by Leslie Small
For health insurers, there's a lot to like in a spending package
passed by Congress to avoid a government shutdown.
One of the two measures that make up the $1.4 trillion spending
package will completely repeal the long-reviled health insurer fee (HIF) starting
in 2021, which will especially help insurers in the Medicare Advantage
business. The legilslation also includes two provisions to that could stabilize
the Affordable Care Act exchanges by thwarting any attempts to ban silver
loading or auto-reenrollment.
And portions of the Lower Health Care Costs Act of 2019 —
including new transparency requirements for contracts between providers and
health plans, and a solution to surprise medical billing that involved
arbitration — neither passed on their own nor made it into the spending
package.
President Donald Trump signed the spending package into law on
Dec. 20 after both the House and Senate passed the legislation.
The HIF repeal, effective starting in 2021, is the most
significant portion of the spending package for the managed care industry.
"This legislation is an early Christmas gift for healthcare
stocks across the board," Evercore ISI analyst Michael Newshel advised
investors in a Dec. 16 research note. "We had been anticipating HIF relief
for 2021 and maybe 2022 too, but permanent repeal is of course better and
removes any future uncertainty about the fee’s possible return [after
2020]," he wrote.
Citi Research analyst Ralph Giacobbe added that the HIF's repeal
is "a major win for the MCOs, particularly those with significant Medicare
Advantage exposure like [Humana] given the dynamics of that end market and the
inability to pass through the tax."
In the commercial insurance market, carriers have largely passed
the cost of the HIF onto their members, "so eliminating it would have the
impact of reducing premiums for consumers, which would be politically
expedient," Credit Suisse analyst A.J. Rice wrote in a Dec. 16 note.
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