WHERE ONE ROAD ENDS, ANOTHER BEGINS: THE LATEST DEVELOPMENTS IN HEALTHCARE REFORM
September 30 marks the end of the budget reconciliation road. The fiscal year agreement by both the House and Senate to use budget reconciliation, the vehicle allowing the Senate to pass legislation with 51 instead of the normal 60 votes, to repeal and replace the Affordable Care Act (ACA) has come to a dead end. October 1 begins the new fiscal year. Once again, we see both Chambers pass a resolution to use budget reconciliation; this year tax reform is the target, not healthcare. The result: ACA remains the law of the land.
What’s The Plan For Healthcare Reform?
Where we go from here requires thought and planning. Do we repair or resurface an existing road or do we construct a brand new road? Constructing a new road is a monumental undertaking. It requires that knowing exactly where we’re going.
Once complete, the decision process can begin and we can determine which road will take you there. The 2017 Congressional events show that there is no agreement on either the destination or the correct path. Therefore, repair and resurface seems the more feasible road to accomplish any positive change.
The House and Senate must work together to change the healthcare road ahead. This requires that individuals and committees work together to draft legislation that improves or enhances the provisions of the ACA necessary to stabilize the marketplace, improve access to care and create more affordable options for all.
Likewise, the regulatory agencies, the Department of Health and Human Services (HHS), Treasury, and the Department of Labor (DOL), must work within their realm to draft the policies and procedures necessary to carry out the new and existing laws Congress enacts. As directed by President Trump in his first Executive Order (EO) on January 3, these agencies are tasked with finding ways to "ease the burdens" on individuals, states and the health industry.”
What Are The Next Steps?
It’s no secret that even with the introduction of positive ACA changes, (coverage up to age 26, no limitations for pre-existing conditions, preventive care with no cost-sharing, and fewer uninsured) the marketplace still faces rising costs in healthcare and health insurance, fewer options, and future implementation of new taxes, like the excise (“Cadillac”) tax that will hit employers in 2019 for payment in 2020.
There is consensus that the status quo will not meet the needs of the country.
Each of the governmental division—Executive, Legislative, and Regulatory—are working to explore the options. They’re evaluating the current environment and considering which areas are in most need of change. Options vary from minor repairs such as provisional modifications or replacements, to major repairs such as structural enhancements or replacements.
Listed below are the following areas that each division is currently exploring or targeting:
Last Thursday, President Trump issued an Executive Order (EO), his first EO since last January.
In it, he requests that the regulatory areas explore some specific areas of the ACA in hopes that this will improve current conditions.
The EO asks the Departments (DOL, HHS, and Treasury) to review and consider proposing regulations, or revising existing guidance, with regard to three separate items that may help to improve choice and competition. Additionally, the Secretary of HHS is to provide a final report within 180 days on state and federal laws and regulations and policies that negatively impact choice and competition. It does not require the adoption of any new rules or regulations.
Listed below are the three specific items, a summary of the request, common viewpoints from those for and against the expansion, and the applicable timeframe for reporting:
Expand Access to Association Health Plans (AHPs)
- DEFINITION: AHPs have been in existence for many decades and allow groups of employers to band together as one large employer. Current laws, including the ACA, prohibit employers from banding together solely for the purpose of purchasing insurance and may subject these groups to additional state laws and other regulations.
