Even though rates are already locked in for the 2018 Obamacare open enrollment period that begins Nov. 1, the seeming inevitability of the end to the subsidies has already had an effect on the cost of insurance. Many insurance companies, sensing that the Trump administration might cut off the subsidies at some point in the coming year, significantly raised their base premiums for policies to be sold on the individual market for 2018. These premium hikes, said some insurers, were intended as a buffer in case the payments did cease. Without these subsidies, some insurers will certainly abandon the individual marketplace going forward, putting the structure put in place by the Affordable Care Act in serious jeopardy and possibly leaving millions of additional Americans with only one — or possibly no — insurance company to choose from in their region. Tonight’s decision will most certainly face a legal challenge from those states who have already intervened to protect the subsidies in court after the administration abandoned their defense. New York state Attorney General Eric Schneiderman, who had previously stated that he would do “whatever we have to” to defend the payments, said on Thursday night that he intends to file a lawsuit against the administration to protect the subsidies. “I will not allow President Trump to once again use New York families as political pawns in his dangerous, partisan campaign to eviscerate the Affordable Care Act at any cost,” said Schneiderman. The other option would be for Congress to do what it didn’t do when the Affordable Care Act was passed nearly a decade ago, and use the appropriations process to provide these funds to insurers. Given the hardline conservative opposition to the payments, it would require Republicans and Democrats to work together to garner sufficient support for such appropriations.
What’s changing?The order can’t entirely repeal and replace the ACA, as the President noted in his remarks, but it can take aim at certain key provisions. The specific changes the White House seeks are to:
- Expand Association Health Plans — less-regulated group insurance plans purchased collectively by similar sorts of employers — to permit any “association” to purchase policies across state lines
- Expand short-term limited-duration insurance — plans lasting only a few months intended to bridge gaps in coverage — to last longer and be available to more buyers
- Expand tax-privileged reimbursement accounts that employers can use to reimburse workers for healthcare costs
What will the effects be?This is where it gets complicated. What Are Association Health Plans?
They let individuals and small employers band together to negotiate group insurance plans like the ones large employers provide for their employees. In theory, they don’t sound like a bad idea but the non-partisan Kaiser Family Foundation notes that those plans could offer fewer benefits than plans which currently fall under regulation by the ACA. So while they would cost less, that would be because they provide less coverage, with higher deductibles and out-of-pocket costs for anyone covered under those plans. Vox recently observed that a loophole in Tennessee law has allowed Association Health Plans to continue into the ACA era, with negative results. The Tennessee association plan estimates that it has roughly 23,000 members enrolled in plans that are not ACA-compliant, Vox reports. Those 23,000 are, presumably, younger, healthier patients that don’t have need for extensive medical coverage at this time. But insurance works, at a very basic and fundamental level, by pooling risk. Early insurers sold policies to a hundred ships; 99 made it back to shore safely and they only had to pay out for the one that sank. A car insurance company insures both good drivers and bad, and makes money by pocketing premiums from everyone who doesn’t need to file claims and distributing a smaller amount back to those who do. A health insurance company theoretically works the same way: it takes in premiums from young and old, healthy and sick alike, and then only needs to pay out claims for a small percentage of its overall customer base. But when you sell two tiers of plans, you end up splitting your pool into two tiers of customers, too. Younger customers, or those who manage to keep aging without developing a single pre-existing condition, opt for the cheaper, skimpier plans. That means that customers who are aging, and those who have ever had a disease or injury to contend with, end up having to pay significantly higher costs to obtain coverage that does what they need. And that’s exactly what has happened in Tennessee: the state’s marketplace has some of the sickest participants in the entire country, Vox reports, and as a result also some of the highest premiums in the country. The National Association of Insurance Commissioners — an organization representing the various state insurance regulators — has been cautious of deregulating association health plans. Each state regulates and licenses the insurance sold in its borders, and the NAIC has raised concerns that expanding association plans to allow for cross-state selling could “result in less protections for the most vulnerable populations and the collapse of individual markets across the country.” “If the federal government pre-empts state licensure requirement out-of-state insurers would be able to lure healthy enrollees away from existing risk pools,” the NAIC told a House Judiciary subcommittee in February, “which would become progressively sicker and more expensive until they ultimately fail, leaving consumers in those states with, possibly, no carriers in their states and no in-state networks of participating providers.” In response to today’s executive order, NAIC CEO Mike Considine expressed concern about possible expansion of association plans but noted that “nothing is written in stone yet,” since the order is just the first step in a lengthy process of rulemaking that will involve multiple agencies. Longer Short-Term Plans
