with quality carriers. Sincerely yours, 234 Spring Lake Drive Itasca, Illinois 60143 Phone: (630) 238-1900 Outside Chicagoland: (800) 345-7868 Fax: (630) 773-8790 Visit us at: www.euclidmanagers.com Karen Knippen, RHU, REBC, CLTC EUCLID MANAGERS® has been serving the independent agent since 1976 with a portfolio of group health, professional liability and individual life and health, annuity and long-term care products. We proudly represent UnitedHealthcare, Delta Dental of Illinois, MetLife and HumanaOne. We encourage your feedback and suggestions. Please call your EUCLID MANAGERS® Marketing Representative or Marcy Graefen at (630) 238-2915 for more information. Outside Chicagoland, call (800) 345-7868. Website: www.euclidmanagers.com Repeal and Replace While some politicians called for repeal of health reform, a number extolled a plan to “repeal and replace" “Obamacare." With the new Congress seated on January 5, 2011, eleven bills were introduced to repeal or defund some or all of the Affordable Care Act. As this issue is going to press, the House of Representatives has passed H.R. 2, the repeal bill. The Senate outcome of H.R. 2, titled “Repealing the Job-Killing Health Care Law Act," is far from certain. And, there is wide agreement that should the bill make it through Congress it will be vetoed by President Obama. Repeal or Defund Initiatives Introduced in Congress The bills introduced on January 5 include: H.R.2: Repealing the Job-Killing Health Care Law Act. Sponsor: Eric Cantor (Va.). H.R.21: Amends the Internal Revenue Code to repeal the mandate that individuals purchase health insurance. Sponsor: Scott Garrett (N.J.). H.R.38: Rescinds funds appropriated to the Health Insurance Reform Implementation Fund under the Health Care and Education Reconciliation Act of 2010. Sponsor: John Fleming (La.). H.R.105: Repeals the ACA and related health-care provisions and to enact in its place incentives to encourage health insurance coverage, and for other purposes. Sponsor: Dan Burton (Ind.). H.R.118: Amends the ACA to permit a state to elect not to establish an American Health Benefit Exchange. Sponsor: John Fleming (La.). H.R.119: Prohibits the hiring of additional employees by the Internal Revenue Service to implement, administer, or enforce health insurance reform. Sponsor: John Fleming (La.). H.R.127: To deauthorize appropriation of funds to carry out the ACA and the Health Care and Education Reconciliation Act of 2010. Sponsor: Tom Graves (Ga.). H.R.141: To repeal the ACA and the Health Care and Education Reconciliation Act of 2010. Sponsor: Steve King (Iowa). -2- Reflections H.R.145: To repeal the ACA (P.L. 111-148) and related health-care provisions. Sponsor: Connie Mack (Fla.). H.R.154: Prohibits the use of funds for implementation or enforcement of any federal mandate to purchase health insurance. Sponsor: Ted Poe (Texas). H.R.191: Amends the ACA to establish a public health insurance option. Sponsor: Lynn C. Woolsey (Cal.). CBO Projects Higher Deficit with Repeal of ACA The Congressional Budget Office (CBO) provided an initial analysis of H.R. 2’s effect on the federal budget. While acknowledging that a detailed estimate of the impact on the budget was not complete, the CBO affirmed that repeal would increase budget deficits. The increase in deficits from 2012 to 2019 is projected at $145 billion. The deficit increases to $230 billion if another two years are added, bringing the period measured to 2021. But, it’s important to note that this preliminary analysis is sketchy in detail and loaded with equivocations. The CBO deficit increase estimate does not match up against original estimates of projected reductions in the deficit. The CBO cites a number of highly technical reasons to support their estimates. Chief among these is that the time periods discussed are not the same and that ensuing legislation or other regulatory actions have resulted in interim changes. It appears that the deficit would increase largely as a result of repealing increases in Medicare-related payroll taxes and fees on manufacturers and insurers. The CBO acknowledges that there would be savings resulting from reduced appropriations for both the Internal Revenue Service and the Department of Health and Human Services. Repeal’s Effect on Insurance Premiums and Lives Covered The numbers of uninsured would increase over the projected numbers under ACA. The CBO estimates that 32 million fewer nonelderly would have health insurance in 2019. Many of these people would have purchased coverage through the Exchanges (24 million) or they would have received Medicaid or Children’s Health Insurance Program coverage (16 million). Insurance premiums in the individual market would be lower after repeal. But, the CBO notes that eliminating the subsidies provided by health reform would result in individuals paying more for insurance even though overall premiums may be lower. They also suggest that uncertainty in the small group market might result in slightly higher premiums