Tagged Insurers

Insurers May Notch Bigger Profits From Fewer Customers In ‘Trumpcare’

The House GOP’s embattled health care bill has plenty of detractors: Democrats, hospitals, the American Medical Association and the House Freedom Caucus all oppose it. But the insurance industry is not on that list — even though it stands to lose millions of customers.

One reason the industry has been hanging back: Insurers’ profits are expected to fatten under the bill.

The House Republicans’ replacement plan would likely attract more younger, healthier consumers to the individual market than the Affordable Care Act did, according to Standard & Poor’s, the corporate credit rating firm. The ACA tilted the opposite way, offering more options for older, sicker Americans whose health care claims eroded insurers’ profits.

“Profitability will likely improve, as the replacement plan can result in an improved risk pool in the individual market,” S&P said in a report on the House leadership’s initial plan.

A vote on the GOP “Trumpcare” bill is expected Friday, but by late Thursday it remained unclear whether there were enough votes to pass it. The Trump administration has said if the measure doesn’t pass Friday, it will abandon the effort to replace Obamacare.

Under the current health law, an insurer is allowed to charge a 64-year-old consumer a premium that’s three times what it charges a 21-year-old. The House bill allows insurers to charge older consumers premiums that are five times higher.

That change would reduce premiums for younger consumers but boost them significantly for people in their 50s and 60s – even with tax credits that increase for older people under the GOP plan.

Not all insurers are enthusiastic about what’s in the House bill. Those that are also mainly in the business of managing Medicaid services to enrollees under contract with states — such as Molina Healthcare — oppose the bill because of the expected sharp reductions in Medicaid if the House measure is enacted.

In a new analysis of the House bill that was released Thursday, the Congressional Budget Office predicted 9 million people would fall off Medicaid rolls by 2020 and 14 million by 2026. Overall, 52 million Americans under 65 would be uninsured by 2026 compared with 28 million that year under current law, the CBO said.

America’s Health Insurance Plans (AHIP), which has expressed concerns about the bill but hasn’t taken a formal position for or against the bill, has said the legislation’s provisions would give short-term relief to insurers that have been mostly losing money since the exchanges started in 2014.

Those include giving states $100 billion over 10 years to start high-risk pools and stabilization funds to help insurers deal with higher-risk customers.

One of the most significant positives for insurers in the GOP bill is the elimination of a tax that all insurers paid under the ACA. The industry paid $8 billion in 2014 and is expected to pay $14.3 billion in 2018. Congress temporarily suspended the fee for this year.

Insurers’ opposition to the tax was one of the main reasons why the insurance industry chose not to support the ACA when it was approved in 2010. However, the insurance industry built support for the law by throwing its weight behind a requirement preventing insurers from refusing coverage to consumers with preexisting conditions in exchange for a mandate that most Americans have health coverage.

Although many conservative Republicans favor ending the individual mandate, the GOP bill as originally proposed would instead require that Americans keep continuous health coverage or pay a 30 percent penalty when they do buy private coverage.

Many of the nation’s largest insurers, such as UnitedHealthcare, Cigna and Aetna, were never large players in the health law’s exchanges or they have pulled out citing steep financial losses. For them, the elimination of the health insurer tax makes the GOP bill look appealing, said Ana Gupte, a health analyst with Leerink, an investment bank. “The GOP bill is a net positive” for those insurers, she said.

Even insurers with many customers on ACA policies now will be better off financially in the GOP bill, Gupte said. “They will make a bigger [profit] margin on a smaller number of people,” she said.

Anthem, a larger player in the Obamacare marketplaces, has said the GOP bill would benefit insurers and individuals by ensuring that remaining insurers stay in the market to provide choices for consumers.

Health insurers’ cautious optimism about the bill contrasts with the rest of the health industry. Lobbying groups representing doctors, hospitals and nurses have objected vehemently to the legislation. AHIP spokeswoman Kristine Grow said the group remains concerned about the long term stability of the Medicaid health plan market because the GOP bill would kill the Medicaid expansion and reduce federal Medicaid funding to states. She also said it’s too early to know how insurers’ 2018 premiums would be affected under the GOP bill.

