Reinsurance Health Reform Provision Should Be Repealed

A provision in the health care reform law that should be repealed is one that will sock employers that self-fund their health care plans with billions of dollars in assessments for which they will receive no direct benefit.Starting in 2014, that Patient Protection and Affordable Care Act provision creates what the law calls the Transitional Reinsurance Program. Self-insured employers will be assessed a per-participant fee — likely in the $60 to $90 range — to help fund the $25 billion program. For a big self-funded employer, with say 100,000 people enrolled in its health care plans, its first-year tab for the three-year program could be about $10 million.And where will all that money go? The beneficiaries will be commercial insurers who will receive the money as partial reimbursement for writing coverage for those in the personal lines market with the highest health care costs.It is hard to find the logic or fairness here. These are employers who voluntarily agree to provide coverage for their employees and dependents and they get hit with a whopping fee to offset coverage costs to individuals for whom they have no connection.If lawmakers wanted to give employers a disincentive to offer coverage, they certainly achieved that in authorizing these fees.Equity and fairness aside, there are plenty of practical problems with the program. For example, the fee assessment is based on the number of plan participants. Does that include COBRA beneficiaries or those in retiree health care plans? No one knows because the law just isn’t clear on those points as well as numerous others.A broader question is how this provision got inserted while the legislation was working its way through Congress and why there never was any discussion of it. Our best guess is that this is yet another example of how attention to detail is overlooked by lawmakers and their staffs on both sides of the aisle, with disastrous results.That, unfortunately, is history. So, for now, we strongly believe the best course of action for lawmakers is to repeal of the Transitional Reinsurance Program as soon as the next congressional session begins.

– Business Insurance 10-21-2012

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