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.
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If the ACA’s employer mandate is repealed, small businesses may no longer be required to provide affordable, minimum-value coverage to their full-time employees to avoid penalties.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.
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.