Congress tries to clarify which taxes to be excluded from revenue
The Democratic chairmen of six congressional panels sent a letter to HHS clarifying the intent of a section of the health reform law that outlines which federal taxes can be excluded from health insurers’ revenue calculations. These revenue calculations are important because insurers have to meet standards starting next year on how they spend member premiums. Under the law, health insurers must spend at least 85% of subscriber premiums on medical costs in group coverage plans, and at least 80% of premiums on medical costs for individual plans. While regulations on medical-loss ratios are still forthcoming from HHS, the six chairmen said the law’s intent is that only federal taxes and fees “derived specifically from the provision of health insurance coverage” in the health reform law can be excluded from insurers’ revenue calculations. However, the National Association of Insurance Commissioners, which plans to issue recommendations on the medical-loss ratio provision, seems to differ on interpretation. One NAIC committee already recommended that all federal taxes be excluded in revenue calculations except for investment income taxes, said Brian Webb, manager of health policy and legislation for the NAIC.