Similarly, short-term limited-duration plans are currently exempt from many ACA requirements, as Trump noted in his remarks. These plans are currently limited to a maximum of three months, and they’re meant to provide basic coverage for individuals who are otherwise between coverage — when you’ve left school but haven’t left started your job, or are between jobs, for example. They’re a stopgap. The upshot of both policies, taken together, is that critics fear this executive order could split the insurance market into separate risk pools, leaving many Americans without coverage when they need it, and sending costs skyward for others. Meet The New HSA: Healthcare Reimbursement
The third tentpole of the executive order has to do with expanding “Health Reimbursement Arrangements,” which seems to be the Administration’s new catch-all term for Health Savings Accounts and other similar vehicles. MORE: WHAT ARE HEALTH SAVINGS ACCOUNTS, AND WHY ARE THEY A BIG PART OF ACA REPLACEMENT PLANS? As we’ve explained before, HSAs are tax-advantaged accounts — the money comes out before your taxes are calculated, like 401(k) contributions. These accounts largely exist to offset the high out-of-pocket costs individuals with high-deductible health plans face when seeking care. However, with changes that were proposed in the now-abandoned House effort to repeal and replace the ACA, these small tax shelters were poised to become bigger, better tax shelters for those who have money to squirrel away — a plan that the executive order now seeks to try to resurrect.
Is this binding? When will the law change?The President doesn’t create regulations on private business. The best he can do is direct federal agencies to make rules, so long as they comply with existing law. So this executive order specifically asks several cabinet agencies — the Department of Labor, the Department of the Treasury, and the Department of Health and Human Services — to themselves investigate how best to make changes to current federal regulations that would result in the White House’s desired outcome. The various departments could, in theory, examine the directive, determine it’s unworkable, and return a consideration of “no.” That won’t happen, of course, but it is technically possible. The Cabinet officials in question, instead, are friendly to the proposal — but making real change takes time, even for an agency that wants to move quickly. An administration official told CNN that actually crafting and enacting policy changes could take six months or more. Some complicated regulations have taken years and gone through multiple iterations before being finalized, and even then they may face legal challenges, and possibly legislative repeal efforts if the political makeup of either chamber of Congress changes significantly in the interim. In the meantime however, the executive order may become moot if Congress manages to rally and pass some kind of repeal-and-replace legislation. “This is only the beginning,” Trump noted at the end of his remarks. The White House has a plan to curtail more pieces of the ACA, “to take measures to provide our people with more relief and freedom,” mainly in the form of “massive tax cuts,” he said. Trump also added, “We are going to also pressure Congress very strongly to finish the repeal and the replace of Obamacare once and for all,” concluding, “We will have great healthcare in our country.”
Is there going to be a legal challenge?Some kind of challenge is all but guaranteed — the question is, what kind, and from whom. Legal experts speaking with Politico considered that reinterpreting the Employee Retirement Income Security Act (ERISA) in order to expand association health plans might be a violation of that law. “How that doesn’t get challenged, how that isn’t such an expansive interpretation of ERISA that goes beyond the administration’s authority — someone’s absolutely going to” file a challenge, one insurance industry official told Politico, adding, “This is chaos.” The Wall Street Journal and Washington Post also both speculate that the part of the order targeting ERISA is the most likely to face legal complaints. Pretty much every single kind of stakeholder you can think of, including the insurance companies, absolutely hated the last bill the Senate ultimately abandoned, and many groups that criticized that bill are already out with criticisms of the executive order. “While this executive order claims to help improve consumers’ access to affordable care, it would have the exact opposite effect,” our colleague Betsy Imholz, special projects director at Consumers Union, notes in a statement. “Allowing insurers to sell substandard association health plans that aren’t required to cover basic services and benefits will further fragment and destabilize the insurance markets as a whole,” Imholz added. “This action splits the market into two, pitting the healthy against those with preexisting conditions and life-threatening illnesses — but ultimately both groups lose in this new scheme.”
