How the Survival of the Affordable Care Act Could Affect You

Maybe next year will be like a more confusing version of this year

(Photo: Thinkstock) (Photo: Thinkstock)

Senate Majority Leader Mitch McConnell says he has sent a new version of the Better Care Reconciliation Act bill to the Congressional Budget Office for review.

CBO analysts, and analysts at outside groups, will try to predict how the Senate's bill might change federal revenue, federal spending, the number of people with health coverage, and the overall state of the commercial health insurance market over the next 10 years.

The analysts will do their best to compare their Better Care bill projections for the "baseline projections" they make based on the assumption that the Affordable Care Act will stay in place, and work roughly the way the drafters expected.

(Related: Will Trump Kill the Affordable Care Act?)

Of course, the Affordable Care Act has often worked differently than drafters, implementers and budget analysts have expected.

In November 2008, for example, analysts at a PricewaterhouseCoopers LLP think tank predicted that the health system changes Barack Obama had proposed would help get about 30 million uninsured people get covered, at a cost of about $2,500 per newly insured individual.

Between 2013 and 2017, the Affordable Care Act Medicaid expansion program, the premium tax credit subsidy program, the cost-sharing reduction subsidy program and the ban on medical underwriting have helped cut the number of uninsured people by 13 million.

The federal government spent about $66 billion on Medicaid expansion support for states in 2016, according to the 2016 Medicaid actuarial report. Milliman estimates the federal government spent about $14 billion on the premium tax credit subsidy program and the cost-sharing reduction subsidy program in 2016. Actual federal Affordable Care Act subsidy spending amounted to $80 billion, for an actual 2016 average of about $6,000 per newly insured individual.

Republicans are now trying to pass a budget bill that would repeal many Affordable Care Act taxes and penalties, and replace the existing subsidy programs with new state grant and tax credit subsidy programs.

It's possible that the Republican efforts to change the Affordable Care Act could peter out. The Affordable Care Act could stay on the books, more or less as is.

Here are four ideas about how the Affordable Care Act could, possibly, change life for individuals, employers, and agents and brokers in 2018, just by continuing to be the law of the land.


1. Knowing what the rules are in any given market could be harder.

One of the guiding principles floating in the air when policymakers were working on health system change proposals from 2000 through 2009 was that making state insurance rules more uniform would probably help bring down costs, by reducing compliance costs.

The Affordable Care Act eliminated state-to-state differences in underwriting rules and greatly reduced differences in benefits package rules, but it added new types of differences. Since January 2014, when major Affordable Care Act rules took effect, some states have had state-based Affordable Care Act exchange programs, and some have had exchange programs operated by the U.S. Department of Health and Human Services' HealthCare.gov system. Some states have helped HHS implement the Affordable Care Act major medical standards rules, such as the rate review rules. Other states have refused to have much, or anything, to do with enforcing the Affordable Care Act standards.

Under the administration of former President Barack Obama, efforts by HHS to ease some Affordable Care Act rules without wrestling rule changes through Congress increased state-to-state differences.

Hospital (Photo: Thinkstock)

(Photo: Thinkstock)

Obama signed the main Affordable Care Act bill into law March 23, 2010. A "grandfathering" provision in the law explicitly let people hold on to individual major medical policies that were in effect on March 23, 2010. Some consumers said they should also be able to keep any policies they bought between March 23, 2010, and Jan. 1, 2014.

The Centers for Medicare and Medicaid Services, the HHS arm in charging of running the Affordable Care Act commercial health insurance programs, took a sideways approach to handling that controversy.

CMS did not try to get Congress to pass a new law. CMS did not develop a formal regulation.

Instead, in November 2013, CMS issued a memo saying it would refrain from enforcing certain Affordable Care Act standards. CMS said it would look the other way if a state let insurers keep individual policies written after March 23, 2010, under the pre-Affordable Care Act rules, stay in effect after Jan. 1, 2014. The non-enforcement memo gave each state the freedom to do what it wanted about "transitional" policies, which are also known as "grandmothered" policies.

The method CMS used to create individual policy grandmothering set an important precedent: One way to change how the Affordable Care Act works is to let states go their own way.

In other cases, CMS worked with the Internal Revenue Service and the Employee Benefits Security Administration to tweak and flesh out Affordable Care Act rules by issuing different types of "informal guidance," including memos, rulings on specific proposals, and batches of answers to frequently asked questions.

If the current Affordable Care Act framework stays intact, and Trump administration tries to operate within that framework as well as it can, Trump's CMS may end up dealing with Affordable Care Act controversies and operational problems by issuing its own non-enforcement letters, and its own batches of informal guidance, that give states more freedom to do what they want to do.

