The year 2017 has been like no other. In less than six months, the Congress confronted us with four terrible health reform bills. Miraculously, all of these have failed. Now, the administration has confronted us with decisions that have the potential to destroy the individual health insurance market.
On October 12, the president issued his 50th executive order intended to accomplish three objectives: Expand access to Association Health Plans (AHPs), which could potentially allow American employers to form groups across state lines; expand coverage through low-cost, short-term limited duration insurance (STLDI); change Health Reimbursement Arrangements (HRAs) so employers can make better use of them.
One can make several immediate observations on the AHPs and the HRAs. The AHPs would benefit employers financially, with no guarantee of better or even the same quality health insurance benefits for employees of these firms. Similarly, the increased cost of the HRAs would be borne by employees, not employers. Hence, both of these are not-so-subtle moves to decrease healthcare costs for employers and to increase them for employees.
Of the three, the most troubling, by far, is the effort to promote short-term insurance. Given the option, many people would flock to STLDI simply because of the lower cost, with little or no consideration that the benefits would be dramatically more limited than in an Affordable Care Act (ACA) Marketplace Plan.
Further, of great concern to us, the STLDI would have no Essential Health Benefits. This would potentially lead to plans that offer greatly reduced or no mental health or substance use benefits. For the same reason, there would be no parity requirement in such plans.
Looked at in a very practical sense, the young and healthy would reject the ACA plans with better benefits in favor of lower cost STLDI despite greatly reduced benefits. Persons who are more disabled and older would remain in the ACA plans. Their premiums would escalate dramatically as young people continued to depart. Some early estimates suggest that premium increases would be in the range of 20% higher in the first year alone.
The bright side of this issue is that none of these three changes can be made simply by executive order. Both the Department of Health and Human Services and the Department of Labor would need to issue new regulations before any of these changes could take effect. Such regulatory efforts would be time-consuming, and they would require public input.
If all of this were not enough, the administration also announced in a press release on October 12 that it is ending all premium subsidies immediately for those up to 400% of the Federal Poverty Level who purchase health insurance through an ACA State Health Insurance Marketplace. Clearly, such a change would be devastating for large numbers of those who receive their insurance through a marketplace, because they would no longer be able to afford health insurance without the subsidy. Very early estimates are that between 1 million and 7 million persons would lose their health insurance coverage.