About Employers Health Benefits After AHCA
It has been a month since the American Health Care Act was pulled because House Republicans lacked the votes to advance it to the Senate. Here’s a run-down of all that has happened since then, including our perspective on what it means to employers.
Individual Options in the Public Exchange
Over the past month, after Humana announced that it will no longer offer plans on the public exchange and Anthem announced that it is nervous, we have been seeing articles about parts of the country where Obamacare options could go from one to zero. Insurance companies are trying to decide whether to participate in the exchange market in 2018 as they wait for Washington to provide some much-needed clarity and stability.
Last week, health insurers met with Seema Verma, the new Medicare administrator. Their biggest concern is the future of cost-sharing reductions (CSRs) paid by the administration that now go to the companies covering about seven million individuals to help lower deductibles and co-payments. While the Obama administration paid the subsidies, House Republicans sued, arguing that payments made by the executive branch and not appropriated by Congress were unconstitutional. A federal district court judge agreed but allowed the subsidies to continue while the case is being appealed, and the next court date is May 22. Interestingly, Kaiser Family Foundation released an analysis that showed eliminating the CSRs would actually result in a net increase of $2.8 Billion to the Federal government in 2018 for higher premium subsidy payments. In addition to the CSRs, insurers also worry about enforcement of the individual mandate penalty. Without it, healthier people might consider going without insurance, which drives up costs for the insured.
What employers need to know: The funding for the CSRs is critical for the insurance companies because it will saddle them large immediate costs and affect their pricing of future policies. Without the subsidies, rates are estimated to increase an additional 20% on top of required increases for 2018. The health of the individual market is important to employers as outside options for COBRA coverage and pre-65 retiree medical coverage. In addition, shortfalls in the individual market will result in cost-shifting to other markets, most likely employers since they cover the largest portion of the US population.
Attempts to Revive the AHCA Continue
Following the failed attempt to pass the AHCA in the House, the White House urged continued efforts aimed at bridging differences between GOP moderates and conservative Freedom Caucus members who believe the AHCA did not do enough to drive down insurance premiums. Just before Congress left town on Friday, April 7, for its two-week Spring recess, House Republicans agree to add language to the bill that would establish a federal risk-sharing program providing $15 billion to states over nine years. The change did not convince the Freedom Caucus members, who had earlier met with Vice President Mike Pence to discuss their support for getting rid of three ACA regulations -- essential health benefits, which mandate what services insurers must cover; community rating, which says insurers can't charge sick people more for insurance; and guaranteed issue, which says insurers must cover people with pre-existing conditions.
Talks between the White House, House GOP lawmakers produced a compromise proposal on April 26 that would let States to opt out of essential health benefit regulations and loosen the rules on when insurance companies can charge higher premiums. In exchange, states would have to set up a high-risk pool where older, sicker people could buy coverage, likely at much higher prices. It remains unclear, however, whether the proposed changes will attract enough votes to move the bill out of the House.
What employers need to know: There is still interest in repeal/replace, but the reality that it will take time seems to have sunk in – especially given that even if the House is able to pass a bill, there will be more issues to navigate in the Senate.
Trump Has Options While Waiting for Lawmakers
There was an interesting piece in the New York Times outlining what the Trump administration could do to the ACA in the absence of legislative changes. It could weaken enforcement of the individual mandate; not fund CSRs and make premium subsidies less generous; allow states to impose work requirements under Medicaid expansion; and redefine essential health benefits (although this would require a lengthy re-write of current regulations). What the administration can’t change is the employer mandate or taxes created under the ACA. Nor can it increase in premiums for older Americans. Most recently, HHS issued a stabilization rule aimed at addressing some of the insurance companies concerns in the individual insurance market. It addresses premium payment requirements, shortening the open enrollment period, pre-approval verification for special enrollment requests, and flexibility on plan designs within the metal categories (essentially, allowing higher cost sharing in order to lower the premium costs).
What employers need to know: The longer it takes for lawmakers to reach consensus, the more important these types of actions will be. Employers should be aware of any actions that potentially could result in cost shifting -- which is everything on the list.
Here’s the bottom line. More than 177 million Americans get their health coverage through an employer. American businesses are a critical partner for success as the Trump Administration and lawmakers navigate the future of health insurance. We strongly support actions that seek to slow healthcare cost growth and limit cost-shifting to private payors.
In our recent policy paper, we recommend the creation of a “President’s Healthcare Leadership Council” to drive transformation and boost transparency in healthcare. In setting health policy for the coming years, the federal government has an important opportunity to support the collaboration needed to drive value throughout the entire health system.