- EO REQUEST: The Secretary of Labor should consider ways to allow more employers to form AHPs. Specifically, they should:
- review and reinterpret ERISA’s (Employee Retirement Income Security Act of 1974), “employer” definition to expand the ability to set up and operate association health plans. ERISA sets the protection standards for health and pension plans; and
- consider ways to “promote AHP formation on the basis of common geography or industry”
- SUPPORTERS’ VIEWPOINTS: By allowing smaller employers to group together to self-insure or purchase coverage as one group, AHPs will help reduce costs by:
- removing the state coverage requirements that drive up premium cost;
- avoiding some of ACA’s plan mandates that drive up coverage cost, like requirement that plans include all ten essential health benefits (EHB’s);
- providing uniform premium contributions for all participants, regardless of age; and
- simplifying administrative costs and improve access
- OPPOSING VIEWPOINT: Expansion of AHPs will:
- further destabilize the market since healthier groups will opt for coverage that eliminates state mandates and leave only the “sick” groups in need of the state-mandated coverage in the existing market plans;
- cause unknowing consumers to forgo coverage that current state mandates provide, e.g. coverage for autism;
- potentially eliminate current ACA plan coverage mandates; and
- resurrect historic issues of new AHPs failing to provide protections to consumers governing timely claim payment and proper funding
- TIMEFRAME: Departmental report of feasibility of enacting such provisions is due within 60 days
Expand Availability of Short-term Health Plans
- DEFINITION: Short-term limited duration insurance (STLDI) plans provide individuals with insurance to fill gaps, i.e. provides coverage between the time when one health plan ends and a new one begins, and do not require all ACA coverage mandates. Historically, these policies allow individuals to apply for coverage for no more than 12 months but allow for renewal. Under President Obama, a 3-month maximum duration with no extension was placed on these policies
- EO REQUEST: The Department Secretaries should consider proposing regulations or revising guidance to expand STLDI availability, including the allowance of longer periods of coverage and coverage that individuals may renew
- SUPPORTERS VIEWPOINT: Expanding STLDI coverage will:
- help individuals find lower cost options to those appearing in the marketplace;
- prevent healthier individuals from having to purchase expensive full coverage for a short period of time; and
- allow individuals the personal choice of purchasing less extensive coverage
- OPPOSING VIEWPOINT: Expansion of STLDIs will:
- cause unknowing consumers to forgo coverage provisions they may need; and
- unintentionally trapping individuals in STLDI coverage by preventing eligibility for a special enrollment period (SEP) needed to change to full coverage mid-year
- TIMEFRAME: Departmental report of feasibility of enacting such provisions is due within 60 days
Expand Availability and Permitted Use of Health Reimbursement Arrangements (HRAs)
- DEFINITION: HRAs are vehicles that allow employer dollars to be used, tax-free, by employees for reimbursement of certain healthcare expenses and premiums
- EO REQUEST: The Department Secretaries should consider proposing regulations or revising guidance to increase usability, expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used to reimburse non-group expenses
- SUPPORTERS VIEWPOINT: Expanding HRA coverage will:
- provide more flexibility to employers and employees in financing the cost of health insurance; and
- remove the employer burden of offering healthcare coverage by allowing all employers, not just those non-applicable large employers (ALEs), to reimburse individual health policy premiums
- OPPOSING VIEWPOINT: Expansion of HRAs may cause the following:
- employers in individual marketplaces may have to reimburse individual policy premiums rather than offering group health plans having little choice today and high premiums, which may not be in the employees’ best interest; and
- individuals not previously offered group coverage but who now have access to employer HRA funds to pay for individual premiums, will limit or lose eligibility for premiums subsidies
- TIMEFRAME: Departmental report of feasibility of enacting such provisions is due within 120 days
Future Changes to Regulations
Once all reports are in and recommendations made, any regulatory changes will follow the normal rulemaking process that requires a proposed rule be issued and posted for public commentary prior to any regulation enactment
There continues to be a flurry of legislative activity proposing changes and improvements to the ACA. The introduction of a number of bills in the House and Senate affecting employers demonstrate the support for improving the current healthcare landscape. Here are a few of the bills addressing employer concerns:
- HR 173 & S 58 – “Middle Class Health Benefits Tax Repeal Act of 2017” – repeals the excise “Cadillac” tax
- HR 246 & S 1859 – addressed the tax on health insurers, i.e. HIT tax, that is passed through to consumers by the way of additional premiums – the House calls for a repeal while the Senate bill calls for a moratorium on the tax through 2018
- HR 3291 & S 1827 – “HEALTHY KIDS Act of 2017”and “KIDS Act of 2017” – restores funding to states for the Children’s Health Insurance Program through 2022
- HR 3919 & S1908 – “Common Sense Reporting Act of 2017” – modifying required ACA reporting for applicable large employers (ALEs) to only those employees receiving subsidies
- HR 1101 & S1818 – “Small Business Health Fairness Act of 2017” and “Small Business Health Plans Act of 2017” – expanding association health plans (AHPs)
- HR3798 – “Save the American Worker Act of 2017” – modifying the ACA definition of full-time employee from 30 hours per week to 40 hours per week
HHS, Treasury, and DOL, on separate occasions over the past months, sent out Requests for Information (RFI) to gather information to address the President’s EO from January on ways to ease the regulatory burden on stakeholders. Each area has been reviewing the responses to finalize ideas and feasibility of changes.
Visit our ACA Watch Page to stay up to date on healthcare developments.