The Role of Health Insurance Plans in Health Reform
What Plans Have Agreed To:
- A massive overhaul of market rules: Health plans have proposed major insurance market reforms – including guaranteed coverage, and eliminating preexisting condition exclusions and rescissions – that would provide peace of mind to all Americans, regardless of their health status or medical history. The experience of the states demonstrates that these reforms should be combined with premium assistance to achieve universal coverage.
- A massive overhaul of administrative procedures: Health plans have committed to a comprehensive overhaul of administrative processes to standardize and automate five key functions: claims submissions, eligibility, claims status, payment, and remittance. This is a critically important component of our nation’s overall strategy for containing costs and freeing up hundreds of billions of dollars in provider savings.
- Funding for a stabilization program: Health plans have committed to supporting a
$25 billion reinsurance program to ensure that premiums remain stable during the transition to the newly reformed market. This mechanism is critical to ensure stability for those currently with health coverage, and to promote affordability for those coming into the market during the critical first few years of reform.
Additional Costs the Chairman’s Mark Would Impose on Health Plans and Their Enrollees:
- A dangerous level of Medicare Advantage funding cuts: The pending bill would reduce funding for the benefits of Medicare Advantage enrollees by approximately $117 billion over ten years. Enactment of these cuts could cause serious disruptions for millions of Medicare beneficiaries, eliminate health plan choices for many, lead to reduced benefits and higher out-of-pocket costs for others, and cause many seniors to lose the care coordination and other innovative strategies that Medicare Advantage plans have implemented.
- Assessments to fund the exchanges: The pending bill would impose assessments on health insurance plans to help support the operations of the new health insurance exchanges, estimated by CBO to amount to 3 percent of premiums.
- Additional surcharge taxes: The pending bill would impose two new taxes on health plans – one that applies to high cost plans, and another that applies broadly to all plans – that would generate an estimated $268 billion in revenue over ten years. In the absence of system-wide cost containment, these taxes would significantly increase the cost of coverage for American families. These new taxes would be layered on top of existing taxes that are paid by health insurance plans: premium taxes, assessments to support high risk pools, state and federal income taxes, employment taxes, sales and use taxes, and property taxes.
