Various House and Senate Committees conducted hearings this week to discuss several aspects of the health care reform law. On Tuesday, the House Oversight & Government Reform Committee focused its attention on the Department of Health and Human Services’ (HHS) annual benefit limit waiver program. This program temporarily waives the restricted annual limit requirements imposed by the Affordable Care Act for insurers offering limited benefit “mini med” plans if compliance with the restrictions would result in a significant decrease in access to benefits or a significant increase in premiums. The agency has so far provided more than 1,000 such waivers. As explained by one panelist, this type of health benefit is typically provided to low-wage, and/or part-time or seasonal workers, and in places of employment with high turnover. Under these conditions it is generally not cost-effective or practical to offer those workers traditional, full-benefit plans.

During the hearing Steven Larsen, Deputy Administrator and Director of the Center for Consumer Information and Insurance Oversight (CCIIO), explained (pdf) that:

Until now, very little data were available about these limited benefit plans. We are now analyzing the data we have received through the waiver process and have begun determining what approach we should take for plan years beginning September 23, 2011 and beyond to 2014. We will continue to work in a manner that minimizes market disruption and ensures Americans have health coverage. The overriding purpose of this waiver program is to ensure that Americans do not lose their health coverage before better health insurance options become available in 2014.

Edmund Haislmaier, Senior Research Fellow with the Heritage Foundation’s Center for Health Policy Studies, however, criticized (pdf) the HHS’s waiver program, claiming that HHS has exceeded its statutory authority in creating this waiver process. According to Haislmaier, “the Department could have avoided adversely effecting mini-med plans by simply setting a lower amount for the transitional limit. The wording of the statute certainly seems to indicate that Congress' intent was to forego writing a figure into the statute, and instead delegate to HHS the task of determining an appropriate amount – nothing more.” He also faulted the program on public policy grounds, claiming it results in unequal application of the law to affected parties and creates unequal burdens; creates the perception that regulatory enforcement is being subordinated to Administration political priorities or concerns; and creates “the opportunity, and the temptation, for Administration officials to apply the law corruptly or to engage in political favoritism when making enforcement decisions.”

A health benefits attorney testified (pdf) that more guidance is needed to explain how the limit waiver program impacts health reimbursement arrangements (HRAs).

On Wednesday, Senate Finance Committee held its own hearing to discuss the lessons learned during the first year of the Affordable Care Act’s implementation. Committee Chairman Max Baucus (D-MT) and Secretary of the U.S. Department of Health and Human Services (HHS) Kathleen Sebelius both touted the benefits that the new law has produced, including a purported slowing of the health care cost growth rate, improved health care delivery system reform, and greater health insurance industry accountability. In response to a question posed by Sen. Wyden (D-OR), Sebelius said she was in favor of state coordinated waiver applications, which would allow states to avoid the individual and employer mandates included in the Affordable Care Act if they establish health care delivery systems that achieve certain required goals, such as providing coverage to as many individuals as would be covered under the Act, and not increasing the federal deficit. Sebelius said that many state governors are “enthusiastically” looking at strategies to achieve the required goals without adhering to the particular mandates.

Paul Van de Water, Senior Fellow with the Center on Budget and Policy Priorities, also spoke in favor of the Act, while panelist Holtz-Eakin, President of the American Action Forum, voiced his disapproval of the measure. Copies of the panelists’ testimony can be found here.

The week of hearings concluded with a Senate Committee on Health, Education, Labor and Pensions (HELP) hearing on health insurance exchanges and ongoing state implementation of the Affordable Care Act. As described by Steve Larsen – who also testified at the earlier hearing on the waiver program – the health exchanges represent “a free market approach to health care” that offers transparent one-stop shopping for health plans. Larsen explained that the Administration’s goal is to give states maximum flexibility in establishing these exchanges. He testified that in some places in the country it may make sense to establish a regional exchange whereby more than one state can work together.

Larsen also claimed that small businesses will be able to increase their bargaining power by using the exchanges. In addition, Larsen averred that the exchanges will simplify the administrative processes, and make it easier and less costly to sell to the small business market. As for a rule on how to implement the exchanges, Larsen said his agency’s goal is to issue such regulations this spring.

In response to a question posed by Sen. Al Franken (D-MN), Larsen explained that the new medical loss ratio (MLR) requirements have moderated health premium rate increases. Under the new rule, insurers are required to spend 80-85% of the premium amounts, depending on the size of the market, on health care services, as opposed to administrative or advertising costs Larsen claimed that companies are structuring their rate filings based on the MLR requirements, and therefore becoming more efficient.

Joshua Sharfstein, Secretary of the Maryland Department of Health and Mental Hygiene, testified that successful implementation of the insurance exchange as well as other Affordable Care Act provisions will result in an estimated net savings of $853 million over the next ten years in his state.

Kansas Insurance Commissioner Sandy Praeger offered tempered praise for the exchange system, but discussed challenges that remain for its implementation.

Ranking minority committee member Mike Enzi (R-WY), however, claimed that the exchanges “cannot fix the fundamental problems with the new health care law.” Similarly, Utah State Representative David Clark discussed what he perceived as flaws in the exchange system.

An archived video of this hearing in addition to a list of the panelists and links to copies of their testimony can be found here.

This entry was written by Ilyse Schuman.