California Lawmaker Raises Concerns With Health Insurance Provider Fee

It is my firm belief that all Americans should have access to quality, affordable health care. While I strongly support the intent of the Patient Protection and Affordable Care Act (PPACA), I am concerned by the anticipated impact the law's annual fee on health insurance providers will have on my constituents. Rather than helping to rein in rising costs, this fee may directly undermine one of the primary goals of the PPACA: making coverage more affordable.

Though the fee technically falls on insurers, the fee is intended to be passed onto consumers in the form of a 2 to 2.5 percent increase in health insurance premiums. As a result, this fee may negatively affect small businesses, employers, consumers, and seniors. In recent years, premiums in California have risen at a rate more than double the rate of inflation, consuming a growing share of household income. I am concerned that this fee will only further exacerbate this problem and further weaken the already slow economic recovery in the San Diego and Imperial Counties.

As a former member of the California State Legislature, I am particularly concerned by the significant impact that the fee may have on state governments. In an effort to improve patient care and curb rising costs, California is expanding the managed care programs for Medi-Cal. As this fee will be imposed on managed care Medicaid programs, but does not apply to fee-for-service Medicaid programs, it is estimated that California will incur millions in additional costs as a result of this modernization effort.

Therefore, as you prepare the anticipated regulations for implementing the annual fee of health insurance providers, please consider to the following:

• Create a transparent and open assessment process whereby interested parties can determine how the respective fees are assessed on health insurance subject to the fee and provide appropriate input and reaction to the assessed fees. Ensuring full transparency will result in an accurate and fair assessment;

• For future year assessments, take into account the unspent portion of funds needed for the Medicaid expansion and subsidies created by the PPACA that were collected from health insurers before making further assessments; and

• Determine that recoupment of any fee from policy holders is not considered income for the purposes of federal tax collection in order to help ensure consumers will have more choices for health coverage.