Changing the Benefits Landscape
2017 NAHU Capitol Conference
Update by Russ Blakely
Last week I went to Washington, DC along with more than 900 other members of the National Association of Health Underwriters (NAHU) to talk with political leaders about the Affordable HealthCare Act (ACA) and its impact on employers, employees, and those that have purchased individual coverage. While there, I met with key staff members in the offices of Senator Lamar Alexander, Senator Bob Corker, and Congressman Chuck Fleischmann.
The single most important message that NAHU wanted us to convey was the importance of stabilizing the individual health insurance market immediately, before it collapses. Ironically, while we were there Humana announced they are exiting the individual market place after this year. In Tennessee, this means that 16 counties will have no insurance carrier offering individual health insurance coverage through the exchanges in 2018. This includes Knoxville, Tennessee where more than 40,000 residents do not have any individual plan options for 2018. Senator Alexander describes this scenario as the residents in those 16 counties having a bus ticket, but no bus. Our Tennessee political leaders know firsthand the importance of shoring up individual health insurance coverage ASAP.
Collapse of the individual market will spill over into employer sponsored group coverage as well. That is why NAHU wanted us to stress the importance of taking immediate action while GOP repeal and replace options are being discussed. On February 17, proposed regulations were issued which are intended to help stabilize the individual market. However, many fear these regulations do not go far enough to prevent destabilization in the individual market, possibly leading additional carriers to exit the non-group market for 2018. Under current law, carriers have until April to make that decision or submit plans and rates for 2018.
Janet Trautwein, President and CEO of NAHU, testified to the U.S. Senate Health, Education, Labor & Pensions (HELP) Committee outlining steps to positively change the health insurance market in our country. She noted that more than 40,000 pages of regulations and guidance have been issued since the Affordable HealthCare Act (ACA) was enacted, and the resulting burden on employers is overwhelming. Her key points included the following recommendations specific to employer sponsored health plans:
1. Allow continuation of “grandmothered” policies beyond 2017. In Tennessee many employers with fewer than 50 employees remain in “grandmothered” plans which will help shelter them from significant premium increases when “community rating” of plans is scheduled to take effect on January 1, 2018.
2. Allow states more flexibility to regulate the small group market including expanding the age rating bands to 5 to 1 from the current 3 to 1, so costs for younger individuals in group plans could be reduced while older individuals would pay more, which was the case prior to the enactment of ACA. Also, give states the flexibility to decide on permissible health plan provisions, rather than Washington.
3. Permanently repeal the Cadillac Tax which has been delayed until 2020. The Cadillac Tax is a 40% excise tax on health plans for premiums above the threshold of $10,200 for individual coverage and $27,500 for family coverage. Both Republicans and Democrats have pledged to repeal this provision. However, the problem is this tax is designed to help pay for ACA associated costs with the Congressional Budget Office estimating this tax would generate $80 billion over a ten year period. Most experts agree the Cadillac Tax will not generate this much revenue because employers will reduce benefits to minimize the tax. Thus the effect is to discourage employers from providing benefits they wish to provide their employees.
4. Repeal the Health Insurance Tax. The Health Insurance Tax (HIT) is expected to generate $100 billion over the next ten years. It will add approximately $150 to $200 per year to the cost of individual coverage and $350 to $450 annually to the cost of family coverage.
5. Remove or relax the restrictions that health plans must meet to remain “grandfathered,” so greater changes in employee contributions, deductibles, and other benefit changes can be made and still maintain “grandfather status”. Fewer than 10% of all group health plans are grandfathered at this time.
6. Simplify the structure and burden of ACA reporting requirements that employers with more than 50 employees are required to meet each year.
7. Suspend implementation of the complex Equal Employment Opportunity Commission (EEOC) Wellness Rulewhich discourages the use of wellness programs by employers.
These are recommendations which NAHU feels should be implemented quickly, while lawmakers develop their versions of ACA replacement plans. There are several GOP plans emerging including House Speaker Paul Ryan’s “A Better Way” proposal. We heard Senator Bill Cassidy from Louisiana outline his proposal. Kentucky Senator Rand Paul also has a version gaining some traction within the GOP.
Common themes in GOP proposals:
1. Repeal both the individual and the employer mandate.
2. Allow the sale of health insurance across state lines.
3. Make Health Savings Accounts (HSAs) more flexible and accessible.
4. Allow trade associations and local Chambers of Commerce to develop association plans so employers could more easily pool together for coverage.
CHALLENGES FACING LAWMAKERS
Some of the challenges facing members of Congress as they work to reshape individual and group health insurance in our country are:
1. Navigating a path that stabilizes the individual marketplace immediately, while repealing a host of unpopular ACA provisions that impact employer sponsored health plans.
2. “Repair” of the ACA, which is a more cautious and thoughtful approach than “repeal then replace”. However, many Republicans are impatient and want to repeal now. Keeping them at bay while alternatives can be discussed and vetted is wearing thin on hard-liners in the Republican party, including the Freedom Caucus group.
3. Coming up with revenues to fund health care reform, since most Republicans want to repeal any and all taxes associated with ACA and Obamacare. Most Republicans are reluctant to increase existing taxes or initiate new taxes of any kind.
4. Finally, none of the GOP proposals adequately address the underlying problem of HEALTH CARE COSTS. So regardless of where we end up, cost increases will still be the single biggest issue for employers.
We will continue to update and inform you along the way as the legislative process unfolds, whether it be repair, repeal, replace, or some combination of those.