By Sally
Poblete
The Trump administration continues to take steps to weaken
the Affordable Care Act (ACA), but it’s still not clear what the future of
health care looks for Americans.
In December 2017, President Donald Trump signed the Tax
Cuts and Jobs Act that repeals the individual mandate penalty. After the
repeal, new propositions are coming from the Trump administration, such as
loosening the regulation on association health plans (AHPs) and short-term
insurance. As debate continues to unfold, here are the five high-level trends
we may expect in the months ahead, and how stakeholders could be affected.
1. Healthy people may start leaving the individual market.
Recent changes eliminate the penalty for not having health
insurance. Under the ACA, consumers were charged a penalty for the year they
lacked coverage. But now, when consumers file their taxes, they won’t be
charged a penalty. Without the penalty, younger and healthier consumers may
choose to not have individual coverage.
The premiums received from healthy people are generally a
great hedge for the unhealthier, or higher-risk, populations for carriers. In
the short term, with the changes occurring in the individual market, carriers
can expect a worsening loss ratio: the ratios paid by the premiums to the
insurance company to cover settled claims begin to decrease. In the long term,
with the risk pool looking worse, carriers may concentrate on boosting their
sales in relatively more stable segments.
2. Concerns about pre-existing conditions.
2. Concerns about pre-existing conditions.
The Trump administration formally proposed to allow
insurers to sell short-term plans that would last for up to one year. Such
plans can deny coverage for pre-existing conditions and don’t have to cover all
of the essential benefits that previously included preventive and wellness
services, mental health, maternity and prescription drugs. Even though these
plans aren’t exactly new, the regulation limited these plans to 90 days under
the Obama administration. Furthermore, they would not count towards the
individual mandate.
3. Employer-sponsored coverage will be critical for
employee retention.
If the ACA’s employer mandate is repealed, small
businesses may no longer be required to provide affordable, minimum-value
coverage to their full-time employees to avoid penalties. That being said, with
many people losing their individual health coverage, employees may increasingly
expect health coverage from their employers.
Employer-sponsored benefits have always played a critical
role in attracting and retaining talent, but, with the current instability in
the market, many employees will appreciate the security of an
employer-sponsored coverage plan more than ever.
4. Increased availability of association health plans.
4. Increased availability of association health plans.
To increase the availability of AHPs, the administration
proposes to adopt a new definition of “employer” for purposes of determining
when employers can join together to offer or enroll in an AHP . By doing so,
the government is aiming for small businesses, professional associations and
others to unite together to buy insurance coverage as if they were a large
business.
Even though looser regulation on AHPs can increase options
for getting coverage, we can expect such plans to cover much less than the
ACA sought to make national standard. AHP can be a good alternative for
younger and healthier segments of the population, but having such demographics
opt out of theACA markets might once again be alarming for people who actually need
coverage.
5. States may have increasing regulatory power.
States may gain further flexibility to develop new health
care models, including changes to affordability and choices offered. A number
of states are pushing for their own legislation that could potentially give
additional protection to residents beyond the federal level. Keep an eye on
states like New York and California, which seek to create programs to increase
benefits and requirements set by the ACA.
Sally Poblete is
CEO of Wellthie, a provider of technology to help brokers and insurance
carriers.
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