ACA: Administration’s Health Care Order – May Improve Availability & Affordability – But Congress Still Must Act
The Administration’s recent executive order, which will expand health-insurance options for individuals battered by rising premiums and fleeing insurers, depends upon others to clear the way. While the executive order represents progress, Congress still needs to act.
The President directed three federal departments—Labor, Treasury, and Health and Human Services—to consider ways of providing more flexibility for association health plans, short-term insurance, and health reimbursement arrangements.
Associations have been offering their members access to various types of health coverage for decades. The best known example is AARP. Those policies are “fully insured,” meaning a licensed health insurer underwrites them and bears the risk. And because federal law prior tothe ACA left insurance regulation primarily to the states, association-offered policies must comply with regulations in whichever state they are sold.
The Employee Retirement Income Security Act of 1974, better known as Erisa, incorporated widely varying state insurance regulations,which made it difficult for large companies with employees in multiple states to offer uniform coverage to their employees. It allows large employers, as well as groups of employers known as Multiple Employer Welfare Arrangements, to “self-insure.” This means the employer, not an insurer, pays the medical bills.
Erisapre-empted self-funded plans from state insurance regulations, preventing state legislatures and insurance departments from micromanaging as they do small-employer and individual plans,making self-funded plans very popular. For decades medium-size and even small employers have looked for creative ways to leave fully insured coverage for a self-funded plan.
Several associations, especially those representing small employers, such as the National Federation of Independent Business and the National Association of Realtors, spent years trying to persuade Congress to allow associations to self-insure and to offer their members the same coverage across state lines largely free of state mandates. But Congress never changed the law.
However, since the passage of the ACA, states are no longer the driving force behind most insurance mandates and regulations. The health law imposed some requirements on self-funded plans—free preventive care, no annual or lifetime limits, no pre-existing condition waiting period, children as old as 26 can remain on their parents’ policy, etc.Most self-funded plans retain at least some freedom to create their own benefits package.
Anticipating the Labor Department will identify a way to allow associations and small employers to create self-insured plans—or something similar, the change would allow adjusted benefits and offer more affordable coverage to more people.
Many oppose this step because self-funded plans bypass insurers; others fear that association plans will be a “race to the bottom” of coverage. A July 2016 report from the Employee Benefit Research Instituteindicates that 60% of the 155 million American workers and theirdependents with employer-provided coverage are in self-funded plans now and like it.
In addition, the executive order seeks to roll back HHS-imposed restrictions on short-term, limited-benefit policies, known as “bridge policies.” If this measure succeeds, people would again be able to keep those policies for a year instead of three months, the limit imposed by the previous administration.
If HHS believes that purchasing such a policy constitutes an approved “hardship” and temporarily exempts buyers from the mandate’s penalty, more people who have little or no coverage under the ACA could gain at least some coverage.
Since some employers make tax-free health reimbursement arrangement deposits (which employees use to pay for certain eligible health-care costs), the Order would expand HRA options, though it’s unclear how much flexibility officials can provide without changing the law. Expanding health savings accounts would is logical because that money belongs to the individual, but legislations is still required to make it official.
The intent of theExecutive Order is to expand access to affordable coverage. And while it may achieve part of this goal, much is still left up to Congress.
Source: WSJ – Oct. 20, 2017