On Thursday, October 12, President Trump took two actions that will have significant impact on people buying individual health insurance and those with small employer group coverage. First was the expected signing of an Executive Order. The second was the unexpected announcement that the administration would stop paying cost sharing reduction payments.
Executive Order – As expected, President Trump signed an Executive Order directing federal agencies to craft regulations that would allow trade associations to offer health plans that would be exempt from certain requirements in the Affordable Care Act (ACA). Under these "association health plans" (AHPs), smaller employers could band together and be considered large groups, and would be able to offer cheaper, less comprehensive coverage.
The order also directs agencies to propose regulations to expand availability of short-term insurance policies (by making them available for 364 days instead of limited to 90) and to expand the availability and permitted use of Health Reimbursement Accounts (HRAs).
The Departments of Labor, Treasury, and Health and Human Services, will now undertake development of proposed regulations which will presumably ease current restrictions. Federal rulemaking takes months; it is not expected that the new regulations will be issued until at least the end of the year.
While the President and other proponents argue that these actions will lower premiums and expand coverage, numerous groups (including insurers, state insurance commissioners, and the American Association of Actuaries) have opposed expansion of AHPs for years because it would destabilize insurance markets as groups with younger, healthier employees choose the cheaper plans, leaving people with higher health care needs in the more comprehensive plans.
CSR payments ending – The administration decided to end the cost sharing reduction (CSR) payments effective immediately. These payments help lower income people buying individual coverage pay their deductibles and copays.
Nationally, 7 million people are in plans with cost sharing reductions. Insurers are required to offer plans with reduced cost sharing to lower income individuals, those with incomes between 138% and 250% of the federal poverty level. The CSR payments -- amounting to about $7 billion in 2017 -- reimburse insurers for the costs of providing the lower cost sharing plans.
Reaction to the announcement has been strong, with several attorneys general, including Eric Schneiderman in New York, saying they will sue the federal government over the decision.
The BlueCross BlueShield Association and America’s Health Insurance Plans issued the following statement:
“Millions of hard-working Americans with modest incomes depend on cost-sharing reduction (CSR) benefits to get access to medical care. These benefits help real people every day, and if they are ended, there will be real consequences. These payments are not a bailout – they are passed from the federal government through health plans to medical providers to help lower costs for patients who see a doctor to treat their cancer or fill a prescription for a life-saving medication.”
“We need constructive solutions that increase consumer choice, lower consumer costs, and stabilize local markets. Terminating this critical program will do just the opposite. This action will make it harder for patients to access the care they need. Costs will go up and choices will be restricted.”
“We are committed to pursue every possible path to ensure that all Americans who depend on these benefits can continue to get the care they need when they need it.”
News and Media
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June 6, 2017:
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