A big uncertainty for insurers is whether the Trump administration will continue to allow a key program under Obamacare that helps low-income individuals with out-of-pocket health costs. House Republicans suspended a lawsuit that claimed the $7 billion federal funding of the program was illegal.

The program’s future is of concern to Dr. J. Mario Molina, CEO of Molina Healthcare, which has 3 million Medicaid members and nearly 1 million customers on Obamacare exchange plans. The Long Beach, Calif.-based company operates in about a dozen states.

But Molina said his biggest concern is the GOP bill will return the country to the broken individual market system in place before 2014. “The main thing I am worried about is this bill will cause millions of people to lose insurance coverage,” he said.

Regardless of what Congress and the Trump administration decide to do with Medicaid’s federal funding, Molina predicted more states will shift Medicaid recipients into managed care plans to control costs. “In the short term, we will still grow,” he said.

Categories: Health Industry, Insurance, Repeal And Replace Watch, The Health Law

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Late Move To Dump ‘Essential’ Benefits Could Strand Chronically Ill

A last-minute attempt by conservative Republicans to dump standards for health benefits in plans sold to individuals would probably lower the average consumer’s upfront insurance costs, such as premiums and deductibles, said experts on both sides of the debate to repeal and replace the Affordable Care Act.

But, they add, it will likely also induce insurers to offer much skimpier plans, potentially excluding the gravely ill, and putting consumers at greater financial risk if they need care.

For example, a woman who had elected not to have maternity coverage could face financial ruin from an unintended pregnancy. A healthy young man who didn’t buy drug coverage could be bankrupted if diagnosed with cancer requiring expensive prescription medicine. Someone needing emergency treatment at a non-network hospital might not be covered.

What might be desirable for business would leave patients vulnerable.

“What you don’t want if you’re an insurer is only sick people buying whatever product you have,” said Christopher Koller, president of the Milbank Memorial Fund and a former Rhode Island insurance commissioner. “So the way to get healthy people is to offer cheaper products designed for the healthy people.”

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The proposed change could give carriers wide room to do that by eliminating or shrinking “essential health benefits” including hospitalization, prescription drugs, mental health treatment and lab services from plan requirements — especially if state regulators don’t step in to fill the void, analysts said.

The Affordable Care Act requires companies selling coverage to individuals and families through online marketplaces to offer 10 essential benefits, which also include maternity, wellness and preventive services — plus emergency room treatment at all hospitals. Small-group plans offered by many small employers also must carry such benefits.

Conservative House Republicans want to exclude the rule from any replacement, arguing it drives up cost and stifles consumer choice.

On Thursday, President Donald Trump agreed after meeting with members of the conservative Freedom Caucus to leave it out of the measure under consideration, said White House Press Secretary Sean Spicer. “Part of the reason that premiums have spiked out of control is because under Obamacare, there were these mandated services that had to be included,” Spicer told reporters.

Pushed by Trump, House Republican leaders agreed late Thursday to a Friday vote on the bill but were still trying to line up support. “Tomorrow we will show the American people that we will repeal and replace this broken law because it’s collapsing and it’s failing families,” said House Speaker Paul Ryan (R-Wis.). “And tomorrow we’re proceeding.” When asked if he had the votes, Ryan didn’t answer and walked briskly away from the press corps.

But axing essential benefits could bring back the pre-ACA days when insurers avoided expensive patients by excluding services they needed, said Gary Claxton, a vice president and insurance expert at the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

“They’re not going to offer benefits that attract people with chronic illness if they can help it,”said Claxton, whose collection of old insurance policies shows what the market looked like before.

One Aetna plan didn’t cover most mental health or addiction services — important to moderate Republicans as well as Democrats concerned about fighting the opioid crisis. Another Aetna plan didn’t cover any mental health treatment. A HealthNet plan didn’t cover outpatient rehabilitative services.

Before the ACA most individual plans didn’t include maternity coverage, either.

The House replacement bill could make individual coverage for the chronically ill even more scarce than a few years ago because it retains an ACA rule that forces plans to accept members with preexisting illness, analysts said.

Before President Barack Obama’s health overhaul, insurers could reject sick applicants or charge them higher premiums.

