January 4th, 2018
A new year and new news out of Washington. The biggest story this week was that the Trump Administration released a proposed regulation on Association Health Plans that could dramatically change the individual and small group markets. Here are a few highlights:
- The main point of the regulation is to make it easier for small businesses and self-employed individuals to form associations (i.e., a group that purchases insurance—if the term MEWA means something to you that’s what they are).
- It did this by broadening the definition as to who can join an association. They can now be either very loosely based on common industry or interest, or based on geography.
- Associations plans do NOT have to comply with individual or small group market ACA regulations. They are not risk adjusted, do not have to provide EHBs, or have 3:1 age rating. They cannot rate on health though.
- Since the plans can offer skimpier benefits and aren’t risk adjusted they will draw healthier firms/employees out of the small group and individual markets (the self-employed represent probably 20%-33% of the individual market)—leaving more adverse selection and higher premiums among enrollees in ACA compliant plans.
- States do retain significant regulatory authority on associations (for example set minimum standards for benefits).
- This is a significant change to ERISA law- especially by applying the law to the self-employed so legal challenges are possible
- The Comment period ends in 60 days—so the final rule likely won’t be until April or May at the earliest
One key difference between Association Plans and Short-Term Duration Plans (regulation forthcoming) is that Association plans have to prohibit annual/lifetime limits, have minimum value requirements, and have maximum out of pocket limits. Association plans will likely be skimpier than ACA-compliant plans but less skimpy than short-term duration plans.
Other News
Legislation Watch: In a repeat of last month, Congress has until January 19th to pass a budget. Numerous health policy issues such as CHIP, CSR, Reinsurance funding or tax delay could be attached to a budget bill. Axios is reporting that the Alexander-Murray Bill (i.e., CSR funding) is very unlikely to pass. In fact, many/all of the health policy issues may take a backseat to immigration issues.
Medicare: Earlier this week the White House approved CMS’s proposal for all Medicare Advantage plans to have their provider networks reviewed for adequacy at least once every three years rather than for specific circumstances.