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The government spending bill enacted in December 2019 repealed the annual fee on health insurance providers under section 9010 of the Affordable Care Act (ACA), effective in 2021.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.
On February 6, 2020, the U.S. Department of Health & Human Services (HHS) published its annual draft rule governing core provisions of the Affordable Care Act (ACA), including the operation of the marketplaces, standards for individual and small-group market health plans, and premium stabilization programs. This expert perspective focuses on several policies that would have implications for state insurance regulation and the operation of the state-based marketplaces (SBMs). Comments on the rule are due March 2, 2020.
As we round out the seventh year of ACA open enrollment, State Health and Value Strategies (SHVS) is reflecting on the successful steps that states have taken to provide quality, affordable health coverage to more residents and draw on lessons learned as this work moves forward. SHVS is excited to launch a series of posts featuring policy and outreach strategies states are employing to meet the needs of their residents. This Expert Perspective highlights some of the key ways in which states are driving efforts to increase enrollment this past open enrollment period. Subsequent posts will include deep dives into certain specific state policies and outreach strategies, such as plan standardization and targeted outreach to address health disparities in coverage.
In this Expert Perspective, our colleagues at Manatt Health review the Supreme Court’s decision, issued on January 27, 2020, granting the Administration’s request to stay a nationwide preliminary injunction that had blocked the Department of Homeland Security public charge final rule from taking effect in October 2019. The government will now move forward with changes to public charge in all states except Illinois, where an injunction applicable only to that state continues to be in effect.