What does “single-payer” actually mean?At its most basic, single-payer healthcare is the idea that one single entity — generally a government body or agency — receives and handles everyone’s healthcare bills. All treatment is paid for from a single body, which in turn is financed by taxes. Basically, there’s one insurer, everyone can use it, and it covers most or all preventative and medically necessary treatments. That’s in contrast to the multi-payer system we currently have in the U.S., where you and one or more insurance companies split up the bills for any services you receive. For example, if a physician bills you $1,000 for a procedure, you might be expected to pay anywhere from 10% to 50% of the cost, with your insurer picking up the remaining tab. It gets even more complicated depending what kind of treatment you’re seeking, what the specific terms of your annual deductible and out-of-pocket cap are, and how many entities are involved in providing your care, but the general principle holds. Related: How surprise medical bills knock consumers down
Are “single-payer” and “universal coverage” the same thing?The term “single-payer” often gets interchanged with “universal healthcare,” but no, the two are not the same. A national single-payer plan would almost certainly be universal (although the law could, for whatever reason, choose to exclude certain groups — limiting coverage to documented citizens, for example), but there are alternative ways to produce universal or near-universal coverage as well. Germany, for example, has universal coverage through a multi-payer system that operates in a complex public/private partnership. Health care is provided by private doctors and is paid for by “sickness funds” — one of a couple hundred insurance carriers, basically — that get their funding not from taxes but from employer and employee premiums. Conceptually, it’s not unlike the system the U.S. has been heading towards since the ACA took effect in 2014. But Germany’s plan differs from the United States in that the statutory insurance doesn’t come with enormous, ever-growing co-pays, deductibles, and co-insurance like most private American plans do. When you’re covered, you’re covered, with nominal extra fees. That’s different from something like the UK’s National Health Service (NHS). In Britain, you can receive care in NHS hospitals with NHS doctors and nurses working directly there, as government employees. Other practitioners may own private practices, but contract with the NHS to receive payment for services rendered. Canada has something in between: Anyone in the country can apply for public health insurance. Each province has its own insurance plan, which then reimburses providers in private practice for most services they provide. In the U.S., we do have limited public insurance for qualified groups, through Medicare and Medicaid. One way that some single-payer advocates suggest the U.S. achieve single-payer coverage would be through expanding those programs universally; the rallying cry is “Medicare for all.”
Is “Medicare for all” single payer?In a broad sense, yes, it’s currently the most popular proposal for implementing single-payer care in the United States. As always, though, the devil is in the details. Medicare, New York Magazine notes, is not exactly easy to expand. It probably won’t scale very well, and it’s fairly confusing even for the millions who rely on it. Medicare recipients also still often owe significant co-pays and other out-of-pocket costs, NY Mag adds, which pretty much defeats the goal most of those who rally around single-payer care hope to achieve. What’s more, many critical aspects of care — dental and vision care, among them — aren’t included, and many participants (seniors) supplement their Medicare with private insurance. Realistically, then, many single-payer proposals being bandied about come closer to being a universal Medicaid expansion rather than a universal Medicare one. However, the phrase, “Medicare for all” tends to perform better in opinion polls than alternate phrasing, the Kaiser Family Foundation has found. Democrats (the party more likely to act in favor of some kind of universal care) in particular feel negatively about terms like “socialized medicine,” where majorities feel much more warmly about “Medicare-for-all.”
Who’s in favor of single-payer?A rapidly-growing slice of the American public, for one thing. Data from the Pew Research Center, in June of this year, found that overall, 58% of respondents to a national survey felt that providing health care to all Americans is something the government should be responsible for. 33% of respondents overall felt that there should be a single national program, and 25% felt that it should be through a mix of public and private programs. Among self-identified Democrats, however, the skew now leans toward universal public coverage. By June 2017, a majority — 52% — responded that they favor a single, national government program for healthcare. That’s a marked increase from just one-third of Democrats agreeing with that statement in March, 2014. Physicians, overall, also seem to be moving in the same direction as the general public. A survey of doctors released in August found that a majority — 56% — supported the idea of moving to a single-payer healthcare system in the U.S. (In 2008, the same organization found that 58% of doctors opposed the idea.) Doctors largely want to be in the position to do medicine, not paperwork. And the more complicated the health insurance structure is, the more time physicians have to spend on the bureaucratic things they don’t care for — not just billing, but also spending time and energy making sure the tests or medications they prescribe will actually be covered by a patient’s insurance. “Physicians long for the relative clarity and simplicity of single-payer. In their minds, it would create less distractions, taking care of patients — not reimbursement,” an executive for the firm conducting the survey said in a statement.
