Insurance-Fee Exemption Planned for Unions, Some Businesses - Move Could Appease Labor Leaders

From The Wall Street Journal:

The Obama administration is planning to exempt some labor unions and businesses from paying part of a contentious reinsurance fee under the health-overhaul law, a move that could tamp down hostility from organized-labor leaders who backed the law but have sought changes to provisions they say make it too costly to provide insurance for their members.

The Department of Health and Human Services signaled in a final rule released quietly last week that it intended to offer a partial break on the fee.

 

The law includes a $63 levy on each person covered in a health plan, which in turn goes into a fund to compensate insurance carriers who end up paying big medical bills for new customers who buy on the government exchanges. The levy is applied to spouses and dependents as well as policy holders, and is paid by every company that provides insurance, including big businesses, organized labor and insurance carriers.

 

The likely beneficiaries of the compensation fund are the traditional insurance carriers, who are now required to sell coverage to everyone, regardless of their medical histories, for plans that take effect in January. That prompted large employers and organized labor to campaign against the fee, which they argued would make it even more costly for them to continue to offer health coverage.

 

Insurers have said the reinsurance fee is important and needs to be maintained. In all, the levy is designed to run for three years and raise $25 billion for the fund: $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016. It wasn't immediately clear what impact any partial exemption would have on the fund.

 

In October, senators briefly considered a one-year delay to the reinsurance fee as part of negotiations to end the budget standoff. Those went nowhere, in part because GOP lawmakers expressed concerns about benefiting organized labor.

 

Sen. Orrin Hatch (R., Utah), who has been critical of potential changes to the law that would aid unions, said Wednesday that the HHS move demanded "further scrutiny."

 

"It certainly looks like the Obama administration is looking at a special deal for unions which is deeply concerning given the problems that all Americans are facing due to Obamacare," he said in a written statement. "It's an issue that demands further scrutiny and something I will be tracking closely."