Washington, D.C., (July 3, 2014) — A plan by the District of Columbia to cover operating costs for its health exchange would assess fees on supplemental insurance products that are prohibited from being sold on the exchange. The assessments violate the Affordable Care Act (ACA) and are unconstitutional, the American Council of Life Insurance (ACLI) said in a complaint filed today.
The complaint, filed in U.S. District Court for the District of Columbia, focuses on the Health Benefit Exchange Authority Financial Sustainability Emergency Amendment Act of 2014 that the D.C. Council passed on May 22, 2014. The act authorized the D.C. Health Exchange Authority to assess insurers that offer long-term care insurance, disability income insurance and other supplemental products in D.C.
ACLI’s complaint recognizes the challenge the District faces in attempting to fund the high costs of its exchange. 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 D.C. 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 insurers sell coverage to less than 50,000 enrollees.
“ACLI does not have a position on the Affordable Care Act. Our concerns are solely focused on how D.C. has chosen to fund its own exchange,” said Gary Hughes, ACLI executive vice president and general counsel. “The funding limitations of the Affordable Care Act are clear. The D.C. Health Exchange Authority can only assess qualified health plans under its jurisdiction to fund the exchange. Supplemental benefits do not fall under this definition.
“Because these products are prohibited from even being sold on the exchange, the supplemental insurance carriers would be paying an assessment without seeing any benefit. In addition, the cost of the assessments will likely, and unfairly, impact the affordability of these products for consumers in the District of Columbia,” Hughes said.
ACLI also will file a preliminary injunction asking the court to prevent any assessments on supplemental benefit carriers while it considers the complaint.
Download ACLI’s complaint. (PDF)
The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association with approximately 300 member companies operating in the United States and abroad. ACLI advocates in federal, state, and international forums for public policy that supports the industry marketplace and the 75 million American families that rely on life insurers’ products for financial and retirement security. ACLI members offer life insurance, annuities, retirement plans, long-term care and disability income insurance, and reinsurance, representing more than 90 percent of industry assets and premiums. Learn more at www.acli.com.