Who’s opposed?Opposition basically falls into two very broad categories: the ideological and the practical. Many, particularly but not solely on the political right or in the Republican party, oppose single-payer care on philosophical grounds. That same Pew survey that found 33% in favor of a national single-payer health plan also found plenty of respondents who want no part of it. Overall, 38% of those surveyed said that making sure Americans can access health care isn’t the government’s job. Most still favor keeping Medicare and Medicaid, since those already exist, but 5% of respondents said that government should not be involved in healthcare in any way — a figure that leaps to 9-10% among self-identified Republicans. Vox reports that Republican lawmakers are already gearing up counter-attacks to Democrats’ recent embrace of single-player bills, saying that implementing expanding Medicare or Medicaid any further would endanger the Department of Veterans Affairs and the health care veterans receive. Meanwhile, there’s the business angle to consider. The health insurance industry is massive. In the Fortune 500, UnitedHealth Group ranks sixth, Aetna 43rd, Humana 53rd, and Cigna 70th — to say nothing of the dozens of other small, medium, and large providers in the country. You would expect insurers to be opposed to the idea of full, federal single-payer coverage that would cut them out of the loop entirely. But insurers may be less hostile to the idea of some kind of compromise approach to universal coverage than you’d think. Back in May, Aetna CEO Mark Bertolini said that, “we should have that debate [about single-payer] as a nation.” He added, “instead of shouting back and forth across the stage, let’s discuss what single-payer means,” and posited (rightly) that there are many, many different ways to approach that goal, if it’s the policy goal the country wants.
How realistic is it?Single-payer or universal coverage are certainly not in the cards as a serious policy proposal for 2017 or 2018, with the current Congress and White House we have. But the seeds of potential are being planted. Vermont Sen. Bernie Sanders, who retains much of the popularity he gained with his unsuccessful presidential run in 2016, plans to introduce a Medicare-for-all bill on Wednesday, Sept. 13. Sanders told NPR in early August that he had no expectation that the bill would go anywhere at all. “You’re not going to see it. That’s obvious,” he told NPR. Instead, he wants to use the bill to force a discussion about the merits and potential of single-payer healthcare going forward. Reports say Sen. Brian Schatz (HI) also plans to introduce a bill this fall that would expand Medicaid (not Medicare), allowing states to let anyone — not just low-income Americans — buy in. Basically, it would be similar to the Medicaid expansion that many states participate in under the ACA, effectively using Medicaid as a “public option” for anyone uninsured who wants it. Schatz and Sanders each plan to co-sponsor each other’s bills, Vox reports, part of a broader plan to move the conversation forward. Over the summer, several other high-profile Democratic Senators have joined the choir of voices singing the praises of “Medicare for all,”. Sanders’ bill now reportedly has 10 other Democratic Senators signed on as co-sponsors, including: Tammy Baldwin (WI), Cory Booker (NJ), Kirsten Gillibrand (NY), Kamala Harris (CA), Pat Leahy (VT), Ed Markey (MA), Jeff Merkley (OR), Brian Schatz (HI), Elizabeth Warren (MA), and Sheldon Whitehouse (RI). It’s also becoming a tenet of some 2018 House campaigns. As Rolling Stone and the Washington Post report, challengers for seats in California, Nevada, and Wisconsin — including House Speaker Paul Ryan’s seat — have already started campaigning with an explicit platform of single-payer, universal health care. There’s a single-player proposal currently afoot in the House, too. Rep. John Conyers (MI) introduced a bill that so far 117 of his fellow Democrats in the House support. The Conyers bill basically doesn’t just create a public option, but expands Medicare and Medicaid into one massive public option that would basically become mandatory — and fast. But that bill Vox notes, is skeletal at best — a sign that it stands absolutely zero chance of ever moving forward in the current Congress. It’s only 30 pages (the ACA, by comparison, famously clocked in at more than 900 pages of detail), most of which say merely that changes should be made, without specifying how.
What are the challenges?Setting aside political and ideological obstacles to changing healthcare law at all, transitioning the U.S. from its current system to a single-payer system would come with significant logistical and practical challenges to work through. The U.S. population is currently more than 320 million people, and changing anything for all of us at once is hard work. Our policy steers more like a stack of boulders than a sports car, with every stakeholder wanting to make their own adjustments. Major changes to federal law and regulation usually require a long, slow phasing-in process, and healthcare is one that touches literally everybody in some way. But the biggest obstacle facing any single-payer plan is money. