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HAP Will Monitor Trump Administration Health Insurance Changes; Consumer Education Will be Critical

October 23, 2018

The Trump Administration made back-to-back announcements this week about changes to insurance market policies stemming from the Affordable Care Act (ACA).

The Centers for Medicare & Medicaid Services (CMS) and the Department of Treasury issued new guidance that loosens restrictions around state innovation waivers. This guidance will give state governors much more power to overhaul their insurance exchanges. State legislatures will no longer have to approve state waiver plans.

The announcement of the new guidance was followed by the introduction of a proposed rule to allow employers to fund health reimbursement arrangements (HRA) for employees to shop for their own health coverage on the individual marketplace.

New Guidance

CMS and Treasury guidance requires that states provide coverage that is at least as comprehensive and affordable to a comparable number of people as without the waiver. The new guidance also implements an access standard requiring states to provide access to the same level of coverage.

The Administration will judge a waiver by how it impacts the population as a whole, rather than specific populations, as was the case under the ACA guidance. The new guidance will continue to require that a comparable number of people remain covered, but it broadens the definition of coverage to include more types of coverage, such as short-term limited duration (STLD) plans.

Proposed Rule

The proposed rule allowing businesses to give employees money to purchase health insurance on the individual marketplace is intended to expand choices for employees that work at small businesses and bring more competition to the individual marketplace.

The Department of Health and Human Services, the Department of Labor, and the Department of Treasury are calling for a restructuring of Obama regulations that limited the use of employer-funded accounts known as HRAs. Under the new rule, HRA money would remain exempt from federal and payroll income taxes for employers and employees.

The rule could scale back the use of premium subsidies. If the HRA is deemed "affordable" based on the amount provided by the employer, the employee would not be eligible for a premium tax credit. If the HRA would fail to meet those minimum requirements, an employee could choose between a premium tax credit and the HRA.

Public Debate

For the past year, STLDs; association health plans (AHP); and health care sharing ministries (HCSM) have been discussed as lower-cost insurance options for individuals. The effectiveness of these models continues to be debated.

The Commonwealth Fund issued an August Issue Brief looking at HCSMs. The brief suggests consumers may be misled by the exact type of coverage they are purchasing—despite attractive monthly payments.

STLD insurance plans have traditionally been a solution for individuals that experienced a temporary gap in coverage. These plans generally limit the types of services covered and the maximum dollar coverage, and contain certain pre-existing condition exclusions. Individuals accustomed to the protections under the ACA may not be fully prepared for higher out-of-pocket costs in the event of a serious illness or injury. The Pennsylvania Department of Insurance has weighed in with concerns about expanding STLDs.

Earlier this year, Pennsylvania Insurance Commissioner Jessica Altman also sent a letter to the U.S. Departments of Labor and Health and Human Services outlining the department’s position on the implementation of a federal rule aiming to expand AHPs. Commissioner Altman expressed concern that the rule will allow for substandard coverage that will limit consumers’ access to comprehensive health care.

HAP will closely monitor the impact of the Administration’s policy changes and work with the Department of Insurance and health care and consumer stakeholders to educate the public, and ensure affordable, quality access to health care for all Pennsylvanians.

If you have any questions about the impact on insurance coverage in the state, please contact Jeff Bechtel, HAP’s senior vice president, health economics and policy. Questions about HAP’s federal advocacy efforts should be directed to Laura Stevens Kent, HAP’s vice president, federal advocacy.

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