What Would Build Back Better Mean For Health Coverage?

By Susan Rupe

Employers are struggling with health care costs, and three factors contribute to those struggles. That was among the points made during a panel discussion at Thursday’s Employee Benefit Research Institute Winter Policy Forum.

Annette Guarisco Fildes, president and CEO of the ERISA Industry Committee, said the three reasons employers struggle with health care costs are:

Costs are out of control.
Employers believe they don’t have any option to deal with rising costs.
Government programs are being changed that may result in a cost shift that will make things even worse for the private market.

The Build Back Better Act before Congress contains several provisions that may affect employer-based health benefits, the panelists said. The EBRI discussion looked at several of those provisions.

Mental health and addiction is one area that would be addressed by the bill, said Kathy Bakich, senior vice president with Segal.

The act would impose civil monetary penalties on group health plans and health insurers for violation of the Mental Health Parity and Addiction Parity Act that was signed into law in December 2020. The $100 per person per day penalty can be imposed directly on insurers, as well as on plan sponsors and administrators, and would take effect one year after the date of enactment.

Prescription drugs also would be impacted by the Build Back Better Act, Bakich said.

The proposals under the act would enable the Department of Health and Human Services to negotiate prices for up to 10 drugs in 2025, 15 drugs in 2026 and 2027, and 20 drugs in 2028 and beyond – plus insulin. Drug manufacturers would pay rebates to Medicare if a Part B or Part D drug price increases faster than the rate of inflation.

Insulin coverage for the plan year beginning Jan. 1, 2023, would be addressed under Build Back Better.

Group health plans would have to cover at least one of each dosage form of each different type of insulin without a deductible. Cost-sharing for a 30-day supply would be limited to either $35 or 25% of the negotiated price under the plan – whichever is less. Higher cost-sharing may be imposed if the insulin is received from an out-of-network provider.

A number of provisions in the Build Back Better Act could encourage shifts in coverage, said Kris Haltmeyer, vice president, legislative and regulatory policy, with Blue Cross Blue Shield. Those provisions include:

ACA tax credit extension. Extends the American Rescue Plan Act’s premium tax credit enhancements and cost-sharing reduction assistance through 2025. Individuals receiving unemployment compensation or who have incomes below 150% of the federal poverty level would continue to have access to zero-premium coverage.

Tax credits for Affordable Care Act enrollees with employer-sponsored coverage. Reduces the employer-sponsored insurance affordability threshold for accessing ACA premium tax credits (the employer firewall) from 9.8% to 8.5% of household income. The threshold is not indexed until 2027.

Tax credits for low-income people with employer-sponsored coverage. Taxpayers with household incomes below 138% of federal poverty level with access to affordable employer-sponsored coverage or a qualified small-employer health reimbursement arrangement may receive tax credits. The employer penalty would be waived if such individuals enroll.

Addressing the “coverage gap” in states that have not expanded Medicaid. Those who are below the poverty level (who are not eligible for exchange subsidies today) would be allowed to purchase coverage on the exchanges from 2022 to 2025.

Medicaid changes. Provisions in the act would include financial incentives for states to expand Medicaid.

Will coverage increase or decrease as we emerge from the pandemic if the Build Back Better Act is in place? Haltmeyer had these thoughts.

Enhanced tax credits may lead to some reduction of employer coverage, but the post-pandemic impact may be limited. Although the ACA marketplaces have stabilized, coverage remains less generous than that of employer-sponsored insurance. The most likely impact will be on small firms employing lower-wage workers.

There is no indication that major employers will withdraw benefits in the near term. In a tight labor market, health insurance remains important for recruiting and retaining workers.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.