Life Insurers Challenge Obamacare

     WASHINGTON (CN) – The American Council of Life Insurers claims the District of Columbia’s health insurance exchange needs funding so badly it plans to take it from insurers that don’t sell health insurance policies.
     The insurers sued the D.C. Health Benefit Exchange Authority, its Executive Director Mila Kofman, the Executive Board of the D.C. Health Benefit Exchange Authority and city officials in Federal Court, claiming that the city’s emergency legislation to fund its health exchange are unconstitutional.
     The District’s health exchange was created to comply with the 2010 Patient Protection and Affordable Care Act, which appropriated funding to assist states and the District in getting their exchanges off the ground, the complaint states.
     But that funding expires at the end of 2014, and the law mandates that the exchanges must be self-sustaining by Jan. 1, 2015. According to the complaint, the law authorizes states and D.C. to fund their operations by charging assessments or user fees to participating health insurance issuers.
     “In the two years since the District decided to create its own Exchange, it has become clear that the costs of operating the D.C. Exchange will be extraordinary,” the complaint states. “In 2015 alone, the Authority projects that its operating budget will be $28.75 million. That is nearly ten times the $2.9 million operating budget of the entire insurance bureau of the Department of Insurance, Securities and Banking, which monitors the solvency of more than 1,300 insurance companies and nearly 67,000 licensed insurance agents and brokers. The Authority, by contrast, operates an Exchange on which only four issuing insurers sell coverage to, at the moment, less than 50,000 enrollees.”
     The insurers claim the District intends to close the budget gap with recently passed emergency legislation giving it authority to impose assessments not just on companies selling health and dental plans as mandated by the ACA, but “also wholly unrelated insurance products that are not and cannot be sold on the D.C. Exchange.”
     The complaint states: “For example, according to defendants, the Emergency Legislation empowers the Authority to impose the Carrier Fee on all disability income insurance sold in the District even though disability income insurance is not a ‘qualified health plan’ that can be offered on the D.C. Exchange. Similarly, defendants have indicated that the Carrier Fee will also be assessed on dental plans that the ACA allows to be sold on an Exchange but that the Authority is currently excluding from the D.C. Exchange.”
     According to the complaint, the only limitations the District’s emergency legislation offers on the District’s power to assess fees is that the total amount assessed may not exceed reasonable projections of the costs to operate the D.C. Benefit Exchange Authority.
     “Under defendants’ interpretation of the Emergency Legislation, carriers subject to the fee will be required to fund the operations of the D.C. Exchange even if they receive no benefits from its operations. In effect, the Emergency Legislation imposes ‘user fees’ on non-users, i.e., on companies and products that are ineligible for participation on the Exchange and beyond the Authority’s power to regulate,” the complaint states.
     According to the insurance companies, no state plans to fund its exchange in this fashion.
     The Council of Life Insurers wants the court to declare the emergency legislation in violation of the due process clause of the Constitution, and issue an injunction preventing its implementation.
     The Council is represented by James Briody with Sutherland Asbill & Brennan.

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