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Health System Reform Update, 10/13/17
Below is an update on recent actions by the Administration with respect to the Affordable Care Act (ACA).
Cost Sharing Reduction Payments
President Trump announced late last night that the Administration would no longer make the cost sharing reduction (CSR) payments to insurers offering plans in the ACA marketplace. Repeated Administration threats to stop these payments and delays in Congressional efforts to specifically authorize and fund the CSRs prompted many insurers to increase their 2018 marketplace premiums to offset the potential loss of these funds, so the number of plans that will be prompted to withdraw from the ACA marketplace is not yet known. Lawsuits against the federal government in response to this action are also anticipated.
Under the ACA, health insurers must reduce cost sharing requirements (i.e., deductibles and copayments) for low-income enrollees, and the federal government has a contractual obligation to the plans to defray the cost of these CSRs. A court has ruled in a lawsuit (U.S. House of Representatives v. Kathleen Sebelius) that the CSR payments in their current form are unconstitutional since Congress has not gone through the process of appropriating funds for them. However, the case is pending on appeal (filed by the Obama Administration), and the courts have allowed the payments to continue on a provisional basis while Congress has been actively engaged in legislative efforts to amend the ACA, in order to avoid disruptions to the insurance market.
Bipartisan efforts have been underway in the Senate Health, Education, Labor and Pensions Committee to fund the CSRs, but action was stalled during the Graham-Cassidy repeal debate. While those efforts have been renewed, progress has been slow due to partisan disagreements on provisions to include in the legislation that are unrelated to the CSRs.
Attached is a statement the AMA issued this morning, calling for Congress to accelerate its efforts to fund these payments.
Executive Order on Association Health Plans
On Wednesday, the President signed an Executive Order that directs three Departments to take the following actions:
- Directs the Department of Labor to consider expanding access to Association Health Plans (AHPs) to allow employers to join with similar companies anywhere in the nation to offer group healthcare coverage to their employees.
- Asks the Departments of Treasury, Labor, and Health and Human Services to consider proposing regulations that would expand access to short-term limited duration insurance plans. (These tend to be minimal benefit plans that do not meet ACA standards but may be purchased by individuals, like those between jobs, who seek short-term protection.)
- Directs the Departments of Treasury, Labor, and Health and Human Services to consider allowing funds in employer-sponsored Health Reimbursement Arrangement accounts to support consumer-driven health care plans.
Until regulations are drafted and issues, we can only speculate on the potential benefits and shortcomings of these proposals. In particular, the potential for self-funded AHPs to evade state regulations through ERISA is of serious concern. A summary of the Executive Order with references to relevant AMA policy is attached. When the proposed regulations are issued in compliance with the Executive Order on Association Health Plans, we will review them and submit comments.