or slightly lower premiums. Larger employers would see slightly higher premiums. These higher premiums would result from a number of small changes not specified in the analysis. Illinois DOI on Exchanges The Illinois Department of Insurance (DOI) conducted a “first of its kind" webinar in December titled “America’s Health Benefits Exchange: The Basics." The webinar was led by Department Director Michael McRaith. It is archived on the DOI website. The webinar provided a basic overview of Exchanges as provided in the ACA. The definition of an Exchange was offered as a focal point for discussion. Other duties involve determining eligibility for tax credits, reviewing premium growth inside and outside of the Exchange and consulting with stakeholders to carry out the activities of the Exchange. Challenges for Exchanges Among the challenges for Exchanges to be successful is the need to manage adverse selection through attracting a large and diverse pool of insureds. Insurers will be able to offer plans in the Exchanges and outside of the Exchanges. Premiums for the same coverage must be the same both inside and outside the Exchange. Exchanges must be financially self-sustaining and operate efficiently. The Director noted that how an Exchange will be financially self-sufficient remains to be determined. This could include fees on insurers participating in the Exchange, user fees to health carriers or other avenues. Key Decisions for Illinois “Exchanges are a transparent, centralized marketplace that provide access to more affordable, comprehensive health insurance coverage options to individuals and small businesses." Illinois has a number of decisions to make in implementing an Exchange. One concern is whether an existing state agency will serve as the Exchange or whether a quasi-government entity or non-profit will form the Exchange. The statutory goals of an Exchange are to facilitate the purchase and sale of qualified health plans in both the individual and small group markets. As discussed during the webinar, small groups are initially defined to include employers with up to 50 employees. This limit can be expanded to 100 (beginning January 1, 2016) and, in 2017 Exchanges can even be available to all employers regardless of size. The implementation of a successful Exchange depends, in no small part, on the insurance market outside of the Exchange. There is a concern that the Exchange cannot become a dumping ground for poorer risks. As such, rules for the external health insurance market will also be considered as “key decisions" in Exchange implementation. Illinois was awarded $1 million to begin evaluating Exchange options. The state must show progress in implementing an Exchange by January 1, 2013. Open enrollment for the Exchange must begin during the fall of 2013 with the Exchange fully operational by January 1, 2014. Exchange Operations States have considerable latitude in establishing the parameters for Exchanges. As such, the Director noted that every state may take a different approach to them. He noted current examples of the Exchange in Massachusetts as very different from the Exchange in the state of Utah. The Director also spoke of regional or interstate Exchanges. These could have value in areas where people live in Illinois and work in another state or vice versa. Discussions with neighboring states may occur to discuss this situation. Brokers and Exchanges Questions at the end of the webinar included whether brokers could be compensated for business placed through an Exchange. The Director noted that commissions were possible but it was uncertain at this time. He made a further statement that “historic compensation practices were evolving and will continue to change." Mandatory Duties of the Exchange The ACA prescribes, in some detail, which activities an Exchange must perform. These include: certification of “qualified health plans," enrollment periods, website based information; eligibility and enrollment in public programs and the like. Reflections -3- EServing UCLID MANAGERS the independent agent since 1976 ® A Legislative Review Service by Euclid Managers February 2011 Reflections A service publication for brokers from Euclid Managers®, proudly representing UnitedHealthcare of Illinois, Delta Dental of Illinois, MetLife and HumanaOne. EServing UCLID MANAGERS the independent agent since 1976 ® Visit us online www.euclidmanagers.com. Editor: Pamela D. Mitroff Legislative Review is published by Euclid Managers®, 234 Spring Lake Drive., Itasca, IL 60143. For more information, contact your Marketing Representative or Marcy Graefen at (630) 238-2915 or fax your request to (630) 773-8790. Outside Chicagoland: (800) 345-7868, Fax (877) 444-2250. © Permission to quote with credit to source. Health Reform - Repeal Efforts and Other Developments Inside: 234 Spring Lake Drive, Itasca, Illinois 60143 Presorted First-Class Mail U.S. Postage PAID Addison, IL 60101 Permit No. 210 EServing UCLID MANAGERS the independent agent since 1976 ®