Lacking that ability under a Republican law but newly able to shrink benefits, insurers might be more tempted than ever to avoid covering expensive conditions. That way the sickest consumers wouldn’t even bother to apply.

“You could see even worse holes in the insurance package” than before the ACA, said Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University. “If we’re going into a world where a carrier is going to have to accept all comers and they can’t charge them based on their health status, the benefit design becomes a much bigger deal” in how insurers keep the sick out of their plans, she said.

Michael Cannon, an analyst at the libertarian Cato Institute and a longtime Obamacare opponent, also believes dumping essential benefits while forcing insurers to accept all applicants at one “community” price would weaken coverage for chronically ill people.

“Getting rid of the essential health benefits in a community-rated market would cause coverage for the sick to get even worse than it is under current law,” he said. Republicans “are shooting themselves in the foot if they the offer this proposal.”

Cannon favors full repeal of the ACA, allowing insurers to charge higher premiums for more expensive patients and helping consumers pay for plans with tax-favored health savings accounts.

In an absence of federal requirements for benefits, existing state standards would become more important. Some states might move to upgrade required benefits in line with the ACA rules but others probably won’t, according to analysts.

“You’re going to have a lot of insurers in states trying to understand what existing laws they have in place,” Koller said. “It’s going to be really critical to see how quickly the states react. There are going to be some states that will not.”

Mary Agnes Carey and Phil Galewitz contributed to this story.

Categories: Cost and Quality, Insurance, Mental Health, Public Health, Repeal And Replace Watch, The Health Law

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A Fact Check Finds Many Misleading Letters From Lawmakers On Health Care

When Louisiana resident Andrea Mongler wrote to her senator, Bill Cassidy, in support of the Affordable Care Act, she wasn’t surprised to get an email back detailing the law’s faults. Cassidy, a Republican who is also a physician, has been a vocal critic.

“Obamacare” he wrote in January, “does not lower costs or improve quality, but rather it raises taxes and allows a presidentially handpicked ‘Health Choices Commissioner’ to determine what coverage and treatments are available to you.”

There’s one problem with Cassidy’s ominous-sounding assertion: It’s false.

The Affordable Care Act, commonly called Obamacare, includes no “Health Choices Commissioner.” Another bill introduced in Congress in 2009 did include such a position, but the bill died — and besides, the job as outlined in that legislation didn’t have the powers Cassidy ascribed to it.

As the debate to repeal the law heats up in Congress, constituents are flooding their representatives with notes of support or concern, and the lawmakers are responding. We decided to take a closer look at these communications after finding misleading statements in an email Sen. Roy Blunt (R-Mo.) sent to his constituents and asked readers to send us communications they had received.

The resulting review of more than 200 such missives by ProPublica and its partners at Kaiser Health News, Stat and Vox found dozens of errors and mischaracterizations about the ACA and its proposed replacement. The legislators have cited wrong statistics, conflated health care terms and made statements that don’t stand up to verification.

It’s not clear if this is intentional, or if the lawmakers and their staffs don’t understand the current law or the proposals to alter it. Either way, the issue of what is wrong — and right — about the current system has become critical as the House prepares to vote on the GOP’s replacement bill Thursday.

“If you get something like that in writing from your U.S. senator, you should be able to just believe that,” said Mongler, 34, a freelance writer and editor who is pursuing a master’s degree in public health. “I hate that people are being fed falsehoods, and a lot of people are buying it and not questioning it. It’s far beyond politics as usual.”

Cassidy’s staff did not respond to questions about Mongler’s letter.

Political debates about complex policy issues are prone to hyperbole and health care is no exception. And to be sure, many of the assertions in the lawmakers’ letters are at least partially based in fact.

Democrats, for instance, have been emphasizing to their constituents that millions of previously uninsured people now have medical coverage thanks to the law. They say insurance companies can no longer discriminate against patients with pre-existing conditions. And they credit the law with allowing adults under age 26 to stay on their parents’ health plans. All true.

For their part, Republicans criticize the law for not living up to its promises. They say former President Barack Obama pledged that people could keep their health plans and doctors, and premiums would go down. Neither has happened. They also say that insurers are dropping out of the market and that monthly premiums and deductibles (the amount people must pay before their coverage kicks in) have gone up. All true.

