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).
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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
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UCLID MANAGERS
the independent agent since 1976
®