Four health insurers led by Cigna Corp. (CI) have asked the Obama administration to exempt medical plans they sell to Americans overseas from the 2010 health law, saying a denial may imperil about 1,100 U.S. jobs.
The threat to move management of the plans to offshore locations is outlined in a Sept. 15 letter to Health and Human Services Secretary Kathleen Sebelius signed by 15 members of Congress. In the letter, obtained by Bloomberg, the lawmakers urge quick action to save the jobs. Almost half the firings may be at Cigna’s international unit in Claymont, Delaware, said a person familiar with the talks who asked not to be identified because they are private.
The insurers want to avoid a rule that they spend as much as 85 cents of each premium dollar on care, as well as mandates on claims denials and marketing language, said three people familiar with the negotiations who aren’t authorized to speak publicly. A ruling may come this year, one of the people said.
“We are acutely aware of, and sensitive to, the special circumstances of expatriate plans,” said Steve Larsen, director of Health and Human Services Department’s Center for Consumer Information and Insurance Oversight, in an e-mail. He said the agency “will address the methodology for 2012 and beyond in future rulemaking.” He declined to provide further details.
Americans who are sent overseas by employers rely on expatriate plans sold individually and to multinational corporations to cover their health care.
UnitedHealth, Aetna, MetLife
Exemption requests have come from Cigna, the world’s largest provider of expatriate health plans; UnitedHealth Group Inc. (UNH) of Minnetonka, Minnesota; Hartford, Connecticut-based Aetna Inc. (AET); and New York-based MetLife Inc., the people said.
“We’re not looking for special treatment,” Mariann Caprino, a Cigna spokeswoman, said in a telephone interview. “We contend that Congress never meant for the law to apply to expatriate health plans.” The company is working “diligently” with the Obama administration to retain the U.S. jobs, she said.
Caprino confirmed that the Bloomfield, Connecticut-based insurer is seeking exemptions. A March briefing paper sent by Cigna to Congress refers to the need “to begin writing expatriate policies overseas as a competitive necessity, thus moving American jobs overseas.”
While Cigna doesn’t break out revenue for its expatriate operations, Caprino said those plans, managed out of Delaware and California, serve about 800,000 workers globally. The company’s international division had $2.4 billion in sales in 2010, or about 10 percent of revenue.
30% of Market
Cigna controls about 30 percent of the market based on gross written premiums, said Sarah James, an analyst at Wedbush Securities Inc. in Los Angeles. The next biggest provider is closely held BUPA Finance Plc in London, James said.
In a letter sent Oct. 18 to the Health and Human Services Department, Cigna urged that “expatriate and international plans be exempt from all requirements” of the law. The correspondence, provided by Caprino, is signed by the Edward Potanka, the company’s assistant chief counsel.
The law “presents unintended obstacles to ensuring that U.S.-based health service companies and multinational employers are able to provide these benefits, and thus creates a global competitive disadvantage for American business,” Caprino said in an e-mailed statement.
Bloomberg provides international health-care benefits through Cigna International to approximately 200 employees.
The four companies already have a waiver on the cost-of-care mandate in place through the end of 2011. They now want permanent relief from all aspects of the law that don’t fit with the expatriate business model, the people said. Officials expected to decide within weeks on the issue may opt to address each provision separately rather than give a blanket exemption, one of the people said.
Mohit Ghose, an Aetna spokesman, said the company is “actively seeking relief” from the same provisions in the law that have been problematic from its enactment. He referred to a Jan. 31 letter sent to HHS when the company sought the health- spending waiver that expires at the end of the year. He declined to comment on whether the insurer would be move jobs overseas.
“The company continues to seek ways to simplify the new rules and encourage the government to use its authority to preserve different types of coverage,” Ghose said. Aetna covers about 450,000 consumers with its expatriate business.
The letter said the mandate “would put American insurers at a disadvantage to foreign insurers. The end result would be the loss of American jobs at U.S. insurance companies as this business would shift to overseas insurers and their foreign- based workers.”
The letter, signed by Steven Kelmar, the senior vice president for government affairs and public policy, said the law would make expatriate plans more expensive for overseas workers, who already face higher costs because of the need to build a global network of overseas health-care providers and have on- hand employees who speak multiple languages.
The plan costs are also more volatile than similarly sized plans in the U.S., Kelmar said.
John Calagna, a spokesman for MetLife, said the unique nature of expatriate plans make application of the health-law’s provisions “impossible or impractical.” He said his company was seeking “relief” from the law but wouldn’t specify what form that may come in. UnitedHealth spokesman Don Nathan declined to comment on the issue.
Letter From Congress
The letter signed by Democratic Senators Thomas Carper and Christopher Coons, both of Delaware, and 13 other lawmakers said that they were told by insurers that lack of an exemption would result in expatriate businesses moving overseas, resulting “in the loss of more than 1,000 U.S. jobs.”
Also signing the correspondence were Democratic Senators Richard Blumenthal of Connecticut and Kirsten Gillibrand of New York, and Republican Senators Marco Rubio of Florida and Patrick Toomey from Pennsylvania. Democratic Governor Jack Markell of Delaware also spoke with Sebelius on Sept. 15 and discussed the potential loss of jobs in his state, one of the people said.
“We support efforts by your administration to recognize the significant challenges expatriate plans face and encourage you to issue timely regulations that acknowledge those challenges,” the letter stated.
To contact the editor responsible for this story: Reg Gale at Rgale5@bloomberg.net