Health insurance exchange in Washington D.C. sparks more controversy

industry insurance fraud

D.C. exchange may be illegally collecting fees on supplemental insurance products

industry fraud commerce health insuranceThe Washington D.C. health insurance exchange has fallen into a pit of controversy. A new initiative aims to resolve some of the exchange’s financial problems by allowing it to institute fees on supplemental insurance products. The problem, according to the American Council of Life Insurance, is that these supplemental products are prohibited from being sold through the exchange, according to the Affordable Care Act. As such, they cannot be used as a way to cover the costs of the district’s exchange.

Legislation allows exchange to collect fees from insurers, but contradicts the Affordable Care Act

In May of this year, the Health Benefit Exchange Authority Financial Sustainability Emergency Amendment Act was approved by the D.C. Council. This legislation allowed the D.C. Health Exchange Authority to institute a fee on insurance companies that offered long-term care coverage, disability income insurance, and other such products. According to the Affordable Care Act, these products cannot actually be sold through any insurance exchange, so collecting fees on such products as they are sold through exchanges may be illegal.

American Council of Life Insurance files complaint regarding the matter

The American Council of Life Insurance argues that the legislation approved by the D.C. Council is unconstitutional and the organization has filed an official complaint with the U.S. District Court for the District of Columbia. While the organization takes note of the difficulties in funding the exchange,  the actual costs of the exchange may be somewhat exaggerated.

Expenses of the exchange may be somewhat exaggerated when compared to the expenses of regulatory agencies

The operating budget of the D.C. insurance exchange is nearly $29 million, which is ten times higher than the operating budget of the D.C. Department of Insurance, Securities, and Banking. The agency is responsible for regulating more than 1,300 insurance entities and some 67,000 licensed insurance agents. By comparison, the district’s insurance exchange has only four insurance companies offering coverage and has sold coverage to only 50,000 people. The exchange itself is not responsible for managing these policyholders in any way beyond the purchasing of insurance coverage.

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