Any Reforms Must Strengthen Both Health Care and Economy | Health Care Solutions and Benefits Management

Initial Focus Should Address Cost

by Janet Trautwein, CEO, National Association of Health Underwriters

While many in Washington, DC, and across the nation assumed that congressional Democrats and the Obama administration would have made a clear decision by now on the best way to advance health care reform, they instead have been all over the map with no agreement on strategy. President Obama recently signaled that he’s willing to consider Republicans’ ideas for reform in order to produce a health care bill that’s genuinely bipartisan, and such bipartisanship is politically necessary because the Democrats no longer have a supermajority in the Senate.

To be successful, any reformed delivery system must include health insurance agents and brokers. With the increase in affordable access to private coverage that will come with responsible health care reform, millions of new Americans will have the opportunity to enter our health care delivery system. The nation’s agents and brokers look forward to continuing our role as their advocates in the coverage process.

The National Association of Health Underwriters (NAHU) is strongly committed to playing a constructive part in comprehensive health reform. We have a unique opportunity to put in place real solutions to reduce costs, improve quality, and ensure choice and access for all Americans in a way that will strengthen our health system and our economy.

Containing Health Care Costs

Responsible health reform must begin by addressing the true underlying problem with our existing system: the cost of medical care. NAHU believes there are a number of steps policymakers could take to help reduce both government and private-sector health care costs and promote medical care cost containment among all Americans, including:

Creating wellness programs in both the Federal Employees Health Benefit Plan and in government-subsidized health coverage such as Medicaid, Medicare, CHIP, and the Veterans Health system.
Allowing for wellness factors to be used as rating characteristics when determining private group and individual market premium rates. For employer groups, this includes not only the existence of a wellness program, but also factors that help determine wellness.
Establishing a safe harbor for those employers promoting wellness and health activities among their employees from nonintentional discrimination charges.
Making common-sense medical liability reforms including a $250,000 cap on damages for pain and suffering, a $500,000 cap on punitive damages and deadline of one year for adults and three years for children to file suit after a medical injury to recognize such savings.
Making widely accessible objective information on best medical practices and protocols available through comparative effectiveness research, as long as the outcomes are used as an informational tool between doctors and patients, not coverage determinations.

Market Reforms

Surveys show that the vast majority of Americans are happy with their health insurance coverage, particularly those who receive it through their employer. But even though it works well for many people, the private health insurance market is not without its gaps. Some market reform improvements are definitely needed so that all Americans will have fair access to affordable coverage.

However when implementing market reforms on a national level, the coverage must remain affordable. No matter how “fair” a market-reform idea might seem on its surface, it’s not at all “fair” if it also prices people out of the marketplace.

NAHU supports the following reasonable market reforms that will preserve affordability, increase access and preserves the private market:

A requirement that all states have at least one private guaranteed purchasing option for all individual health insurance market consumers, accompanied by some type of financial backstop or risk adjuster to accommodate for the high health costs of Americans with catastrophic medical conditions.
Risk-adjustment mechanisms should operate under federal guidelines, but their administration and design should be state-based to allow for flexibility and for states to take advantage of existing risk-adjustment structures like the high-risk health insurance pools that are already operational in 35 states.
A requirement that all health insurance carriers give pre-existing condition credit for prior coverage in the individual market just as they do for the group market.
Pre-existing condition coverage rules that are consistent in both the individual and group insurance markets.
Greater pricing standardization for the individual and small-group health insurance markets. If a modified community rate is used to determine premiums, at a minimum variations must be allowed for applicant age at the natural age breakdown rate of at least five to one (the rate of the oldest applicant may be no more than five times the rate of the youngest applicant), the existence of a wellness program, and other wellness factors, including smoking status, family composition, and geography.
A uniform application for coverage for all individual and small-group health insurance policies.
A federal financing/reinsurance backstop for those rare individuals whose medical expenses are so great they would exceed health insurance policy lifetime caps.

Exchanges

NAHU has thoroughly evaluated the policy ideas behind exchange proposals and has concluded that our lawmakers need to carefully weigh the pros and cons and structural options of any exchange, rather than assume its automatic inclusion in comprehensive reform. Exchanges are merely a form of purchasing pool, and while purchasing pools may provide more health plan options for individuals, they do not reduce health insurance costs. While we do not believe it is necessary for an exchange to be included in any national health reform effort, if one or more is included, we recommend they be structured in the following manner so that they do not damage or eliminate the traditional private insurance marketplace:

Exchanges should be state-based and regulated. If there is a desire for national unifying standards, they can be achieved through model legislation and regulations developed by the National Association of Insurance Commissioners.
Each state should have the ability to design and maintain its own exchange and be granted the ability to seek waivers.
A federal regulator should be avoided as duplicative of the role of our nation’s governors and insurance commissioners.
To preserve consumer choice, the individual and group private insurance markets independent of the exchange should continue to be allowed.
Any health insurance exchange should include state-licensed health insurance agents and brokers as its sales and marketing force.
The “online portal” model is preferred over a bricks-and-mortar institution and regulatory body that also sells private coverage and/or offers a public program option. Also, multiple competing exchanges should be allowed within states.

Government-Run Public Plan Option

NAHU strongly supports efforts to enact real and substantive private market reform to provide all Americans with access to affordable health care and insurance, and to lower health care and insurance costs. However, the inclusion of a government-run public plan option in any health reform package would fail to help us meet these goals, and NAHU stands in complete opposition.

Financing Issues in Health Reform

NAHU believes that policymakers should not attempt to finance health care reform on the backs of Americans who already are doing the responsible thing and purchasing private health insurance coverage and creating American jobs as small-business owners. This would include financing reform through an excise tax on private coverage, cuts to the private Medicare Advantage program, changes to the existing federal tax exclusion for employer-provided health insurance, and changes to the tax status of account-based health coverage options. Instead, it is wholly appropriate for Congress to consider health-related excise taxes in financing health reform that can help deliver revenue and simultaneously discourage unhealthy lifestyles that are a major component in fueling growing health care costs.

We all have a stake in getting health reform right. We sincerely hope that Congress and the Obama administration work in a bipartisan manner to build on what has worked and fix the parts that are broken. We need to preserve Americans’ choices in doctors, health plans, and benefit specialists, and deliver health reform that guarantees access and choice, lowers costs, improves health care quality, and puts the needs of the American people first.

Janet Trautwein is the CEO of the National Association of Health Underwriters (NAHU), which represents more than 100,000 employee benefits professionals involved in the design, sale, implementation and management of health plans all over the United States. A frequent speaker, Janet is considered an expert in health insurance markets and health plans of all sizes. She can be reached at jtrautwein[at]nahu.org.