Source: Health Plan Week Volume 20, Number 33
In the three months following the health reform law's enactment, health insurers and trade associations tracked by HPW collectively spent about $32 million – up 13% from the second quarter of 2009 – to lobby Congress, the White House, HHS and other federal agencies.
Among health insurers, Aetna Inc. topped the list, spending $1.5 million on lobbying in the second quarter of 2010. That amount is up nearly 150% from the $631,846 Aetna spent in the year-ago period, but down slightly from the $1.6 million spent in the first quarter of this year, according to lobbying reports filed with the Senate Office of Public Records (see table, p. 7). Aetna did not respond to a request for comment on the increase by HPW's press time.
Among trade groups, the American Medical Association (AMA) spent a whopping
$8.6 million on lobbying in the second quarter of the year – double the amount spent by the American Hospital Association, and nearly four times the amount spent by America's Health Insurance Plans (AHIP).
Some industry observers contend lobbying money spent by insurers as the health reform bill was being crafted – and since the law's enactment – has been largely effective. Although insurers were unable to preserve Medicare Advantage funding, for example, they were successful in defeating a government-run public insurance option, "which was their line in the sand," says Devon Herrick, Ph.D., a senior fellow with the right-leaning National Center for Policy Analysis. But although health insurers supported the law's guaranteed-issue provision, "they felt betrayed" by lawmakers because the penalty for not having health coverage is a fraction of the cost of benefits. Herrick predicts health plans will use their lobbying muscle to encourage federal regulators to make it difficult for people to enroll in health coverage only when they need services.
In 2011 and beyond, Herrick predicts that health plan lobbyists will target provisions of the reform law where the HHS secretary has discretion. "We counted about 1,075 instances of 'the Secretary shall…' in the legislation," he quips. Insurers also will need to defend themselves against special interest groups and providers who will likely demand that their respective services are included in the essential benefit package. "One problem is that the interests of insurers are bound to diverge – pitting large insurers against smaller ones, or ones in the individual market versus ones selling group coverage," he predicts.
AHIP spokesperson Robert Zirkelbach cautions that even though some provisions become effective very soon, only interim final rules have been issued, which means they can change before being finalized. He says
AHIP has been collecting feedback from member companies about the workability of these regulations and their likely impact on the companies and their members. "Then we provide that feedback to regulators," he says.
But Robert Laszewski, president of Health Policy and Strategy Associates, is dubious that Democratic lawmakers, the administration or HHS will listen to the concerns of health insurers, or change their negative view of the industry. "Given the name calling on the part of Democrats during the health care debate,…it is hard to see how buying a lot of lobbyist time is going to change that" opinion, he says. "This year, [health insurers] might as well save their money and concentrate on what their customers think of them more than what the Democrats think of them."
In the months since the reform law was enacted, determining how the medical loss ratio (MLR) will be defined has been a top issue for health insurers and their lobbyists. Beginning Jan. 1, 2011, health insurers must maintain an MLR of 80% for individual and small-group products. The MLR floor is 85% for the large-group market.
Health plans that don't meet those minimums will be required to rebate the difference to customers. The National Association of Insurance Commissioners (NAIC) has been tasked with defining MLRs and recommending a formula to HHS.
And health insurers could see a big return on investment if their lobbyists are successful in favorably influencing the formula, says health policy consultant Joseph Paduda, principal at the consulting firm Health Strategy Associates, LLC. "It is absolutely money well spent as it determines – among other key issues – how profitable plans can be." He adds that the courts could become involved if the definition bodes negatively for the insurance industry. Herrick agrees that defining MLR calculations is a significant issue for health insurers. For example, if new excise taxes are counted as an administrative expense, health insurers could end up paying a penalty on the taxes they're required to pay. Another MLR issue in need of clarification is whether there will be a transition period for compliance. NAIC had suggested a transition period that would run until 2014 when the state insurance exchanges become operational. Laszewski is less optimistic that lobbying dollars will help to favorably influence the formula, and says that NAIC seems to be taking "a traditional view" in defining medical costs and expenses. Although AHIP had made several suggestions – such as calling for all utilization review expenses to be classified as quality improvement – those efforts have largely "fallen on deaf ears," he tells HPW. "NAIC, well-staffed and expert in the issues, isn't buying attempts to steer the law away from its original intent."
Brokers, Agents Work to Be Heard
The Council of Insurance Agents & Brokers (CIAB) spent $220,000 lobbying in the second quarter – up $40,000 from the year-ago period, but $10,000 less than it spent in the first quarter of 2010. Joel Wood, CIAB's senior vice president of government affairs, says ensuring the role of agents and brokers in the state insurance exchanges and ensuring the viability of the small-group market are among the top issues facing his members. Most of CIAB's members work with employers that have 100 or more employees.
"There is a lot of anxiety among our members about the future of small-group insurance," he tells HPW.
Moreover, to comply with the MLR rules, health insurers are likely to substantially reduce commission rates paid to brokers and agents (HPW 6/28/10, p. 1). Most of the pressure on commissions, he says, will be experienced in the small-group and individual markets. "The days of a 20% commission for an individual health insurance policy are gone," he adds.
The Independent Insurance Agents & Brokers of America, Inc. ("The Big I"), which spent $430,000 on lobbying in the second quarter, intends to be "very active at the state level" as state insurance exchanges are formed, says Charles Symington, senior vice president of government affairs. The exchanges must be operational by Jan. 1, 2014 (HPW 5/3/10, p. 1). The organization also expects to direct some of its lobbying efforts at the HealthCare. gov Web portal – which will be the precursor to the exchanges – to ensure that consumers understand the importance of working with agents and brokers in selecting the most appropriate health coverage. "We would argue that now, more than ever, there is a need for experts in the field," he says.
Medicare Fee Issue Boosts AMA Efforts
The $8.6 million spent by AMA in the second quarter is more than double what it spent in the second quarter of 2009. The bulk of its lobbying dollars this year have been spent on securing a more permanent payment structure for physicians who see Medicare patients. "The AMA continues to work to fix the broken Medicare payment system, which is causing physicians to face an almost 30% cut in Medicare payments near the end of this year," AMA President Cecil Wilson, M.D., tells HPW. "The ongoing threat of physician payment cuts compromises access to health care for seniors and baby boomers." Laszewski says he's not surprised AMA has upped its spending, and criticizes the group for supporting the reform legislation without securing a solution to the Sustainable Growth Rate Formula for Medicare providers. "Right after the bill passed, they got a retroactive fix only until November and now face a 26% automatic cut by Jan. 1, 2011," he asserts. "They sure didn't get their money's worth in 2009 – particularly when it comes to legislative strategy – and now they have doubled it."