Association Health Plan Update
Association Health Plan Update
by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.
- On one side of the debate over association health plans (AHPs), we have national trade associations, franchisees, and organizations and companies with a high concentration of independent contractors who want to form an AHP and offer fully-insured “large group” or self-insured health coverage to their members, their employees, and their 1099 workforce. On the other side of the AHP debate, we have ACA supporters and State regulators who want to end the flexibility the AHP final regulations offer before these rules can even become effective. While I believe these efforts will fail (as I explained last week), I believe these same opponents will not stop once these rules become effective, and they will take steps to limit the flexibility the AHP regulations now offer.
- Analysis: As most of you can surmise, I am a proponent of AHPs. Not because I do not believe in the ACA. But because I do not see the ACA working the way the drafters of the law had originally hoped. As a result – at least in my opinion – the best way to provide relief to employees of small employers and individuals who are facing difficulties in the ACA’s existing small group and individual markets is to provide them with an “alternative” to the ACA. As I have articulated in the past, one of the best “alternatives” I see is an AHP (as stated, I am NOT a big fan of short-term health plans as an “alternative,” but I do think people should have a right to choose (I’m consistent on that point in other issue areas as well)). Notwithstanding my support for AHPs, I do hope that people view me as an objective supporter. What I mean is this: I recognize that some people will not be able to benefit from the introduction of AHPs in the marketplace. Rather, these people may be disadvantaged by, among other things, higher premiums. And because of this, I want to figure out a way to help this sub-set of the population. One idea that comes to mind is the creation of a reinsurance program or an “invisible high risk pool” for a State’s individual market. Let me be more direct on this point: I believe EVERY State SHOULD put a reinsurance program/“invisible high risk pool” in place through a Section 1332 Waiver. There is literally NO reason not to. This Administration is ready, willing, and able to grant a 1332 Waiver for a reinsurance program/“invisible high risk pool.” And with the introduction of AHPs (and short-term health plans), this Administration SHOULD do more to expedite the approval process, so States can get these risk mitigation programs into place ASAP. I do NOT think HHS needs an act of Congress to expedite the approval of 1332 Waivers (because the statute says that HHS has up to 180 days to make a decision, so a decision can be made sooner AND because HHS already approved 3 requests for a reinsurance program, and in Jan./Feb. 2017, HHS issued a checklist for States wanting to request a Waiver to streamline the application process). I also want to help the millions of people who will actually benefit from the existence of AHPs. This includes employees employed by small employers who are national trade association members or franchisees. I also want to help out independent contractors who are part of the growing “gig economy.” To ensure that these employees and independent contractors can obtain comprehensive coverage at a lower cost than health plans currently being offered in the ACA’s existing small group and individual markets, I want to make sure that States do not take steps to thwart the DOL’s AHP regulations and limit the flexibility that the final rules offer. If States do indeed enact laws or issue regulations to limit the final AHP regulations – to me – that would be akin to hand-cuffing employees and independent contractors to markets that even ACA supporters know are not working. It is almost as if States would be holding this sub-set of the population hostage, and forcing them to find health coverage in dysfunctional markets. Maybe that is over-stating things a bit, but that is how I see it. In summary, because I want to advocate for the creation of programs that will help those people remaining in the individual market (to help with any premium increases resulting from the introduction of AHPs) AND because I want to protect and promote the policy goals encapsulated in the final AHP regulations (so millions of employees and independent contractors can obtain lower costing, comprehensive coverage through an AHP), I want to create a coalition of stakeholders interested in forming AHPs so we can work with State regulators and ACA supporters to achieve these 2 very important goals. Who’s with me??
Employer Updated/HSA Update
- About a month back I told you about a proposal that would allow an HSA to be paired with 80% “actuarial value” (AV) plan (see the attached update). At the time, I suggested that this proposal makes some sense because most high-deductible health plans (HDHPs) out there are 80% AV plans. I was then asked to provide evidence on how I came to the conclusion that the majority of HDHPs are indeed 80% AV plans. In response, I looked back at my notes – and admittedly – I found that virtually every HDHP is a 70% AV plan, not so much an 80% AV plan (although a lot of 80% AV plans are HDHPs). BUT, the reason I mentioned that most HDHPs are 80% AV plans was based on a statistic from a Kaiser Health Survey indicating that a majority of workers who are covered under a “single” health plan has at least a $1,500 deductible, which is by definition an HSA-qualified HDHP (because the minimum deductible for a “single” HSA-qualified HDHP is only $1,300).
- Analysis: The reason I mention the Kaiser statistic is to re-emphasize the point I made 2 weeks ago: That more and more employers are offering their workers HDHPs (see my attached update). In addition, I bring this issue up again to suggest that employees are getting to a breaking-point, where the continued shift of the ever-increasing cost of health care is becoming too great for employees to bear. The article embedded talks about the struggles with HDHPs. So what is the answer? Some are suggesting some form of a “single-payer” system, while others are suggesting that the HSA rules should be modified to make HDHPs more “consumer-friendly” for high-medical-utilizers. You know where I stand in this debate: I think Congress should fix the “eligibility rigidity” that exists under the current HSA rules so employers can develop innovative plan designs that can incorporate direct-primary care offerings and telemedicine services that provide more than “medical care” into the HDHP. I also think the “eligibility rigidity” should be fixed so HDHPs can make first-dollar payments for certain “medically necessary” services like chronic care services. These first-dollar payments would shield workers with chronic conditions from paying for these services out-of-their-own pocket (thus, saving them money). When it comes to whether some form of “single-payer” is the answer, the volume is slowly getting louder and louder on this point as we move closer to the mid-term elections. Starting as early as January 2019, the “single-payer” discussion could grow to a fever-pitch as Democratic Presidential candidates begin jockeying for position. Sadly, I am not sure if we will ever answer the question in a way that makes sense for most Americans and our economy. The way I see it: On the one side of the HSA debate, we have Republicans who want to expand access to HSAs and who think requiring people to have “skin in the game” through an HDHP is good policy. On the other side of the HSA debate are Democrats, who say that low-income individuals do not have enough disposable income to contribute to an HSA, so expanding access to these tax-favored accounts will not help lower-income Americans. They further argue that the increased out-of-pocket expenses resulting from HDHP coverage is NOT good policy. Unless Republicans and Democrats can compromise on fixing the “eligibility rigidity” currently present under the HSA rules, I do NOT see any progress in making HDHPs more consumer-friendly, and I believe the status quo (i.e., more and more costs being shifted to employees) will continue. If the status quo indeed continues, then I believe employees (and employers) will ultimately reach a breaking-point where some form of “single-payer” is enacted into law at the Federal and/or State level. Either because support for some form of “single-payer” has grown among employees and employers (due in large part to the inability to slow-down the continued cost shift onto employees) OR because our country has no other choice than to adopt government price controls and/or a government-run health care system. If we ever get to this point, Republicans – to whom some form of “single-payer” is an anathema – won’t be able to stop the inertia of this policy shift, OR they will be in the minority and unable to stop Democratic policymakers who favor “single-payer.” Again, some of what I am saying may seem a bit over-the-top. BUT, because I see little compromise on both sides of the HSA – as well as the “single-payer” – debates, the grid-lock may drag on long enough where our country is painted into a corner, and the only way to control the ever-increasing cost of health care is through some sort of government intervention.