Ohio Association of Health Underwriters 2010 Legislative Update

Ohio Association of Health Underwriters

2010 Legislative Update

OAHU POLICY STATEMENT CONCERNING THE VALUE OF AGENTS IN THE DISTRIBUTION OF

HEALTH INSURANCE PRODUCTS

1. Efforts to reduce the number of uninsured Ohioans, contain health care costs and improve the quality of care should build upon the strengths of Ohio’s current health insurance system. National data shows that Ohio has the 8th lowest uninsured rate in the U.S., the 10th highest percentage of employers offering health insurance and the 16th highest percentage of persons with private health insurance.

OAHU Policy Statement (cont.)

2. Expanding and improving Ohio’s vibrant private health insurance market is good for Ohio’s economy and will help preserve the over 50,000 Ohio health insurance related jobs with an annual payroll of over $2.2 billion.

3. To the extent that federal and/or state health insurance reforms are enacted, implementation should be at the state level. Each state has unique circumstances relating to all elements of health care delivery and financing.


4. As we reform our health insurance system, let’s fix only what is broken, and build on the strengths of our current free market system.

5. Any expansion of government subsidies to assist lower income Ohioans, who do not qualify for Medicaid, should be available to purchase health insurance in the private market. This will give consumers additional health insurance coverage options and help strengthen Ohio’s health insurance system.


6. One element of the current system that works is the established health insurance distribution system of licensed professional agents and brokers.

► These professionals take the market to consumers by providing efficient, knowledgeable information so that an informed choice relating to health insurance coverage can be made.

► Agents and brokers are also active and effective consumer advocates who help to ensure that consumers receive all the health insurance benefits they are entitled to under their health insurance policy.


7. Make efforts to enhance the role of the agent to assure that they are knowledgeable in the areas of public and private plans available to employees and employers in the group market as well as to individuals seeking coverage in the individual market.

Agents should be the consumer’s primary resource for all health insurance plans and programs available for purchase - both private and public.


8. Licensed agents and brokers should continue to be compensated by insurers, third party administrators or other private payers for the various services (sales, administrative, consulting and brokerage) they perform.

These talking points can assist you as you talk with legislators, regulators and other health insurance stakeholders to explain the role agents can play to preserve and enhance Ohio’s current private health insurance system to provide access to quality, affordable health insurance.

2010 Statewide and Legislative Elections

2010 is a key election year with major statewide offices including the Governor up for election. Also, all 99 Ohio House seats and 17 of the 33 Ohio Senate seats are up for election. Which party controls the Ohio House of Representatives is at stake. A change of 4 seats from the democrats to the republicans would give republicans control of the House.

2010 Statewide and Legislative Elections

The 2010 elections determine which party controls the State Apportionment Board, the entity that draws the Ohio Legislative district lines. Whichever party wins at least 2 of the 3 races for Governor, Secretary of State and Auditor will have a majority of the Apportionment Board members. History has shown that whichever party draws the district lines greatly increases their chances of winning a majority of seats in the Ohio Legislature.

A well-known Columbus personal injury attorney has used this slogan successfully for many years “I don’t get paid unless you get paid”

Health insurance agents bring bottom-line value to consumers: they don’t get paid unless the consumer gets health insurance

I don’t get paid until you get health insurance

Federal Health Care Reform Near-term Implementation Issues

Implement immediately Small employer tax credits for employers with no

more than 25 equivalent full-time employees (Phase I 2010-2013).

Elimination of Employer deductible subsidy under Medicare Part D.

$30 million in grants during FY 2010 to fund state insurance consumer assistance or ombudsman program to advocate for people with private coverage in the individual and small group markets.

Near-term Implementation Issues(cont.)

Within 90 Days $5 billion for states to fund high-risk pools. Ohio will

likely use current open enrollment program and seek high-risk pool funding to purchase reinsurance to reduce open enrollment premiums.

Creates temporary reinsurance program for employers providing health insurance to retirees over age 55 who are not eligible for Medicare.


By July 1, 2010 Requires the states and Secretary of DHHS

to develop information portal options for state residents to obtain uniform information on sources of affordable coverage, including an internet site. Must include information of private coverage options, Medicaid, CHIP, the new high risk pool coverage and existing high risk pool options.


