Recap: Janet Trautwein\’s Health Reform Update

\"\"On Tuesday morning, October 11th, 2011, NAHU CEO and Executive Director Janet Trautwein spoke to the Fort Worth Association of Health Underwriters about the current state of the health reform legislation. Below are some notes from her presentation.

To download a copy of her PowerPoint, click here: Legislative Update October 2011


How to demonstrate power

Janet began by saying that it’s all about power in Washington, DC, and there are several ways to demonstrate power. One, of course, is money. NAHU currently has the 6th largest insurance PAC in the U.S.

Another way to demonstrate power is by having a Washington address. That’s why NAHU is moving its offices at the end of the month from Arlington, VA to Washington, DC.

NAHU is also demonstrating its power through media hits, Operation Shouts, and outside counsel (lobbyist).

The current political environment

Janet said there was much more working together in previous years. Right now, it’s completely fractured. Nobody will let anyone get anything done, even if it makes the most sense. This, Janet says, is the most politicized environment she’s ever seen.

There aren’t too many moderates in Congress – legislators are either far right or far left. Most moderate Democrats were replaced by far-right Republicans in the previous election.

Janet pointed out that it’s always harder to get things done at election time – and this isn’t a normal year.

The pace in Washington is 24 hours a day. Staffers make very little money but work all the time – including nights and weekends. Janet likes talking with them around 7:30 at night – the pace has usually slowed down enough by that time.

The budget deficit and jobs are dominating the discussion in Washington. The only bills that will pass this year are those that have to pass to keep the government running.


The CLASS Act is a huge repeal target. It’s not sustainable long-term, but because it scored as a saver since it doesn’t pay for 5 years, it’s difficult to repeal – we’d have to find the money to replace the savings somewhere else.

Refundable Tax Credits

There’s a proposal to change the tax treatment of employer sponsored coverage and replace it with refundable tax credits. This won’t pass – the Democrats won’t let it. But it will be debated.

Medigap Coverage

Congress is looking at making some cuts mandatory to Medigap coverage – there’s a proposal to take away plans with very little cost sharing. This is definitely on the table.

The States

A lot of states aren’t happy. Many are involved in lawsuits. Many don’t like the new mandates because they create an increase in the level of required coverage, while the new level would be decrease for some states.

States like Texas whose legislature doesn’t meet every year require a lot of advance notice.

Some states like California are full speed ahead but others like Wisconsin have a “we’re going to do it our own way, come and get me” attitude.

Tea Party

In general, in politics, extremes are not good – they are a problem. In some states the tea party has been good to work with, in others very difficult. But yes, the tea party is having an influence.

Individual Mandate

Is it constitutional for the federal government to ask anybody to buy anything to protect themselves – do they have that authority? That’s the question those who are suing over the individual mandate are asking. The courts are split on the issue, and everyone expects the Supreme Court to make the final decision.

The Obama administration has requested a speedy decision. This is a big gamble, but uncertainty causes problems.

Janet isn’t sure that the individual mandate is legal but really hopes it doesn’t go away. In fact she’s terrified about what would happen. If it is voted down, she’s certain the agencies would take a strong position – perhaps they would allow for an open enrollment period and late enrollment penalties.

Essential Benefits

On October 7th, the Institute of Medicine made its recommendations on essential benefits. Based on these recommendations, HHS has said they’ll put out a proposal before the end of the year.

The form of their proposal is important – depending on how they do it, they may or may not have to respond to comments. While it would be nice to have a comment period, insurance companies do need a lot of lead time to alter their plan designs for 2014, so for that reason “interim final rules” might be good.

The rumor, though, is that HHS will put out a “Notice of Proposed Rules” which would allow for a comment period and then not do anything until after the election.

The Essential Benefits Report from the Institute of Medicine is better than expected – there’s a lot of “affordability” language in it.

It is important to note that the essential benefits apply only to individuals and groups up to 100 employees inside and outside the exchange. Groups with 101+ employees will have a “minimum value standard” based on what benefits are provided today. Janet says this is a very good thing.

As for penalties, groups with 50+ employees will be required to offer coverage or pay a penalty. There will be a “Full Time Equivalent” standard used to determine which groups are required to offer coverage.

