Repealing the Affordable Care Act – 15 Predicted Changes

Written by Joanna Morrow

Joanna Morrow, Principal and Founder of Employer Benefits & Advice, is an employer consultant and advocate who has worked in the employee benefits industry for over two decades. She works diligently to help employers overcome obstacles in their business by sharing her expertise in Human Resources, Benefits & Compensation, Process Mapping, Risk Management and ERISA/DOL/IRS compliance. She is a licensed life and health insurance professional in the State of Arizona and is an active member of the National Association of Health Underwriters (NAHU).

Repealing the Affordable Care Act – 15 Predicted Changes

On November 8th, Donald Trump made history when he was elected as the 45th President of the United States.

Of the changes he has proposed to make in his first 100 days in office, few are more anticipated by employers than his promise to repeal the Affordable Care Act (ACA).

Although a complete repeal is unlikely, there are a number of aspects of the Affordable Care Act (ACA) I expect will ride into the sunset along with the Obama administration.

Here I share 15 of the changes most likely to occur once Trump is in office.

Employer Mandate

  1. Gone: The requirement that all large employers must offer health insurance to their full time employees or pay a non-taxable penalty. Along with the employer mandate, the following are some of the other requirements and definitions I expect will disappear starting in 2017.
  2. Gone: IRS definition of “Affordable” health insurance – employees share of the premium on the lowest cost employer option offered cannot exceed 9.5% of his/her annual income.
  3. Gone: IRS definition of “Large Employer” – any employer employing 50 full-time equivalents (FTE) or more.
  4. Gone: IRS required 1094/95C reporting by employers to report the offer of health insurance coverage to all full time employees.
  5. Gone: IRS non-discrimination rules as they pertain to employers who offered health insurance. Once finalized, these rules would ensure that employers couldn’t discriminate against lower income employees when it came to offering health insurance and other benefits.

Insurance Mandates

  1. Gone: Essential Health Benefits (EHB) – Health insurers will no longer be forced to cover essential health benefits (EHB), which include items and services in the following ten benefit categories: (1) ambulatory patient services; (2) emergency services; (3) hospitalization; (4) maternity and newborn care; (5) mental health and substance use disorder services including behavioral health treatment; (6) prescription drugs; (7) rehabilitative services and devices; (8) laboratory services; (9) preventive and wellness services and chronic disease management; and (10) pediatric services, including oral and vision care.
  2. Gone: My prediction of the EHB most likely to be dropped from standard health insurance plans:
    • Pediatric services such as oral and vision care currently included with all health plans
    • Certain mental health and substance use disorder services
    • Some preventative and most wellness services
  3. Gone: Mandated Out-of-Pocket Maximums – the ACA capped the total out-of-pocket on all health insurance plans to $6,350. We are likely to see a return to insurers expanding their product lines to include deductibles and out-of-pocket maximums that extend to $10,000 and $15,000 for an individual. I also believe we will see a return to “mini-med” plans which traditionally were indemnity policies that covered limited expenses only.
  4. Keep: The Guaranteed Issue provision that requires insurance companies to offer health insurance to any and all eligible applicants, without regard to health status. Following the ACA, insurers were not allowed to refuse to cover a person on the basis of a pre-existing health condition. President-elect Donald Trump has stated he agrees with this mandate and will likely support it being continued. It is unclear at this point how it will be funded, however I expect to see a combination approach to risk spread across some form of public option, a high risk pool for chronically ill, and the commercial market to which we have all become accustomed.
  5. Predicted Return: I predict a return to the pre-ACA practice allowing insurers the ability to appropriately price risk by requesting medical information prior to issuing a policy. If the Guaranteed Issue provision remains intact, insurers would be prohibited from refusing anyone coverage but would be allowed to price risk (set rates) based on medical status, versus the current age-rated model.
  6. Keep: Dependent Coverage to Age 26 – The ACA allowed parents to keep dependent children on their health insurance plan up to age 26, regardless of student status. President-elect Donald Trump has stated he agrees with this mandate and will likely support it being continued.
  7. Toss-Up: The Risk Adjustment Provision. This was a permanent program set up by the current administration and funded through paid insurance premiums. Think of this as a fancy term for “redistribution of wealth”. This provision required health insurers earning higher profits to pay into a fund that will pay insurers earning less of a profit. The intent here was to reduce an insurer’s incentive to “cherry-pick” risk. It will be interesting to see if the next administration uses this as a mechanism to offset the cost of continuing to cover those with pre-existing health conditions.

Individual Mandate

Gone:

    The Individual Mandate which requires the majority of people to carry health insurance or pay a penalty will likely be re-worked. An insurer’s pricing model can only be stabilized when the law of large numbers is protected. If the next administration wants to protect all of those who were able to purchase health insurance over the last several years they will have to figure out a way to incent the right combination of attractive risk groups to grow the insurance premiums beyond the claim costs.

Less Government

In summary, I believe we will see a significant scaling back of IRS involvement in our health insurance affairs – both at the individual and employer level. The scales will be tipped from policing employers and individuals in the area of health insurance toward granting concessions that make for a more flexible regulatory environment.

  1. Predicted Return: As an example, the ACA outlawed stand-alone Health Reimbursement Arrangements (HRA)s which some employers traditionally offered often as an alternative to group health insurance. These arrangements allowed employers to reimburse employees for individual health insurance premiums and/or their medical expenses. I believe we will see the return of stand-alone HRAs with the new administration.
  2. Predicted Change: In addition, Health Savings Account (HSA) with current limits of $3,400 for an individual and $6,750 for a family will likely be raised significantly – allowing individuals to put aside more tax-free money to spend on qualified medical expenses.

While the current administration largely addressed access to care and saw an additional 20,000,000 people secure much needed health insurance, the next administration promises to get a handle on costs for all of us. They have 4 years to get it done, and have announced a start by repealing various aspects of the ACA, many of which I believe I will have covered here. In addition, I am hopeful that we will see a valiant effort toward regulation of pricing practices among healthcare providers and pharmaceutical companies which prior to now, have proved to be no match for powerful lobby groups. Time will tell.