But elected officials in both parties have distorted evidence and left out important context. Some statements were simply disingenuous. Others were whoppers. And while more Republicans fudged than Democrats, both had their moments.

“Do most people pay that much attention to what their congressman says? Probably not,” said Sherry Glied, dean of New York University’s Robert F. Wagner Graduate School of Public Service, who served as an assistant Health and Human Services secretary from 2010 to 2012. “But I think misinformation or inaccurate information is a bad thing, and not knowing what you’re voting on is a really bad thing.”

We reviewed the emails and letters sent by 51 senators and 134 members of the House within the past few months. Here are some of the most-glaring errors and omissions:

Rep. Pat Tiberi, R-Ohio, incorrectly cited the number of Ohio counties that had only one insurer on the Affordable Care Act insurance exchange.

What he wrote: “In Ohio, almost one third of counties will have only one insurer participating in the exchange.”

What’s misleading: In fact, only 23 percent (less than one quarter) had only one option, according to an analysis by the Kaiser Family Foundation.

His response: A Tiberi spokesperson defended the statement. “The letter says ‘almost’ because only 9 more counties in Ohio need to start offering only 1 plan on the exchanges to be one third.”

Why his response is misleading: Ohio has 88 counties. A 10 percent difference is not “almost.”

Rep. Kevin Yoder, R-Kan., said that the quality of health care in the country has declined because of the ACA, offering no proof.

What he wrote: “Quality of care has decreased as doctors have been burdened with increased regulations on their profession.”

Why it’s misleading: Some data show that health care has improved since the passage of the ACA. Patients are less likely to be readmitted to a hospital within 30 days after they have been discharged, for instance. Also, payments have been increasingly linked to patients’ outcomes rather than just the quantity of services delivered. A 2016 report by the Commonwealth Fund, a health care nonprofit think tank, found that the quality care has improved in many communities following the ACA.

His response: None.

Rep. Anna Eshoo, D-Calif., misstated the percentage of Medicaid spending that covers the cost of long-term care, such as nursing home stays.

What she wrote: “It’s important to note that 60 percent of Medicaid goes to long-term care and with the evisceration of it in the bill, this critical coverage is severely compromised.”

What’s misleading: Medicaid does not spend 60 percent of its budget on long-term care. The figure is closer to a quarter, according to the Center on Budget and Policy Priorities, a liberal think tank. Medicaid does, however, cover more than 60 percent of all nursing home residents.

Her response: Eshoo’s office said the statistic was based on a subset of enrollees who are dually enrolled in Medicaid and Medicare. For this smaller group, 62 percent of Medicaid expenditures were for long-term support services, according to the Kaiser Family Foundation.

What’s misleading about the response: Eshoo’s letter makes no reference to this population, but instead refers to the 75 million Americans on Medicaid.

Rep. Chuck Fleischmann, R-Tenn., pointed to the number of uninsured Americans as a failure of the ACA, without noting that the law had dramatically reduced the number of uninsured.

What he wrote: “According to the U.S. Census Bureau, approximately thirty-three million Americans are still living without health care coverage and many more have coverage that does not adequately meet their health care needs.”

Why it’s misleading: The actual number of uninsured in 2015 was about 29 million, a drop of 4 million from the prior year, the Census Bureau reported in September. Fleischmann’s number was from the previous year.

Beyond that, reducing the number of uninsured by more than 12 million people from 2013 to 2015 has been seen as a success of Obamacare. And the Republican repeal-and-replace bill is projected to increase the number of uninsured.

His response: None.

Rep. Joseph P. Kennedy III, D-Mass., overstated the number of young adults who were able to stay on their parents’ health plan as a result of the law.

What he wrote: The ACA “allowed 6.1 million young adults to remain covered by their parents’ insurance plans.”

What’s misleading: A 2016 report by the U.S. Department of Health and Human Services, released during the Obama administration, however, pegged the number at 2.3 million.

Kennedy may have gotten to 6.1 million by including 3.8 million young adults who gained health insurance coverage through insurance marketplaces from October 2013 through early 2016.

His response: A spokeswoman for Kennedy said the office had indeed added those two numbers together and would fix future letters.

