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Washington Watch - July 20, 2011

Health Insurance Exchanges

Exchanges are one part of the Affordable Care Act that both Republicans and Democrats seem to like. Many lawmakers and policy wonks alike think that the exchanges will survive even if the law does not. In fact, several states had set up Exchange systems before they were even written into the health reform law. 

An exchange as envisioned by the Affordable Care Act is a marketplace where individuals and small businesses can shop for health insurance. The law set out two kinds of exchanges. The first is one that would provide options for those who buy their own coverage in the individual market, which often includes the self-employed. A second type of exchange, which the the law calls the Small Business Health Options Program (SHOP), was in very general terms created to facilitate small employers’ purchase of coverage for their employees in the small group market. Congress was fairly general in describing exchanges, leaving many of the details to the Department of Health and Human Services (HHS).

The federal government specifies that SHOP exchanges will "give small employers and their employees greater bargaining power, a bigger risk pool, and choices among affordable health plans. Employers can still purchase coverage outside of an Exchange. In SHOP, employers can choose the range of plans they want to offer and decide on a contribution toward the coverage; employees then select the plans that best meets their needs and resources.  Employers can offer plans from several insurance companies, but will receive a single bill and write a single check."

On July 11, 2011 HHS issued the proposed exchange rules giving the public 75 days to comment. The proposed rules are 347 pages and address exchange regulation and risk regulation for these markets. 

Read about how the exchanges will be set up for small employers on the NASE blog SelfMade.

Click here for more general information about the exchanges.

Businesses To Congress: Reform Regulations Now

On July 14, the House Committee on Energy and Commerce Subcommittee on Environment and the Economy held a hearing entitled, “Regulatory Chaos: Finding Legislative Solutions to Benefit Jobs and the Economy.” The hearing was a part of series held by the Subcommittee on the issue of regulatory reform.

Chair John Shimkus (R-Ill.) presided over the hearing, in which the witnesses expressed agreement on the need for regulatory reform. Kirk Liddell, President of IREX Corporation, was supportive of the Regulatory Flexibility Act (RFA), but said “indirect effects” should be considered when agencies analyze regulations and their affect on businesses. Kevin Rogers, President of the Arizona Farm Bureau, warned the Subcommittee that the Federal government is making it increasingly harder for farmers to live off the land. 

“Let’s keep in mind that in order to decrease the deficit, we need to grow jobs,” Timothy Murphy (R-Pa.), said. “We can’t create jobs if we burden businesses with regulatory costs.”

The NASE supports efforts to ensure that federal agencies undergo a cost/benefit analysis of proposed rules to determine the impact on the small business community prior to finalizing regulations.

For more information about the hearing, click here.

Warren Testifies On The New Consumer Financial Protection

On July 14, Consumer Financial Protection Bureau (CFPB) architect Elizabeth Warren testified for the House Committee on Oversight and Government Reform in a hearing entitled, “Consumer Financial Protection Efforts: Answers Needed.” The CFPB is a new federal regulator of consumer financial products created by the financial reforms of the Dodd-Frank Act of 2010. The hearing addressed the implementation and congressional oversight of the CFPB that Warren helped guide into existence. The NASE has written about this amendment in previous editions of Washington Watch.

Committee Chairman Darrell Issa (R-Calif.) expressed concerns that the Congress may have trouble with oversight because the CFPB is housed within the Federal Reserve.

"The Federal Reserve is not transparent,” he said. “It resist(s) any kind of congressional oversight and considers it unreasonable interference.”

During almost four hours of questioning, Warren, a special advisor to the President, repeatedly addressed another Republican concern: Will the Consumer Finance Protection Bureau seek to ban any credit instruments or practices, like payday lending, as abusive or unfair?

Warren said there were not any practices she would want to ban at the moment, adding she would instead pursue less severe remedies like consumer education, enforcement investigations, fines or civil lawsuits against lenders.

Several Republicans seized on her answer and pressed her to agree to strip the agency of its power to ban such practices if she did not see any immediate need to use them. But Warren disagreed, saying the power to ban practices was one important tool the new agency needed to fix “a broken consumer credit system.”

While many of its policies are currently undefined, the agency will immediately enforce 18 consumer protection laws that existed before last year's financial overhaul, including rules governing credit cards and oversight of mortgage servicers.

Read more about the hearing here.

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