Meetings & Presentations , State Materials | Jan 30, 2020

Considerations for a State Health Insurer Fee Following Repeal of the Federal 9010 Fee

The recent repeal of the federal health insurer fee may create an opportunity for states to secure substantial funding to support health coverage, without increasing costs on consumers or the health care industry.

The government spending bill enacted in December 2019 repealed the annual fee on health insurance providers under section 9010 of the Affordable Care Act (ACA), effective in 2021.  The fee, which totaled about $20 billion per year, amounted to an assessment of between two and three percent on prior-year health insurance premiums.  A state fee can be designed to pick up this revenue, with little or no year-to-year market impact.  Two states – Maryland and Delaware – have passed similar assessments to fund state reinsurance programs. States could also use this revenue stream to fund other affordability measures like the state subsidy program enacted last year in California.

This opportunity is time-limited: a seamless transition generally requires states to enact their own fee before 2021 premiums are set in the middle of 2020.  Since the federal fee will be collected for the last time in 2020 based on 2019 premiums, state fees should be first collected in 2021 based on 2020 premiums to ensure continuity.  In addition, a state fee may be able to redeploy a one-year “windfall” that issuers would receive due to repeal of the federal fee.  That’s because in many cases the federal fee that was to be paid in 2021 (based on 2020 premiums) was “baked in” to 2020 premiums.

Enacting a fee to replace the federal one presents several design questions for states, including what lines of insurance to include, timing, rate, and targeted exemptions.  Frequent SHVS partner and ACA tax expert Jason Levitis prepared the slides to help states understand these issues.  For states interested in learning more, SHVS is happy to make Jason available to provide technical assistance. In addition, experts at Manatt are available through SHVS to help understand the complex federal rules governing states taxes on Medicaid Managed Care Organizations (MCOs), as well as the related rules under the proposed Medicaid Fiscal Accountability Rule (MFAR). If you have questions or are interested in assistance, contact Heather Howard at heatherh@princeton.edu , or you can contact Jason directly at jason.levitis@gmail.com.


Expert Perspectives

The No Surprises Act: Implications for States

In the waning days of 2020, Congress enacted a $900 billion COVID-19 relief package and government funding bill (H.R. 133). Included in the measure is the “No Surprises Act”, which contains new protections for consumers from surprise medical bills from out-of-network providers. The new law establishes, for the first time, comprehensive protections in the states without their own balance billing laws and for the nearly 135 million people in self-insured plans beyond the reach of state regulators. This expert perspective summarizes provisions that have particular implications for state regulators.

January 7, 2021

The State of Play: Public Option at the Federal and State Level and What to Expect in 2021

Faced with significant premium fluctuation and the risk of “bare counties”, many policy stakeholders have turned to the public option as a potential tool to promote stability and affordability in the individual insurance market. Since 2017, nearly a dozen states have considered or passed legislation to study or implement a state-based public option program. Additionally, the 2020 election and transition to a new federal administration marks a pivotal point for state policymakers with interest in fostering new coverage options. An incoming Biden Administration’s support for state innovation will create new state-based coverage opportunities, even as major federal legislation is unlikely under a divided Congress. This expert perspective provides a brief overview of selected states efforts to implement a public option and highlights what to expect in a federal policy environment.