Filed Under:Annuities, Sales Strategies

Fiscal cliff bill slams CO-OPs, creates LTC panel

The new fiscal cliff deal could hurt the nonprofit groups that want to set up Consumer Operated and Oriented Plan (CO-OP) health insurers, but it could end up helping sellers of private long-term care insurance (LTCI).

At press time, members of the House had voted 257-167 to pass H.R. 8,  the "American Taxpayer Relief Act of 2012" bill. The Senate had passed the ATRA bill earlier in the day, and President Obama was preparing to sign it.

The bill is supposed to prevent a number of the automatic tax increases and other automatic law changes that were set to take place when older laws expired.

Some of the best-known provisions would increase tax rates for people with incomes over $400,000; let the payroll tax rate rise to 6.2 percent, from 4.2 percent; set the estate tax at 40 percent for estates over $5 million; and postpone implementation of a perennially postponed Medicare physician reimbursement "sustainable growth rate" law that eventually could sharply reduce the fees Medicare pays doctors. 

Another provision, Section 644, the Consumer Operated and Oriented Plan program contingency fund section, would cut 90 percent of the CO-OP program loan funding that is not already "obligated."

Drafters of the Patient Protection and Affordable Care Act (PPACA) put the CO-OP provision in PPACA in an effort to increase health plan market competition. The program has been providing loans for entities that want to start nonprofit, member-owned health insurance cooperatives that would serve the individual market, the small group market, or both. 

The National Alliance of State Health CO-OPs (NASHCO) recently reported that the U.S. Department of Health and Human Services (HHS) has awarded $1.8 billion of the $3.8 billion in authorized CO-OP funding to CO-OP organizers in 24 jurisdictions.

Another H.R. 8 provision, Section 643, would create a Commission on Long-Term Care.

The LTC commission is supposed to include representatives from LTC insurance providers as well members representing the interests of family caregivers, health care workers, users of LTC services, and users of LTC insurance. Some commission members are supposed to have demonstrated experience in dealing with public and private insurance.

The Senate will reimburse commission members for commission-related travel expenses, and the commission will have the authority to ask the U.S. Government Accountability Office and the Congressional Budget Office to conduct studies.

The long-term care (LTC) commission is supposed to develop recommendations for creating "a comprehensive, coordinated, and high-quality" LTC system within six months after the commission members have been appointed.

Some recommendations could relate to "gaps in federal and state infrastructure that prevent delivery of high-quality long term services and supports" and the "development of new technologies, delivery systems, or other mechanisms to improve the availability and quality of long-term services and supports."

If a majority of commission members approve a set of recommendations within six months after the commission is appointed, then the House majority leader is supposed to introduce a bill based on the recommendations in the House, and the Senate majority leader is supposed to introduce a bill based on the recommendations in the Senate.

A PPACA section, the Community Living Assistance Services and Supports (CLASS) Act, was supposed to create a voluntary, worker-paid LTC benefits program. HHS Secretary Kathleen Sebelius announced that she could not set up the CLASS Act program because she could see no way to guarantee that the program would be actuarially sustainable.

Section 642 of the ATRA bill would make the demise of the CLASS Act official by formally repealing the act.

Since Sebelius suspended implementation of the CLASS program, both Democrats and Republicans in Congress have been talking about the need to develop an alternative. The 2012 Republican party campaign platform included home care proposals. 

President Obama said in a speech after the House passed H.R. 8 that he also would like to work with Congress on finding a way to reduce the effects of Medicare spending on the budget deficit.

Obama said he agrees with both Democrats and Republicans in Congress that "the aging population and the rising cost of health care makes Medicare the biggest contributor to our deficit."

"I believe we've got to find ways to reform that program without hurting seniors who count on it to survive," Obama said.

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