From addressing essential health benefits to ensuring there's a solution to modified community rating provisions, the leaders of the top lobbying firms representing employee benefit brokers and advisers in Washington know they have their work cut out for them on Patient Protection and Affordable Care Act implementation in 2013. While hope is not lost for legislative fixes such as the medical loss ratio commission exclusion, the top lobbyists for the Council of Insurance Agents & Brokers, Independent Insurance Agents & Brokers of America, National Association of Health Underwriters and National Association of Insurance and Financial Advisors know it's an uphill climb. EBA sat down with them for a frank discussion as they pulled on their proverbial hiking boots for the long road ahead.



Charles Symington, SVP of government affairs, IIABA: One of the more positive developments is the number of co-sponsors the four organizations were able to obtain on the MLR legislation in the House. We have over 218 legislators on both sides of the aisle that support the Rogers-Barrow legislation to exclude agent commissions from the MLR formula

Janet Trautwein, CEO, NAHU: What's really interesting is not only did we get all these co-sponsors; we passed it out of the committee of jurisdiction. To get that kind of bipartisan sponsorship, that's unusual. For a broker bill to get that many co-sponsors and to come out of committee is unheard of.

The biggest gain from that is we've really raised the bar on what people know about agents and brokers and the value they bring to the whole process. I think that one thing was even more important than anything else - that people know what we do. That wasn't the case a few years ago.

Diane Boyle, VP, federal government relations, NAIFA: Having it introduced in the Senate was a huge win as well. We didn't get the co-sponsors there, but a lot of that was the timing of when it was actually introduced.

Joel Wood, SVP, government affairs, CIAB: On balance, I have a lot more anxiety about this year than a sense of accomplishment. On the accomplishment side, I think we've come a long way with respect to where HHS and the administration had been in terms of what they would allow in broker engagement in exchanges. I think that those regs were very good. I think the further along that we see exchange development and, as panicked as many states are about it - this is not uniform - but the more they seem to be turning to brokers and more of a recognition that exists in the states that these are the people who know how to deliver this product.

I hate to be the skunk at the garden party with respect to the MLR legislation. I think it is great that we got a lot of co-sponsors, but we had one Democratic vote coming out of the Energy and Commerce Committee. Harry Reid was re-elected the majority leader and the president was re-elected and they are strongly in opposition to this. And a billion-dollar score from CBO was not a good number. I think the prospects for a stand-alone measure on the MLR are exceedingly difficult.

On the MLR front, in a lot of ways the compensation genie is already out and our members are adjusting to that in many ways.

Symington: There's no doubt that passage of the MLR legislation is a heavy lift. I agree with Joel. With that said, we're still going to devote resources to it and try to push it forward next Congress. But, much like the other organizations, we're spending much of our time on exchange creation. That's really the brick and mortar foundation of the bill, at least how it's going to impact our members across the country and their consumers.



Trautwein: We have had significantly more success than I anticipated with the makeup of the federally facilitated exchanges. They seem to be extremely broker-friendly and, in fact, dependent on brokers being a part of the solution, according to everything that they're saying. Now, we don't take anything for granted here. We're going to stay on top of it. But, I do feel encouraged that we'll get off to a decent start with that and we just really have to watch what goes on with each implementation. Because each state's exchange is still going to be their exchange and we want to make sure that there aren't any hiccups along the way in terms of the role of agents and brokers.

Boyle: Our concern is there's a little anxiety over whether they'll actually be compensated. We saw with the PCIP program a recognition that they needed to compensate agents in order to get people enrolled in the high-risk pool. And then when money got tight they cut it. So, is there going to be consistent compensation that's fair for the agents to help people in the exchanges? That's something we're watching very closely.

Wood: I don't think any of us will consider it a success if there is broker involvement in exchanges if the marketplace moves to a devolution of employer-sponsored care. So our biggest concern is the migration issue. All of our organizations have representatives in virtually every jurisdiction that is considering [an exchange]. I feel very, very good about the engagement and the way things are going with the states and with the evolution in the federally facilitated exchanges. But ... you've got the subsidy gap, you've got penalties that are very small and are not reflective of the marketplace. It's going to be very difficult to get young invincibles in to these systems and our members want to be able to continue to serve employers - and not serve as the liaison for employers to dump their people onto the state-based exchanges.

Trautwein: Our biggest concern is that employers will stop offering coverage in the way they do today. We want to make sure that that doesn't happen. So the lion's share of our time today is spent on making things easier for employers so that they don't make that decision. Really creating enough information so that they look at those kinds of decisions in more than just doing the simple math.

Wood: It's not so much that employers say they don't want to be the first to [direct employees to health exchanges], but they don't want to be the third, either. So that's the concern. In retail and hospitality that is an absolute fear. That most of this will be exchange-related business. No Chicken Little here. Employers want to have their workers covered. The job market makes it imperative for that. But are the costs of this sustainable with subsidies available up to 400% of the poverty line?

I'm not unrealistic. Obamacare is not going to be overturned. We're going to be moving to an exchange scenario, but hopefully there will be opportunities to address some of the core concerns. Our core concern is whether those subsidies are so significant that it will skew the marketplace.