Plan years beginning on or after Six Months after Enactment

Increase dependent age to 26 for those who do not have another source of employer-sponsored health insurance. Note: Issues with respect to differences between new Ohio dependent age law (up to age 28) and the federal requirement.

Lifetime limits for all fully-insured and self-insured groups and individual plans prohibited. Annual limits prohibited on plan years beginning on or after January 1, 2014.


Mandates coverage of specific preventive services with no cost sharing.

Mandates coverage of emergency services at in-network level regardless of provider.

Mandates coverage for preexisting conditions for children 19 and under.


Regulatory process with HHS and

NAIC starts in 2010 – Implement 2011

Minimum loss ratios of 85% for large groups and 80% for small group and individual plans.

EXCHANGE BASICS

State Exchanges must be operational by January 1, 2014 If a state does not create qualified Exchanges, then the

Secretary of HHS must create one Secretary must determine by January 1, 2013 whether the

state intends to operate qualified Exchanges Secretary will provide start-up grants to states 1 year after

enactment – amount to be determined There are two Exchanges – a non-group market Exchange and

a Small Business Health Options Exchange Program (SHOP Exchange) for small businesses

– States may choose to operate only one Exchange serving both groups

EXCHANGE BASICS (cont.)

Functions to be performed by a Qualified Exchange– Certify Qualified Plans to be sold in the

Exchange “Qualified Plans” defined by the Secretary and must:

– Include Essential Benefits– Include quality provisions outlined in the legislation– Comply with marketing regulations– Provide choice of providers– Provide an adequate network of providers– Utilize uniform enrollment form– Utilize standard format for presenting plan options


– Use a uniform enrollment form – Provide standardized comparative information – Maintain a website – Provide for Initial, Annual and Special open enrollment

periods– Maintain a toll-free number– Create a rating system for plans and perform satisfaction

survey– Determine eligibility for other state/federal health insurance

programs


– Provide a calculator to determine enrollee premiums and subsidies

– Identify those individuals exempt from the individual mandate and notify Treasury

– Work with navigators – Require participating plans to provide justification for rate

increases– Report to the Secretary and GAO on use of funds– Provide employee choice of plan in the small group

Exchange


States must also:– Operate reinsurance and risk corridor programs in

years 2014-2016– Operate a risk adjustment program– Determine the role of agents– Enact other non-group and group market reforms

in the legislation

Health Insurance Agents Prepared to Help Consumers in both Private and Public

Health Insurance Markets

Current Ohio law and the recently passed federal health care reform provide several different opportunities for Ohioans to purchase health insurance. In the current state operating budget Ohio’s open enrollment program was expanded to allow individuals who are denied coverage to seek care through a revamped open enrollment program.

The open enrollment program is off to a slow start because of higher than expected premium rates, however, the Ohio Department of Insurance is seeking federal high risk pool dollars (included in the federal health care reform legislation) to hopefully help make the rates more affordable. OAHU supports a more formal outreach program utilizing licensed health insurance agents to help this program succeed

Health Insurance Agents Prepared to Help Consumers in both Private and Public Health Insurance Markets (cont.)

Childrens Health Insurance Program In Ohio’s budget bill that went into effect on July of 2009 the

Legislature approved an expansion of the Childrens Health Insurance Program (CHIP) to include children in families with incomes up to 300% of the Federal Poverty Level, however, due to a lawsuit affecting tobacco monies that were earmarked to be used for funding of CHIP, the expansion to 300% has not occurred.

OAHU member agents are ready to assist the state to help identify children that qualify for the program and who do not have access to private health insurance.


Also, the 2009 federal re-authorization of CHIP includes provisions that will make it easier for CHIP funds to be used in the private employer market. Many parents who already have private insurance through their employer may prefer to add their CHIP-eligible child to their health insurance.

The state should look into the possible use of CHIP funds in the private market as Ohio is one of a small number of states that does not authorize this use of CHIP funds.


Federal Health Care Reform The federal health care reform legislation includes several new

options for coverage. Such new coverage opportunities will occur in the Exchanges which will provide coverage options to small employers and individuals. Individuals in families with incomes up to 400% of the Federal poverty level will receive premium subsidies in the Exchanges and some small employers will be eligible for tax credits.

Another area of new coverage is for those adults between 90% and 133% of the federal poverty level becoming eligible for Medicaid. Ohio’s health insurance agent community should be at the forefront of advising consumers concerning their coverage options and can help to ensure that consumers purchase health insurance that meets their needs.

