Bloomberg News

Insurers to Pay Fees in States Rejecting U.S. Health Law

November 30, 2012

Health insurers who want to sell plans in states that refuse to create new U.S. health-care marketplaces will have to pay fees for the federal government to regulate them.

Insurers will pay a fee of 3.5 percent of their premiums to sell plans in a federally run health exchange, the government said today in a regulatory filing. The exchanges are new marketplaces somewhat like online travel services where uninsured people will buy policies.

Each state must tell the federal government by Dec. 14 whether they will run an exchange. So far, 17 have said they won’t build one, according to the nonprofit Kaiser Family Foundation of Menlo Park, California. In another six, the government will build the exchange and run it in partnership with the state. The total amount of the fee announced today won’t be known until all states have made their decisions, the government said.

The proposed regulation also describes how the government will prevent insurers from cherry-picking healthy customers in the exchanges. The rule “will help to ensure that every American has access to high-quality, affordable health insurance,” the Department of Health and Human Services said in the filing.

Republican Refusals

Most states that have refused to build exchanges have Republican governors, who have said they oppose the health-care law, projected to extend coverage to about 30 million Americans who would otherwise lack it. Arizona Governor Jan Brewer, a Republican, said Nov. 28 that she wouldn’t build one because her state “would wield little actual authority” over an exchange and it would cost $27 million to $40 million a year.

Insurers say that the fees will be passed onto their customers.

“Any new fees to pay for the administration of exchanges will add to the cost of coverage, and that is why the focus needs to be on reducing administrative costs, streamlining operations, and avoiding regulatory duplication that will add complexity and increase costs,” Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry’s Washington lobbying group, said in an e-mail.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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