The GOP is gaining traction with its efforts to repeal some of the key provisions of the Patient Protection and Affordable Care Act (PPACA). Last night, the House Democratic leadership had to pull a vote on small business jobs legislation because there was real concern that an amendment to repeal the expanded 1099 reporting requirements in PPACA, filed by Representative Dave Camp (R-MI), would pass. Apparently, there were enough moderate and rank-and-file Democrats who would have supported the motion to recommit to outright repeal the part of PPACA that requires businesses to file a 1099 form for any vendor to whom they pay more than $600 on in a given year beginning in 2011. Democratic leadership is determined not to let any type of outright “repeal” bill pass, so instead they pulled the vote on the entire Investing in American Jobs legislation. 

The very unpopular 1099 provision in PPACA is expected to impact 40 million U.S. businesses, self-employed workers, charities and government agencies. It is not only expected to impose a serious administrative burden and significant costs on these entities, but as previously reported in Washington Update, the requirement has also been criticized by the IRS as potentially more trouble than it is worth. 

To address the bipartisan concerns about the 1099 requirements without actually repealing a portion of PPACA, the House leadership is expected to release a revised version of the small business jobs bill today that contains language to tweak the 1099 requirements in order to make them less of a burden. Alternatively, the repeal measure as a stand-alone is on the suspension calendar, which requires a two-thirds majority vote, so whether or not it will pass is unclear. Senator Mike Johanns (R-NE) has a bill pending in the Senate that is very similar to the Camp amendment and would repeal the 1099 requirements in PPACA.

The Senate version of the small business bill, with its parity provision for deductibility of health insurance costs for the self-employed, was also pulled after the Senate failed to invoke cloture and will likely hold over until September. Even if Majority Leader Harry Reid (D-NV) brings the bill up next week, the House will be in recess, so the differences between the House and Senate versions will have to be hammered out over the August recess.

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The Department of Health and Human Services issued a clarification to earlier regulations banning preexisting condition exclusions for children in individual and non-grandfathered group plans on Tuesday. The new guidance was issued in response to publicly articulated concerns by many insurance companies that the new requirement, which takes effect in health plan contract years following September 23, would lead to adverse selection. The clarification specifies that carriers are free to set up specific open enrollment periods for child-only plans if allowed under state laws.

Last week, carriers and insurance commissioners made news when they pointed out that the initial rules seemed to permit parents to wait until their children got sick and then purchase coverage. Due to the potential cost of such adverse selection, some carriers indicated they might have to pull out of the child-only policy market. However, as a result of the new guidance, the health insurance carrier community has publicly backed away from the idea of pulling out of this market. 

Scott Serota, president of the Blue Cross and Blue Shield Association, said following the release of the new guidance, "We think this policy will ensure that children get the comprehensive coverage they need while avoiding this unintended consequence. This is consistent with other public and private health insurance programs."

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In addition to the new guidance on child-only policies, HHS had an extraordinarily busy day yesterday when it released the interim final rules on how the new federal high-risk pool program will work, only a month after the program went into effect. The new regulation outlines how states may determine who has a preexisting condition and verify citizenship and current insured status to prevent crowd-out. It also outlines coverage appeals processes for the new pool, fraud protection measures and how federal program funding will be allocated to the states that elect to operate their own preexisting condition insurance plan.

In addition, HHS announced the first phase of grants for states to begin working on their state-based health insurance exchanges. Along with the grant announcement, HHS put forth a request for comments by October 4 from the states and interested stakeholders on how best to create health insurance exchanges. NAHU will be preparing a detailed response on behalf of our members.  

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Congress is about to leave town for their summer recess. The House of Representatives is scheduled to begin their break today, reconvening on September 14, while the Senate is scheduled to remain in session until the end of next week, reconvening a day before the House. While they are gone, it’s been reported that House Democrats have been asked to focus on weekly themes, and that the theme for the week of August 16 will be the benefits of the “September 23” reforms included in PPACA. Previous attempts by Speaker Pelosi to encourage her rank-and-file members to focus on the benefits of PPACA during the Memorial Day and Fourth of July recesses didn’t really work—few members actually held health-related district events. It will be interesting to see if House Democrats follow the party’s themes during this much longer break. If you are represented by a Democratic representative, keep an eye out for health reform-related events the week of August 16.

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The National Association of Insurance Commissioners (NAIC) held interim meetings July 22-23 in Washington, DC, dedicated to health care reform implementation. The Health Insurance and Managed Care (B) Committee and workgroups on exchanges and consumer information held a series of panel discussions on key reform issues, including the structure and function of state insurance exchanges, enforcement of provisions that become effective on September 23, standard definitions of insurance terms, and uniform enrollment forms. The NAIC also continued its ongoing work on crafting the definitions as to which health insurance expenses will and will not be included in the medical loss ratio (MLR) calculation required by the PPACA. They are not expected to complete this work on the MLR definitions until the end of the summer, at the earliest. 

The role of agents and brokers was debated during the exchange subgroup discussion. Consumer advocates likened the role of insurance agents to that of travel agents, but several commissioners took issue with that characterization. Florida Commissioner Kevin McCarty was quoted in Politico as saying, “A number of us feel very strongly about the important role agents play providing advice and counsel to the thousands of Floridians and Americans across the country on making really critical decisions. I know some people have thought perhaps if we gravitate toward the exchange program, it will lessen the role of an agent. I substantively disagree with that.”

The NAIC will hold its summer meeting in Seattle August 12-17. The meeting will be attended by three NAHU representatives, and the reform implementation discussions will continue at that time.

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We know many of you have been extremely active and generous with your time and resources with legislative issues leading up to the new health reform law, and we want to thank you for your hard work! Please know it has certainly made a difference and has helped in preserving and protecting the role of professional benefit specialists.

The next few months of implementation of PPACA will be among the most intensive and demanding of times for our association's government affairs efforts. In order to help provide the best possible information, strategy and direction in this all-important and complex implementation stage, we are reinstating our Grass Roots Initiative Program. GRIP is a voluntary donation program for our legislative and regulatory expenses at the national level that was created some years ago.

We are now soliciting both individual and chapter contributions to GRIP, and would greatly appreciate any additional help as there is still much to be done on the legislative and regulatory front.

How to donate:

• Make a chapter donation.
• Make an individual donation.