ACA Watch October 13, 2017
Yesterday, President Donald Trump issued an Executive Order (EO) that directs the Departments of Treasury, Labor, and Health and Human Services to review and potentially revise previous guidance concerning several matters related to health insurance plans. (White House)
At this time, no Affordable Care Act (ACA) regulations are affected. (NAHU) The Agencies would need to take regulatory action before any ACA policies would change.
Impact on Benefits
In regards to the benefits industry, the Executive Order asks for the Agencies to propose new regulations or revised guidance (to the extent permitted by law), supported by the following new policy:
- Consider expanding access to association health plans (AHPs), which includes allowing AHPs to be offered across state lines. AHPs would not be allowed to exclude any employee, determine premium prices based on pre-existing conditions, have annual or lifetime limits, or require cost-sharing for preventative care services.
Timeline: within 60 days
- Consider expanding the availability of short-term, limited duration insurance (STLDI)
Timeline: Within 60 days
- Consider improving employees’ ability to use Health Reimbursement Arrangements (HRAs)— for example, by allowing HRAs to reimburse the cost of health insurance premiums, and by allowing HRAs to be integrated with non-group coverage. This would reinstate the ability to have stand-alone HRAs.
Timeline: within 120 days
- Later in the day, the President made a separate statement announcing plans to cut off $7 billion in cost-sharing reduction payments to insurers this year. If carried out, this would likely cause the federal Exchanges to fail. Senate Health Committee leaders have been working on a bipartisan deal to fund these payments in order to stabilize the markets. (The Hill)
No foreseeable effect on 2018 enrollment
It is important to note that the EO does not have the force of law and does not actually direct the Agencies to adopt any particular rules. At this time, 2018 open enrollment does not appear to be affected by the EO in any way. (NAHU)
Rather, the Agencies now just need to consider expanding access to AHPs, STLDI and HRAs to the extent consistent with current law.
Any changes or new regulations issued would have to allow ample time for comment and implementation. The EO’s impact, if any, will not be seen for a minimum of several months. Unless the Agencies take regulatory action, nothing will change.
Earlier this year, Republicans made numerous attempts to repeal the ACA through introducing bills to Congress. This culminated in the GOP exhausting all options for ACA repeal in 2017.
Yesterday’s EO would suggest a shift in the Trump administration’s strategy for health care reform—now relying on executive authority rather than Congress to implement GOP policy objectives.
When the ACA passed in 2010, minimum coverage standards were established for all health plans, including AHPs.
Historically, AHPs were intended to make it easier for individuals and small businesses to purchase insurance. Before ACA, some AHPs experienced issues with bankruptcy or had been accused of advertising comprehensive coverage that was not actually comprehensive. (Kaiser Health News)
Currently, short-term insurance is limited to 90 days of coverage, as a result of ACA regulations. The Trump proposal would allow short-term plans that last up to 364 days.
The ACA also did not allow free-standing HRAs, nor did it allow HRAs to be used to pay insurance premiums. The EO asks the agencies to allow employers to give employees money to buy their own plans. (Kaiser) This is intended to increase choice and reduce consolidation in the marketplace.
On the whole, critics say that changes proposed by the EO could divert healthier people away from insurance markets that are already struggling. It may also result in more employers abandoning job-based coverage.
The President’s later statement expressing intention to cut off insurers’ cost-sharing reduction payments is likely to be met with many lawsuits. It also puts pressure on lawmakers and the Senate Health Committee to reach a deal to fund the payments.
As a recap, the ACA and all its regulations and penalties are currently in effect. Employee Benefits Corporation will continue to provide any relevant updates as they become available.
As a long-time member of the Employers Council for Flexible Compensation (ECFC), Employee Benefits Corporation will continue to provide ACA Watch updates as legislation continues to evolve.