House Republican leaders have assembled a health care bill with familiar provisions as a counter to the Democrats’ push to extend premium subsidies for Affordable Care Act (ACA) insurance enrollment. The GOP approach signals caution to avoid the political risks associated with getting immersed in a larger debate over health care policy. Still, this cautious approach will make it difficult to argue Republicans have a plan to lower costs for the majority of American consumers.
The GOP bill includes five substantive provisions:
- Association Health Plans (AHPs). Small employers would be given the authority to join together into larger “associations” for the purpose of providing health coverage to their workers. The insurance provided under these arrangements would be exempt from some of the ACA’s insurance rules. In particular, AHPs could buy insurance at premiums based on the risk profiles of the businesses in the associations rather than what exists in the non-AHP pool in state-regulated markets. However, AHPs could not charge individual workers or their family members more based on pre-existing conditions, or exclude such conditions from insurance coverage.
- Treatment of Stop-Loss Coverage for Self-Insured Small Businesses. The bill would exempt some stop-loss coverage products from state regulations aimed at limiting the ability of small firms to self-insure and exit state-regulated insurance pools. Small businesses seeking to lower premiums for their workers by self-insuring usually secure stop loss protection to guard against the very high costs of a small number of catastrophic cases. Some states have tried to prevent small businesses from exiting their risk pools by regulating these stop-loss plans as health insurance, which then undermines the risk advantage of self-insurance. The House GOP bill would preempt state laws regulating stop-loss policies when secured in combination with health coverage offered pursuant to the federal Employee Retirement Income Security Act (ERISA).
- CHOICE Accounts. House Republicans would like to codify a coverage option first developed during the first Trump administration, based on existing laws governing Health Reimbursement Arrangements (HRAs). The concept, which the GOP is calling Custom Health Option and Individual Care Expense Arrangements (CHOICE), allows businesses to deposit tax-exempt compensation into HRAs, which workers can then use to buy individual market coverage through the ACA-regulated exchanges. HRAs differ from Health Savings Accounts (HSAs) in that the funds are not portable for the workers and lapse if not used at the end of a calendar year.
- PBM Oversight. House Republicans (and many Democrats) have united around the argument that the pharmaceutical benefit management (PBM) industry requires more government oversight. Their bill would require PBMs to provide more transparency around their contracts with drug manufacturers, their rebate payments to these manufacturers, and the net prices paid for the various products covered by their formularies. The intention is to guard against abusive pricing behavior by requiring more disclosure.
- Funding of ACA Cost-Sharing Reduction Costs. The bill also would restart federal cost-sharing funding for ACA insurance tied to reduced out-of-pocket costs for qualified households. Republicans correctly argue this provision returns the ACA to what was originally intended at passage. The cost-sharing subsidy programs were upended by poor drafting of the original ACA law, which led in time to a more costly workaround (“silver loading”), which drove up premiums and subsidies to offset the loss of CSR funds. The House GOP bill would fund CSR payments and also eliminate silver loading as a way of pushing up overall federal costs.
The net effect of the GOP bill on insurance coverage is likely to be small. The most significant change may be the funding of CSR costs, which the Congressional Budget Office (CBO) has estimated will lower (rather than increase) overall federal subsidization of ACA coverage, which in turn will lead some consumers to drop out of the market and become uninsured.
The other provisions may make it easier for some businesses to offer employer-sponsored insurance (ESI) or to fund CHOICE accounts, but the effects of these changes are unlikely to be large enough to make a real difference in the aggregate estimates of the insured and uninsured populations.
Regarding overall costs, the most significant change is the forced transparency in the PBM industry. However, it seems possible that disclosure of some PBM contract terms will increase overall costs rather than reduce them. That was the conclusion CBO reached when assessing a similar bill that had passed out of the Senate Health Committee in 2023.
Republican leaders may be right that the bill they are putting forward is their best option given their narrow majorities. However, if the party wants to influence the future direction of health care policy, it will likely need to accept that significant policies to cut overall costs often come with higher political risks.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.