HEALTH CARE REFORM – AN OPPORTUNITY TO STRENGTHEN OHIO’S HEALTH INSURANCE INDUSTRY

On December 15, 2009, Governor Strickland kicked-off the unveiling of a Strategic Growth Plan for Ohio’s Insurance Industry. The plan was developed under the direction of the Ohio Department of Development’s Office of Insurance and Financial Development whose director is former state representative Jim Raussen. The stated mission of the strategic plan is to “enhance the business climate for Ohio’s insurance industry and develop innovative ways to retain and create insurance industry jobs for Ohioans”.

Ohio insurance companies employ over 100,000 Ohioans with nearly 1,700 insurance companies operating here and over 81,000 agents call Ohio home. Ohio ranks seventh in the nation in insurance industry employment.

HEALTH CARE REFORM – ANOPPORTUNITY TO STRENGTHEN OHIO’S HEALTH INSURANCE INDUSTRY (cont.)

The Strategic Plan focuses on 5 goals: Share the Ohio Story – Market Ohio’s strengths to domestic

and foreign insurance companies. Strengthen our Strengths – Enhance the attractiveness of

Ohio’s insurance business climate. Cultivate Top Talent – Attract and retain insurance industry

talent while promoting employment opportunities in the industry.

Invest in our Regional Assets – Invigorate our regions as centers for insurance company expansion.

Focus on our Customers – Operate government at the speed of business.

HEALTH CARE REFORM – AN OPPORTUNITY TO STRENGTHEN OHIO’S HEALTH INSURANCE INDUSTRY (cont.)

The Ohio Association of Health Underwriters strongly supports the Governor’s efforts to recognize the importance of Ohio’s insurance industry as a major sector of Ohio’s economy and to look at ways to expand this sector throughout Ohio.

In a November 2007 state-by-state report, it was determined that there were 15,173 Ohio health insurance industry jobs with an average wage of $52,604 and 35,888 other Ohio health insurance related jobs (which include health insurance agents and brokers) with an average wage of $42,312. Total annual wages paid were over $2.2 billion.

HEALTH CARE REFORM – AN OPPORTUNITY TO STRENGTHEN OHIO’S HEALTH INSURANCE INDUSTRY (cont.)

Implementation of federal health care reform will likely provide another opportunity to strengthen Ohio’s already strong health insurance industry.

Ensuring that professional health insurance agents are at the forefront of advising Ohioans who lack health insurance is a win-win for consumers and agents who have been trained to be advisors and advocates for Ohio’s health insurance consumers.

FEDERAL HEALTH CARE REFORMCoverage Mandate Moratorium?

One of the hotly debated issues at the state level has been whether or not Ohio should pass additional health insurance coverage mandates for certain conditions. Arguments on both sides of the issue are compelling.

Proponents of coverage mandates argue that if you have health insurance but the insurance does not cover your specific condition (or the latest technology) what good is it? Just as passionately opponents of mandates argue that individuals and small employers are disproportionately hurt because most large employers are self-funded and, therefore, not subject to state mandates. This leaves those that can least afford the additional costs of the mandates to pay for them.


(cont.)

Regardless of your perspective on coverage mandates, the recently enacted federal health care reform law may be a reason to impose a moratorium on additional mandates until the Exchanges are up and operating by January 1, 2014.

The Exchanges, which are one of the key components of the federal legislation, are required to include an “essential health benefits package” as defined by the Secretary of Health & Human Services (HHS).


(cont.)

This package must include at least the following: Ambulatory patient services; Emergency services; Hospitalization; Maternity and newborn care; Mental health and substance abuse disorder services, including behavioral

health treatment; Prescription drugs; Rehabilitative and habilitative services and devices; Laboratory services; Preventative and wellness services and chronic disease management; Pediatric services, including oral and vision care; Limits cost-sharing for such coverage; and Provides either the bronze, silver, gold or platinum level of coverage.


(cont.)

The Secretary of HHS is required to ensure that the scope of the benefits coverage is equal to typical coverage provided by an employer after conducting a survey of employer-sponsored coverage to determine typical benefits.

In light of this information, it may be best for the Ohio Legislature to wait and see what an “essential health benefits package” looks like before enacting new health insurance coverage mandates.

Documents

Ohio Association of Health Underwriters 2010 Legislative Update