Rep. Blaine Luetkemeyer, R-Mo., said that 75 percent of health insurance marketplaces run by states have failed. They have not.

What he said: “Nearly 75 percent of state-run exchanges have already collapsed, forcing more than 800,000 Americans to find new coverage.”

What’s misleading: When the ACA first launched, 16 states and the District of Columbia opted to set up their own exchanges for residents to purchase insurance, instead of using the federal marketplace, known as Healthcare.gov.

Of the 16, four state exchanges, in Oregon, Hawaii, New Mexico, and Nevada, failed, and Kentucky plans to close its exchange this year, according to a report by the House Energy and Commerce Committee.  While the report casts doubt on the viability of other state exchanges, it is clear that three-quarters have not failed.

His response: None.

Rep. Dana Rohrabacher, R-Calif., overstated that the ACA “distorted labor markets,” prompting employers to shift workers from full-time jobs to part-time jobs.

What he said: “It has also, through the requirement that employees that work thirty hours or more be considered full time and thus be offered health insurance by their employer, distorted the labor market.”

What’s misleading: A number of studies have found little to back up that assertion. A 2016 study published by the journal Health Affairs examined data on hours worked, reason for working part time, age, education and health insurance status. “We found only limited evidence to support this speculation” that the law led to an increase in part-time employment, the authors wrote. Another study found much the same.

In addition, PolitiFact labeled as false a statement last June by Donald Trump in which he said, “Because of Obamacare, you have so many part-time jobs.”

His response: Rohrabacher spokesman Ken Grubbs said the congressman’s statement was based on an article that said, “Are Republicans right that employers are capping workers’ hours to avoid offering health insurance? The evidence suggests the answer is ‘yes,’ although the number of workers affected is fairly small.”

We pointed out that “fairly small” was hardly akin to distorting the labor market. To which Grubbs replied, “The congressman’s letter is well within the range of respected interpretations. That employers would react to Obamacare’s impact in such way is so obvious, so nearly axiomatic, that it is pointless to get lost in the weeds,” Grubbs said.

Rep. Mike Bishop, R-Mich., appears to have cited a speculative 2013 report by a GOP-led House committee as evidence of current and future premium increases under the ACA.

What he wrote: “Health insurance premiums are slated to increase significantly. Existing customers can expect an average increase of 73 percent, while the average change due to Obamacare for those purchasing a new plan will be a 96 percent increase in premiums. The average cost for a new customer in the individual market is expected to rise $1,812 per year.”

What’s misleading: The figures seem to have come from a report issued before the Obamacare insurance marketplaces launched and before 2014 premiums had been announced. The letter implies these figures are current. In fact, premium increases by and large have been moderate under Obamacare. The average monthly premium for a benchmark plan, upon which federal subsidies are calculated, increased about 2 percent from 2014 to 2015; 7 percent from 2015 to 2016; and 25 percent this year, for states that take part in the federal insurance marketplace.

His response: None

Rep. Dan Newhouse, R-Wash., misstated the reasons why Medicaid costs per person were higher than expected in 2015.

What he wrote: “A Medicaid actuarial report from August 2016 found that the average cost per enrollee was 49 percent higher than estimated just a year prior — in large part due to beneficiaries seeking care at more expensive hospital emergency rooms due to difficulty finding a doctor and long waits for appointments.”

What’s misleading: The report did not blame the higher costs on the difficulty patients had finding doctors. Among the reasons the report did cite: patients who were sicker than anticipated and required a raft of services after being previously uninsured. The report also noted that costs are expected to decrease in the future.

His response: None

Sen. Dick Durbin, D-Ill., wrongly stated that family premiums are declining under Obamacare.

What he wrote: “Families are seeing lower premiums on their insurance, seniors are saving money on prescription drug costs, and hospital readmission rates are dropping.”

What’s misleading:  Durbin’s second and third points are true. The first, however, is misleading. Family insurance premiums have increased in recent years, although with government subsidies, some low- and middle-income families may be paying less for their health coverage than they once did.