Repeal & Replace vs. Fix

Paul Ryan wants repeal the health care law altogether and replace it with something else. Janet says that’s not happening.

This is a huge argument. The House actually passed a bill to repeal the legislation, but it didn’t go anywhere in the Senate. The President would have vetoed even if it had passed. Janet says repeal won’t happen, and Republicans don’t want to “fix” anything because they feel that would be admitting there’s something right with the legislation. So nothing is getting done, and the clock ticks forward…

Medical Loss Ratios

The MLR requirements went into effect at the beginning of the year. If carriers don’t meet the requirements, they will have to issue rebates. Not only would the refunds be costly, so would the administrative process of issuing the refunds. It would be burdensome on clients as employer and employee contributions would need to be split up for refund purposes, and if the employer doesn’t participate the insurer will be on the hook. This, of course, would cause premiums to go up.

HR 1206: The “Broker Bill”

This bill, which would remove broker commissions from the MLR calculations, currently has 132 co-sponsors. When it gets enough co-sponsors (213) it has to go to vote, but there’s been no vote yet.


Janet has testified twice before the Energy and Commerce Committee. This is different than the process in Texas, where anyone can sign up to testify on a proposed bill. You have to be invited and they want to know what you’re going say ahead of time. In the last couple hearings, Republicans and Democrats have only asked questions of their own witnesses.


HHS has issued a number of waivers, including in Texas. It’s important to note that the waivers are only temporary – they’re not a fix.


The exchange comments deadline has been extended to the end of October. NAHU has already made a lot of comments.
The federal law is clear that there is a right to do this, and if the states don’t implement their own exchange the federal government will. Since this will happen in a lot of states, it’s important they do it right. NAHU has another meeting with HHS October 28th to share their comments.

In the beginning, the Exchange was explained as a “Travelocity-type” program, but there are not Travelocity comments anymore. It seems that everyone is talking about the value of the agent – on the record.

There are two kinds of exchanges: an individual exchange and a SHOP exchange for businesses.

NAHU thinks HHS could allow the states to phase in the SHOP exchange after individual exchange. There are also partnership opportunities where states could partner with the federal government on info needed for the exchange to do what it’s designed to do.

Within the exchange, an individual must first be pre-screened for Medicaid. Janet’s worried because she’s part of a working group designing the portal and right now it doesn’t look good. If it’s too difficult, people may be turned off permanently.

There’s an idea that they’ll create a hub where all of the necessary information is fed in, but a lot of agencies will be involved. The Medicaid component scares Janet the most because it’s not uniform. How do you take dissimilar systems and plug them into a hub? There’s a good chance it won’t be ready in time.

Finally, Janet said that there has been different progress in the different states on the exchange. Some have received planning grants, some have considered bills that would create an exchange in their state, and some have returned the money they’ve been given.


Bryan Keathley asked Janet about the best-case and most-likely scenario for brokers would be. Janet said they are the same. The best and most likely scenario is that the exchange will just be another market. There will be outside markets. This is definitely the case for groups. Individual plans will be concentrated in the exchange but there will be outside markets for individual coverage as well.

Brokers could be paid less but the agencies definitely want brokers involved. Some states want brokers paid from the exchange – Janet says this is very dangerous. One state looking at requiring brokers to be navigators, but Janet says that probably won’t happen.

Janet pointed out that brokers do receive commission in Massachusetts and the Utah exchange is completely broker-driven.


Janet says that navigators are not optional – they are required by the legislation. However, there is a huge push to require navigators to be licensed.


Surprisingly, the white horse right now is the agencies writing the regulations – they don’t want to mess it up, so they’re listening to what we have to say.

Janet said that NAHU is working on other issues too. In fact, comments on 5 regulations are due this month. This, Janet says, is the best reason she can think of to recruit new members – our dues go to pay for the work they are doing.

Members will receive a survey soon. Janet asks that everyone to respond to it thoughtfully.

Thank you very much to Janet Trautwein for taking time out of her very busy schedule to speak to the Fort Worth Association of Health Underwriters on October 11th. We’re fortunate to have such a dedicated individual
leading  our association.



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