Trump's HHS has already notified states that it wants to make the Affordable Care Act Section 1332 waiver program, which lets states apply to adjust some Affordable Care Act rules, as flexible as possible.

Trump's CMS has told states that it wants to find ways to defer more to state insurance regulators. CMS has already decided to rely more on state insurance regulators' efforts to review 2018 rates, instead of conducting its own reviews.

For agents, brokers and clients, Trump administration efforts to give states more flexibility could lead to programs and rules that do a better job of meeting local needs.

One possible drawback is that keeping track of what the rules are in each state could become more complicated. A producer with a multi-state practice, or an employer with operations that cross state lines, might need to spend a lot of time updating and reviewing state-by-state comparison spreadsheets.

Another possible drawback is that even knowing what the rules are in any given state could take more legwork. The Obama administration, for example, posted important batches of informal guidance in many different formats, on many different websites, and producers, employers and compliance lawyers had to scramble to figure out where to look for guidance. An increase in reliance on informal guidance to adjust Affordable Care Act rules could aggravate the informal guidance scavenger hunt problem.


2. Government-run health plan programs could displace ordinary individual major medical coverage in some markets.

Congress has taken so long to enact changes to the current Affordable Care Act framework, or to postpone making major changes, that it has left health insurers and managed care companies almost no time to implement any changes, or even to come up with individual major medical products and rates for 2018 based on the idea that the current framework might stay pretty much the same.

Calendar (Image: Thinkstock)

(Image: Thinkstock)

Republican congressional leaders are now talking about the possibility of Congress completing work on an Affordable Care Act change bill in mid-August. Meanwhile, the HealthCare.gov open enrollment period for 2018 is set to begin Nov. 1.

The current CMS HealthCare.gov issuer map shows that most people in the United States could be able to buy individual exchange plan coverage from at least one issuer in November, but that coverage supply appears to be fragile. Many counties are on track to have just one exchange plan issuer. If issuers dislike what they see happening in Washington, they could still pull their 2018 products out of HealthCare.gov.

If Congress leaves the Affordable Care Act intact, and it also approves funding for the cost-sharing reduction subsidy program, a major Affordable Care Act subsidy program for low-income exchange plan buyers, issuers might be able to rush into the 2018 open enrollment period with the products they've already filed with regulators.

If Congress leaves the Affordable Care Act framework intact, but it fails to fund the cost-sharing reduction subsidy program or other stabilization funds, issuers could have trouble adapting to the new market conditions by Nov. 1. Issuers may have no choice but to pull products off the shelves.

In Iowa, for example, regulators have already proposed setting up a government-run health plan program.

(Related: Iowa's Individual Health Rescue Proposal, Dissected)

An issuer participating in the Iowa program would offer consumers just one standardized plan.

The Affordable Care Act itself offers states access to a somewhat more elaborate Basic Health Plan program, aimed at residents who are just above the Medicaid income eligibility cut-off. Today, the only states that offer Basic Health Plan programs are Minnesota and New York.

Turmoil related to the unexpected survival of the Affordable Care Act could make Iowa's stripped-down version of the Basic Health Plan program a trend, rather than a rarity.

In theory, that shift could be agents and brokers. It's possible that organizers of pop-up government health plan programs would be desperate for help with enrollment, and that they would have no choice but to pay agents, brokers and others to help out.


3. In the individual market, the popularity of short-term health insurance, hospital indemnity insurance and other gap-filler products is likely to grow.

In the past few months, as Trump's CMS has gone about running the Affordable Care Act system, within the Affordable Care Act framework, officials have focused on appealing to insurers by making individual major medical enrollment rules tougher, not easier.

If that trend continues, consumers who might want to buy major medical coverage will have no choice but to buy products such as short-term health insurance and hospital indemnity insurance.

Many companies are already positioning themselves to respond to the growing need for gap-filler products.

HealthValues.org unveiled a bundled gap-filler insurance package in March 2016.

AgileHealthInsurance.com introduced a package of "health benefit insurance plans" that cost less than $100 per month this week. 


4. The agents and brokers with the best recordkeeping abilities might be the winners.

One possibility is that Affordable Care Act public exchange programs and health coverage providers may be so busy making emergency changes, even in the group product, that they will have a hard time with managing, or even tracking, everyday operations.

Agents, brokers, plan administrators and others who can cope with upheaval at insurers and government health programs by keeping good, legally credible records may be in a good position to help their clients get what they've paid for.

The ability to file and track reconsideration requests may also be helpful. In this environment, producers and clients may have to overcome the effects of severe disruption at insurers and government health programs to resolve any problems. The squeaky wheel that keeps squeaking may be the one that gets the grease. 

--- Read 4 ACA Change Paths That Just Got More Popular on ThinkAdvisor.

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