His response:  Durbin’s office said it based its statement on an analysis published in the journal Health Affairs that said that individual health insurance premiums dropped between 2013 and 2014, the year that Obamacare insurance marketplaces began. It also pointed to a Washington Post opinion piece that said that premiums under the law are lower than they would have been without the law.

Why his response is misleading:  The Post piece his office cites states clearly, “Yes, insurance premiums are going up, both in the health-care exchanges and in the employer-based insurance market.”

Rep. Susan Brooks, R-Ind., told constituents that premiums nationwide were slated to jump from 2016 to 2017, but failed to mention that premiums for some plans in her home state actually decreased.

What she wrote: “Since the enactment of the ACA, deductibles are up, on average, 63 percent. To make matters worse, monthly premiums for the “bronze plan” rose 21 percent from 2016 to 2017. … Families and individuals covered through their employer are forced to make the difficult choice: pay their premium each month or pay their bills.”

What’s misleading:  Brooks accurately cited national data from the website HealthPocket, but her statement is misleading. Indiana was one of two states in which the premium for a benchmark health plan — the plan used to calculate federal subsidies — actually went down between 2016 and 2017. Moreover, more than 80 percent of marketplace consumers in Indiana receive subsidies that lowered their premium costs. The HealthPocket figures refer to people who do not qualify for those subsidies.

Her response: Brooks’ office referred to a press release from Indiana’s Department of Insurance, which took issue with an Indianapolis Star story about premiums going down. The release, from October, when Vice President Mike Pence was Indiana’s governor, said that the average premiums would go up more than 18 percent over 2016 rates based on enrollment at that time. In addition, the release noted, 68,000 Indiana residents lost their health plans when their insurers withdrew from the market.

Why her response is misleading: For Indiana consumers who shopped around, which many did, there was an opportunity to find a cheaper plan.

Sen. Ron Wyden, D-Ore., incorrectly said that the Republican bill to repeal Obamacare would cut funding for seniors in nursing homes.

What he wrote: “It’s terrible for seniors. Trumpcare forces older Americans to pay 5 times the amount younger Americans will — an age tax — and slashes Medicaid benefits for nursing home care that two out of three Americans in nursing homes rely on.”

What’s misleading: Wyden is correct that the GOP bill, known as the American Health Care Act, would allow insurance companies to charge older adults five times higher premiums than younger ones, compared to three times higher premiums under the existing law. However, it does not directly slash Medicaid benefits for nursing home residents. It proposes cutting Medicaid funding and giving states a greater say in setting their own priorities. States may, as a result, end up cutting services, jeopardizing nursing home care for poor seniors, advocates say, because it is one of the most-expensive parts of the program.

His response: Taylor Harvey, a spokesman for Wyden, defended the statement, noting that the GOP health bill cuts Medicaid funding by $880 billion over 10 years and places a cap on spending. “Cuts to Medicaid would force states to nickel and dime nursing homes, restricting access to care for older Americans and making it a benefit in name only,” he wrote.

Why his response is misleading: The GOP bill does not spell out how states make such cuts.

Rep. Derek Kilmer, D-Wash., misleadingly said premiums would rise under the Obamacare replacement bill now being considered by the House.

What he wrote: “It’s about the 24 million Americans expected to lose their insurance under the Trumpcare plan and for every person who will see their insurance premiums rise — on average 10-15 percent.”

Why it’s misleading: First, the Congressional Budget Office did estimate that the GOP legislation would cover 24 million fewer Americans by 2026. But not all of those people would “lose their insurance.” Some would choose to drop coverage because the bill would no longer make it mandatory to have health insurance, as is the case now.

Second, the budget office did say that in 2018 and 2019, premiums under the GOP bill would be 15 to 20 percent higher than they would have been under Obamacare because the share of unhealthy patients would increase as some of those who are healthy drop out. But it noted that after that, premiums would be lower than under the ACA.

His response: None.

Have you corresponded with a member of Congress or senator about the Affordable Care Act? We’d love to see the response you received. Please fill out our short form.

Charles Ornstein is a senior reporter at ProPublica, a nonprofit news organization based in New York City.

Categories: Insurance, Medicaid, Repeal And Replace Watch, The Health Law

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GOP Recycles Controversial 2003 Bill To Boost Small-Business Insurance

In a bid to improve the health insurance purchasing clout of small businesses, Republicans have dusted off a piece of controversial legislation more than a decade old and reintroduced it as part of their effort to remake the market after they throw out the Affordable Care Act.

