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Health Care Reform Could Still Be Alive While DOL Rule Could Be Dead

Figuring out what’s next on health care reform will be among the issues Congress is expected to address when it returns from its summer recess.

After the Senate failed multiple times to pass a repeal of the Affordable Care Act (ACA), Washington’s attention is turning toward stabilizing the marketplace until lawmakers can figure out which direction they want to go on health care reform.

That attempt at market stabilization is becoming a bipartisan effort — something Washington has not seen on health care reform in recent years.

Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Lamar Alexander, R-Tenn., and ranking Democrat Patty Murray of Washington are the latest to take up the cause of market stabilization. The goal is to come up with a stabilization plan in time to help health insurers make their final decisions on what they will charge in premiums for 2018.

Senate Republican leaders — including Majority Leader Mitch McConnell, R-Ky., — have made it clear that they are ready to move on from health care reform after a series of failed votes over the summer. But they are leaving the door open to any ACA bill that has enough votes to pass.

Republicans want more flexible 1332 waivers. The waivers were part of the ACA, and they allow states to make changes in the law’s requirements, including the individual mandate, the employer mandate, the premium tax credit, cost-sharing subsidies and essential health benefits.

Democrats want to continue the government’s cost-sharing reduction payments to health insurers. These payments are made to compensate insurers for the cost of offering silver-level plans to low-income enrollees. The Congressional Budget Office estimates the cost of these payments at $7 billion in fiscal year 2017, rising to $10 billion in 2018 and $16 billion by 2027. President Donald Trump has suggested he might stop the payments as a way to pressure Congress to take another stab at ACA repeal and replace.  

The Senate HELP Committee will hold hearings this month on how to stabilize the law. The hearings will include testimony from Democratic and Republican senators, as well as insurance commissioners, patients, governors, insurance companies and health care experts, according to Alexander.

House Announces Proposal

The bipartisan efforts also are underway in the House of Representatives, where congressmen from both sides of the aisle announced their five-point proposal to shore up the health insurance marketplace.

Those five points include the following:

  • Ensure funding for cost-sharing reduction payments to insurers.
  • Repeal the medical device tax.
  • Change the employer mandate to require companies with at least 500 employees — instead of 50 employees — to offer insurance coverage.
  • Create a stability fund for states to hold down premiums or limit insurer losses.
  • Give states more flexibility, including the ability to form agreements to sell insurance across state lines.

The proposal is not in bill form at this point. 

Meanwhile, the nation’s governors are jumping into the controversy over the cost-sharing payments, urging Trump to continue making the payments before more insurers abandon the marketplace. And the attorneys general of 17 Democratic states joined in a federal lawsuit to keep Trump from blocking the payments.

CMS Has Concerns, Too

Congress is not the only government body looking at stabilizing the health insurance market. Stabilizing the individual health insurance marketplace and making it easier for consumers to enroll in coverage are priorities for the Centers for Medicare & Medicaid Services (CMS), its director told an agents’ group recently. 

Dean Mohs directs the CMS’ agent/broker strategy for the federally facilitated marketplace. He spoke at the 2017 Agent Summit sponsored by Health Agents for America (HAFA).

CMS has taken some steps to provide some flexibility in the enrollment process and attempt to attract more young and healthy enrollees, Mohs said. 

However, one step that agents say will make their work more challenging is that open enrollment for 2018 has been shortened to 45 days — from Nov. 1 to Dec.15. 

Mohs told HAFA members that the Trump administration is willing to work with the private sector on health care reform.

“Agents and brokers,” he said, “are important stakeholders in the success of health care enrollment.”

Fiduciary Rule Update

After a year of disappointments, the financial services industry began receiving good news this summer in its epic battle against the Department of Labor (DOL) fiduciary rule.

Just when the fight seemed all but lost, the Trump administration came through with a plan to study the economic and legal impacts of the rule. With Labor Secretary Alexander Acosta finally in charge of the department, the DOL began talking about a delay in the impending Jan. 1, 2018, effective date for phase two of the rule.

Portions of the fiduciary rule went into effect June 9, requiring agents and advisors to act as fiduciaries, make no misleading statements, and accept only “reasonable” compensation. It’s the remaining aspects of the rule covered by the new RFI — the exemptions.

In a Feb. 3 memorandum, Trump ordered the DOL to study the rule, an order that took weeks to execute given the difficulty getting a labor secretary in place.

One delay scenario has the DOL pushing the phase two effective date back one year, and giving financial services a year beyond that to comply.

That would change the effective date from Jan. 1, 2018, to Jan. 1, 2020. Bradford P. Campbell, counsel at Drinker Biddle & Reath, agreed the timeline seems plausible.

“I think that is a reasonable time to gather the data and do the review work that the president has ordered,” Campbell said during a recent webcast. “A year is sort of the minimum that you would need to be able to do all that work.”

As for potential changes during the delay, Campbell said the Best Interest Contract Exemption (BICE) is likely to be weakened. It requires significant disclosures, and a signed contract with the client. That contract forms the basis of litigation liability.

Removing the class-action lawsuit from the BICE is a good possibility, Campbell said, basing his opinion on statements the DOL has made so far. If the class-action right isn’t scratched, it will cause problems in the courts, he predicted.

Appeals Court Hope

From day one, litigation formed a prominent plank in the industry strategy to fight the DOL rule. It has also been perhaps the least successful — until now.

After a string of losses at the federal court level, plaintiffs were pleased by a July 31 hearing before the 5th U.S. Circuit Court of Appeals.

The hearing — featuring several plaintiffs from lawsuits consolidated out of the Northern District Court — included skepticism from the bench over the DOL’s authority to regulate individual retirement accounts.

The appeals court, which has a reputation for narrowly defining federal powers, can throw out the rule if it chooses. The so-called Harkin amendment in the Dodd-Frank Act of 2010 gives it reason to do so, said Eugene Scalia, plaintiffs’ attorney. Initiated by former Sen. Tom Harkin, D-Iowa, the amendment bars the SEC from regulating fixed indexed annuities as securities, as it tried to do with Rule 151A.

The court can also send the rule back to a lower court, or affirm the previous ruling.

A ruling could come by late September or early October, said Erin M. Sweeney, a lawyer with Miller & Chevalier in Washington, D.C., who attended the hearing.

“It was a very unusual hearing,” she said. “Every single thing was openly hostile to the Department of Labor’s view.” 

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Follow her on Twitter @INNsusan. Contact her at [email protected].

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. Follow him on Twitter @INNJohnH. John may be reached at [email protected]

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