Ellmers: Reform law may hamper small insurers

The Health and Human Services Department hasn’t adequately addressed the needs of small insurance companies — and small employers — as it implements the healthcare reform law, Rep. Renee Ellmers (R-N.C.) said in a letter to Health and Human Services Secretary Kathleen Sebelius.

Ellmers, chairwoman of the House Small Business Committee’s healthcare subcommittee, said Health and Human Services (HHS) deserves credit for giving states significant flexibility over their health insurance exchanges. But regulations on the exchanges haven’t answered key questions about small insurers, Ellmers said.

Her letter, dated Tuesday, also raised concerns about the impact other parts of the healthcare law will have on small insurers and small employers.

Small insurers likely will have a harder time meeting new limits on the amount of money plans can use for profits and administrative expenses, Ellmers said. The law also requires all plans sold through an exchange to offer a package of “essential” health benefits, which could be harder for smaller carriers to put together.

“If the Exchanges are to truly foster competition and reduce the cost of health insurance for small businesses, the many standards that small insurers must meet should be realistic, and not result in their exclusion from the market or from health insurance altogether,” Ellmers wrote.

HHS has issued two rounds of regulations on the exchanges but still hasn’t defined essential benefits. And Ellmers said employers need more information about exchanges specifically designed for small businesses.

States have the option of running separate exchanges for individuals and small employers, or they can combine the two into a single marketplace.