AHIP Testimony on Implementation of Exchanges

The House Ways and Means Subcommittee on Health hosted a hearing focused on the implementation status of health insurance exchanges and related regulations. Dan Durham, Executive Vice President for Policy and Regulatory Affairs at AHIP, testified at the hearing.


  • Our members are strongly committed to competing in the new marketplace and offering high quality, affordable coverage options to consumers who shop in the exchanges.
  • Following the enactment of the ACA, health plans have been working diligently to comply with the thousands of pages of regulations, directives, information requests, guidance, and other regulatory documents that HHS and other federal agencies have issued to implement various statutory provisions, including rate review, rate disclosure, medical loss ratios (MLR), federal external review, internal claims and appeals, grandfathered health plans, lifetime and annual benefit limits, coverage of preventive services, coverage of adult children to age 26, the consumer web portal, pre-existing condition exclusions for children, and access to emergency services.
  • As our members prepare for implementation of the exchanges in January 2014 and the initial statutory open enrollment period in October of next year, there is a tremendous amount of work that needs to be done in the intervening months.

Urgent Need for Regulatory Clarity on Key Issues

  • We begin by emphasizing that there is an urgent need for more regulatory clarity with respect to exchanges and insurance market reforms.
  • Unless such guidance is forthcoming, it will be difficult for health plans to complete product development, fulfill network adequacy requirements, obtain necessary state approvals and reviews, and ensure that their operations, materials, training and customer service teams are fully prepared for the initial open enrollment period that begins on October 1, 2013.

Development of Health Insurance Exchanges

  • Because exchanges are such a critical component of the health reform law, the way they are structured and how smoothly they operate – particularly during the first year – will be a major factor in determining whether the law is effective in meeting the health care needs of individuals and small businesses.
  • We support the decision by HHS to certify a health plan as a QHP that meets all certification standards within the context of the federally-facilitated exchange for 2014. We recommend that this approach be extended to future years to ensure a robust marketplace and a wide array of health plan choices for individuals, families, and small businesses.
  • The adoption of common standards across all exchanges will reduce administrative burdens and manual “workarounds,” reduce exchange implementation costs, and ensure that the enrollment process is as consumer friendly and efficient as possible – meaning that health care coverage starts on time in January 2014 and no one falls through the cracks.
  • We appreciate the agency‘s comments that its objective is to minimize duplication of efforts in the administration of an exchange. To avoid the duplication of exchange functions and keep costs affordable, we believe there is an opportunity to take advantage of existing state resources and expertise in areas such as rate review and QHP certification.
  • Another way to improve the efficiency of exchanges – and also avoid added costs and complexity – is to utilize the experience and expertise of health plans.
  • Exchanges should not be built or expected to serve as the only option for obtaining coverage in the individual and small group markets, but function as another competitive channel to encourage individuals and businesses to purchase coverage in states and across the nation.

Affordability of Coverage

  • Health plans long have supported the goal of expanding health coverage to all Americans, but this goal can be achieved only if coverage is affordable. As implementation proceeds and health plans develop coverage options for consumers, it is essential to look at provisions that were included in the ACA that will have an unintended consequence of increasing costs.
  • Beginning in 2014, the ACA will impose a new health insurance premium tax that will exceed $100 billion over the next ten years.  The tax begins at $8 billion in 2014, rises to $14.3 billion in 2018, and increases annually based on premium growth thereafter.
  • While the tax is assessed on health plans, experts agree that it will impact consumers and employers that purchase coverage directly from a health insurance plan in the individual and group markets as well as beneficiaries in public programs.
  • Beginning in 2014, the ACA will require health plans to provide coverage for an essential health benefits (EHB) package covering a broad range of mandated benefits, some of which are not typically included in individual and small group policies today. The ACA further requires that coverage sold through the exchanges must be at one of four actuarial value levels: 60% (bronze); 70% (silver); 80% (gold); and 90% (platinum). As a result of these provisions, millions of people may be forced to purchase health insurance that is more comprehensive – and more expensive – than they currently have.
  • We are deeply concerned that the ACA‘s restrictive age band will cause premiums to increase dramatically for younger people, increasing the likelihood that younger, healthier people will wait to purchase coverage until after they get sick or injured. To protect young people from dramatic cost increases, we believe the ACA‘s age rating requirement should be replaced with a 5:1 age band.
  • Health plans have a track record of partnering with hospitals and physicians to reform the payment and delivery system to advance the National Quality Strategy‘s three aims of achieving better care for individuals, better health for populations, and lower cost growth. Health plans also have pioneered innovative programs and services to coordinate care for patients with multiple chronic conditions, help patients manage chronic disease, and promote prevention and wellness.
  • Looking forward, both public programs and the private sector need to continue building upon this progress in order to create a health care system that is affordable for consumers and employers and sustainable in the long run. Meeting this challenge will require a system-wide commitment from all stakeholders to advancing delivery system reforms that improve patient care and payment reforms that reward physicians who deliver high quality and efficient care.

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