The earlier bill, which passed the House in 2003 but didn’t advance, was widely panned by groups representing consumers, providers, the health insurance industry and state officials. At the time, they argued that it would do little to enhance the coverage options or control costs of many small businesses, especially those that employ older, sicker workers, while at the same time weakening consumer protections against plan insolvency and fraud.

Health policy experts say there’s no reason to change that assessment now.

“It was a bad idea in 2003, and it’s a worse idea today,” said Timothy Jost, an emeritus professor at Washington and Lee University School of Law in Virginia who is an expert on the health law.

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The bill would allow the establishment of nationwide “association health plans” that could be offered by professional or trade groups, chambers of commerce and the like. Small businesses could buy coverage through these associations, in theory gaining strength in numbers to enhance their bargaining leverage with insurers, leading to cheaper, better coverage and lower administrative costs.

The Small Business Health Fairness Act of 2017 is slated to head to the House floor this week. Speaker Paul Ryan (R-Wis.) has expressed enthusiasm for association health plans and said he intends to move the legislation in tandem with the reconciliation bill that would unwind budget-related provisions of Obamacare, another name for the ACA.

Several business groups, including the National Retail Federation and the U.S. Chamber of Commerce, support the bill, hoping that it will encourage more small businesses to offer their employees coverage.

“We don’t think it’s going to be the panacea to solve all our members’ issues, but we view it as a valuable option,” said Kevin Kuhlman, director of government relations for the National Federation of Independent Business, a trade group and supporter of the bill. NFIB members, he said, “want a little more ability to design their own options and less responsibility to conform to federal requirements.”

The idea isn’t new. Association health plans have existed for decades. But they often escaped close supervision because neither states nor the federal government had clear regulatory authority over them. In the 1970s and ’80s, there were cases of fraud and insolvency that raised concerns about the model. Some multiple-employer purchasing groups went belly up and left consumers and providers with millions in unpaid claims.

So Congress amended federal law to allow states to regulate these plans. When the ACA passed in 2010, the Obama administration required that association health plans meet the new small-group standards: They had to cover the 10 essential health benefits, for example, and couldn’t charge older people premiums that were more than three times higher than those of younger people.

The new bill would change all that. It would eliminate most state regulation of association health plans and put oversight in the hands of the federal Department of Labor, which would certify them.

The ACA requirements that apply to all plans, like the prohibition on lifetime and annual coverage limits, would apply to association health plans as well, said Kevin Lucia, a research professor at Georgetown University’s Center on Health Insurance Reforms. But the ACA’s small-group requirements would not. Plans could offer stripped-down coverage and would have more latitude in setting premiums than regular plans in the small-group market. They could operate in multiple states and generally avoid state-mandated benefits and other state insurance rules.

Under the Republican bill, association health plans still couldn’t discriminate against individuals based on their health, but they could charge higher premiums to companies with sicker workers. So association health plans would likely appeal to employers with younger, healthier workers who would qualify for lower rates and not be troubled by skimpier coverage. That could draw those businesses away from state-regulated health plans, which would be left with sicker, costlier enrollees, creating an uneven playing field and a segmented market.

“If you’re a healthy small employer and you’re allowed to escape all these rules, you may be able to have lower premiums, until someone in your group gets sick,” said Lucia.

Solvency is a real concern as well, say experts, since the federal standards in the bill are generally less rigorous than state rules.

The flexibility that GOP lawmakers see in the bill might not serve workers well, said Sarah Lueck, a senior policy analyst at the Center on Budget and Policy Priorities.

“Right now there’s a fairly consistent set of rules of what a small group or individual plan has to look like in terms of benefits, costs and coverage,” she said. “If we’re talking about a world where none of that exists anymore or an association health plan is outside of those standards, then as a consumer you’re dealing with a very confusing situation.”

Please visit khn.org/columnists to send comments or ideas for future topics for the Insuring Your Health column.

Categories: Health Industry, Insurance, Insuring Your Health, Repeal And Replace Watch, The Health Law

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