Insurers, small business brace for start of health care reform

from New Orleans City Business by David Muller

While state and federal bureaucrats wrangle over the largest health care overhaul in the nation’s history, local insurance brokers and human resource managers have been in the thick of its repercussions.

Tracey Dodd was left scratching her head when she was renewing U.S. Risk Management’s health insurance plan for its employees. How, she wondered, could the company’s insurance costs rise 4 percent if employee usage was down?

“We were a little surprised because we had a very low utilization rate this year,” Dodd said, adding that the some 25 employees on the plan are relatively young and healthy.

Dodd, a principal with the environmental consulting firm, said the company’s premium rise didn’t add up when compared to corresponding rates and employee usage in past years.

She said the company’s insurance provider, UnitedHealthcare, told her that half of the increase went to cover accounting compliance issues, and the other half was blamed on the changes from the health care reform legislation.

UnitedHealthcare did not respond to an interview request.

That puts the insurance provider square against the Obama Administration and its attempt to reform the American health care system.

Kathleen Sebelius, U.S. Department of Health and Human Services secretary, sent a letter to insurance industry members telling them she was aware they were “falsely blaming premium increases for 2011 on the patient protections in the Affordable Care Act.”

Among companies cited for pinning increased rates on health care reform is Blue Cross/Blue Shield.

John Maginnis, spokesman for Blue Cross/Blue Shield Louisiana, denies this has happened at the not-for-profit operation.

“None of our current rates are configured to take health care reform or insurance reform into consideration,” he said. “We don’t have shareholders. We don’t have to ship money to Wall Street.”

Sebelius told insurance providers there would be “zero tolerance” for unjustified increases. The teeth in her policy, according to HHS, is restricting the money set aside for 46 states to help their insurers review unjustifiable claims.

Louisiana was among the recipients, securing a $993,107 grant for rate reviews. But it is also among the 20 states trying to declare the same legislation unconstitutional.

Louisiana Attorney General Buddy Caldwell “believes the health care law is an unprecedented intrusion on state sovereignty and individual freedom,” spokeswoman Sharon Kleinpeter said. The legislation would cost the state of Louisiana more than $7 billion a year, she said.

Louisiana Insurance Commissioner Jim Donelon said he worked in conjunction with Gov. Bobby Jindal’s office to pursue the grant money.

“The law is the law as we speak, and when money was made available to do this at the state level as opposed to defaulting to the feds, I made the decision” to go for the grant.

A decision on the states’ lawsuit to block the ACA is expected in mid-December from a federal district court in Pensacola, Fla., but the U.S. Supreme Court ultimately is expected to decide the case.

Meanwhile, health insurance brokers such as Tom Daly are trying to sort through waves of new provisions, with the latest round hitting Thursday — six months to the date that President Obama signed the ACA into law.

“It’s created a ton of confusion, obviously, in a world that was already confusing for people,” said Daly, managing principal of Hartwig Moss Benefits in New Orleans.

Of the higher rates, Daly said, “We’re seeing it, too, but I’m not sure if you can put a pencil to it.”

With the latest provisions, Daly said that lately he has been consumed with sorting out which plans are “grandfathered” and which are not.

“The general thinking is that grandfather plans will have less mandates on them so there will be less pressure on them to have higher rates,” he said, adding however that it won’t be so simple.

“In the real world, grandfathered plans are going to have to have an extra layer of administration to them because they’ll have separate rules.”

This could add to costs as well, he said.

Daly said his clients are “pretty representative” of the New Orleans market for insurance brokers, with clients’ businesses sized at about 50 to 75 employees each.

The health care legislation that narrowly passed the House of Representatives March 21 and signed into law two days later is aimed at extending health coverage to some 400,000 uninsured Louisianans and an estimated 46 million Americans in total.

Aside from myriad new regulations on insurance providers, the law’s ultimate goal is to set up insurance market exchanges, which each state will regulate in order drive down the cost of health insurance.

The exchanges are to be set up by 2014, when every citizen faces a mandate to obtain health insurance.

Assuming some or all of the law does not get repealed, Daly admits that his current job may be quite different in three years. But that’s not to say he will have to choose another line of work.

“At end of day, my clients hire me to attract and retain employees,” Daly said. “The vehicle I happen to use today is health insurance.”•

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