Symington: It's continuing to work together as a coalition, being four very powerful grassroots organizations. We all have our own individual legislative events, our Capitol Hill fly-ins. We fly in agents and brokers from all across the country and they sit down with their legislators and key staff face to face and really try to crystalize how these policies impact the day-to-day lives of our small business members and their consumers.

Wood: Right now, there's a settling in of the reality that this is going to move forward and the administration is going to push forward on all cylinders. But I think when you look at these deadlines that are very, very difficult to achieve, when you look at the astronomical costs associated with this, there should be some opportunities for Republicans to nip around some edges ... in the coming months.

Trautwein: I think we'll be past some of the political posturing that we saw in 2012, and also 2011. But we cannot overlook the ability to affect some pretty significant changes in the regulatory process. Because every single place where the law's ambiguous, I think that as much as we don't want employers to stop doing what they're doing, neither does the administration.



Trautwein: The essential health benefits apply to the smaller employers and we want to make sure they're not pushed out of the market because it's more than they can afford. Also, we're looking really hard at how the employer mandate will function; what we do about the hospitality and the retail people in terms of the way full-time employees are considered, seasonal employees are considered. We've gotten a few safe harbors that we've worked really hard on. We're going to continue pushing for every safe harbor that can be created that encourages an employer to stay in instead of leaving.

Wood: On the plus side, we like the wellness provisions [of PPACA]. We want more clarity in those regs and we've been getting it. On the negative side, I totally agree that the essential benefits are probably our greatest regulatory disappointment. Because we all thought that one of the great advantages of the passage of the Affordable Care Act was that there would be a single national basic bronze standard out there, and instead it's continuing to leave it to the states. But there still is much to be done on the evolution of those standards.



Trautwein: We want to make sure each statute is interpreted in a way that will make it easier for employers to comply. [One] example ... is the issue of the affordability prong of the employer mandate. Employers don't have any way to know what family income is, which is a requirement of that. Because there is an ambiguous place in the law, [we can] have this safe harbor in there that says, 'Look, we know you as an employer don't know what the family income is. So base the employee contribution on no more than 9.5% of W-2 income.' That was not written in the law. That was negotiated by working the regulatory process. There are many, many things where you can do that. You can reduce how frequently an employer has to report, or the number of agencies that they have to report to, or make sure they're doing one form instead of a slight variation on six different ones. Those are things you can do so that employers don't just throw up their hands and say, 'We don't want to do this anymore. It's just too much of a burden.'

For them not to drop coverage is a huge deal for us; to make it easier for our members' clients to continue offering coverage, which in turn helps our members. Because look, if they don't have any clients offering coverage that's a lot worse than the MLR. It's a different planet all together. They have to have the clients in order to be paid at all.



Trautwein: We have to make sure, first of all, that when it's appropriate to charge an additional fee that it can be done and there aren't any legislative impediments anywhere. Secondly, if our members want to offer additional services we have to make sure they don't run afoul of state rebating laws, which is a huge issue right now, and in a number of states they're pretty aggressively pursuing that.

Wood: I would agree that the anti-rebating statutes are a significant impediment. We don't think that they have any rationale in today's commercial marketplace. Anti-rebating statutes were erected because of perceived life insurance abuses almost 100 years ago. In the commercial context it goes to the very question of the value-added services of a broker. Offering, for example, COBRA administrative services to clients, which has been very problematic in certain jurisdictions.

There is more and more pressure moving more and more toward the fee-based model. The days of 8%, 10%, 12% medical trend and corresponding revenue, they're gone. And there's been a tremendous amount of pressure, some of it based on the MLR, some of it based on the marketplace generally, some of it based upon the slowing of the economy in the last four years. But we're going to continue to see a lot of pressure on that.



Trautwein: We're seeing it all over the place. A lot of different kinds of players in that space. Some of them are general agencies, some of them are carriers, some of them are various other brokerages that come together. That is something that is maybe the biggest surprise and what will be interesting to see, how it shakes out. What's different from one platform to another is the way that coverage is purchased once you're inside. Sometimes the employer buys a group product, some turn it into an HRA-type setting with an employer contribution, but they're actually buying individual coverage. I think the administration is concerned about that second avenue and I wouldn't be surprised if we saw some additional regulation that might make it a little bit more difficult in that setting. Because you have to look in that setting is the employer making an offer of coverage or are they not?



Symington: There are three general approaches to the creation of the state exchanges: state, federal, hybrid. I [would like to have] success in all three of those categories with ensuring that agents and brokers play a role in the marketplace, are properly compensated. We have great concern with the potential role played by navigator programs and they need to be properly regulated, properly licensed.

Boyle: We want to make sure that the exchanges that are going to start up in 2014 are well aligned and structured and ready to roll out in a way that has a meaningful role for the agent.

Wood: I would feel really good if we could look back on 2013 and feel that the political atmosphere had diminished and we were working on obscure regulatory and compliance issues for our member firms and smooth running of the exchanges. Away from the vilification and the hard partisan edges of all of this.

Trautwein: We are going to have to do something about the modified community rating provisions. I am really worried that they are going to result in rate shock across the country. That has to be one of the items where Republicans and Democrats come together. It is an emergency. I think that may be one of the most important things that we get done.

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