While Congressional efforts to change or repeal the Patient Protection and Affordable Care Act (ACA) continue to be stalled, the federal administration announced two significant health policy developments at the end of last week – an Executive Order aimed at promoting access to plans not subject to the full range of ACA protections as well as the decision to stop making cost-sharing reduction payments immediately.
• Expanding access to Association Health Plans (AHPs), via which small employers may join together to purchase large group plans or self-insure in the large group market rather than purchasing small group plans that are subject to greater regulation under ACA and by states. Via the order, the Secretary of Labor is directed to consider proposing regulations or guidance to expand AHPs by expanding the basis on which employers may permissibly join together in “bona fide” associations for AHPs (which requires commonality of interest outside of providing a health plan), such as to allow on the basis of common geography or industry (across state lines), to the extent such change is consistent with existing law.
• Expanding the coverage period for Short-Term Limited-Duration Insurance (STLDI), which are not subject to ACA regulation. Via the order, the Secretaries of Treasury, Labor, and Health & Human Services are directed to consider proposing regulations or guidance to allow STLDIs to cover individuals for longer periods (currently limited to three months) and renew coverage, to the extent such change is consistent with existing law.
• Expanding the use of Health Reimbursement Arrangements (HRAs), which are employer-funded (non-taxable) accounts that can be used for health care purposes. Via the order, the Secretaries of Treasury, Labor, and Health & Human Services are directed to consider proposing regulations or guidance generally increase the “usability” of HRAs (theoretically outside of the context of ACA-compliant group plans), expand employers’ ability to offer HRAs to employees, and allow HRA funds to be used in conjunction with non-group coverage (instead of requiring that HRAs be offered in conjunction with group coverage), to the extent such change is consistent with existing law.
Any resulting policy changes could lead to further erosion of enrollment in plans with the full range of ACA protections. However, the changes would have to be consistent with existing federal law (which raises questions about the likelihood of being able to achieve all of what was proposed) and requires further action. Any rulemaking would be done via a public comment period. The Departments are also required to report on existing law that fails to conform with the Executive Order and actions that could promote the Executive Order.
The order also states that the administration will prioritize:
• Lowering barriers to entry in health care markets, limiting “excessive” consolidation, and preventing abuses of market powers.
• Improving access to quality information needed to make informed health care decisions while minimizing reporting burdens on industry.
Ending Cost-Sharing Reduction payments
After nearly a year of suggesting they intend to do so, the administration announced late last Thursday that it will cease making payments to fund cost-sharing reductions (CSRs) immediately. Under the ACA, insurers are required to offer reduced cost-sharing plans to income-eligible individual and the federal government is required to reimburse insurers for the cost of doing so. However, there is ongoing legal dispute over the lack of appropriation of CSR payments, and the administration is now using that as a basis to end payments.
CSRs themselves should still be available as insurers on the Marketplace are still required under the law to reduce cost sharing. However, insurers may also choose to leave the Marketplaces and only offer coverage off-Marketplace, where CSRs are not required. For carriers that choose to remain on the Marketplace, without the federal reimbursements, the cost of the (still-required) CSRs must be spread across the market in the form of higher premiums.
On Tuesday, Senators Alexander and Murray (Chair of the Senate Committee on Health, Education, Labor and Pensions and ranking minority member, respectively) announced that they had reached agreement on a deal to appropriate CSR funding for two years (the bill would also increase flexibility provided by Section 1332 waivers). Appropriating the funding would eliminate the administration’s basis for stopping required payments. In addition, nineteen state attorneys general have filed suit to require the payments to continue. Insurers are also expected to raise judicial challenges regarding the fact that they remain legally obligated while the government is not making related legally-obligated payments.
For now, however, payments are set to end. Rates for 2018 in many states were increased to account for a lack of CSR reimbursements and the Centers for Medicare and Medicaid Services is allowing carriers that did not already adjust their 2018 rates assuming CSRs will not be paid to do so now. However, 2017 rates cannot be changed.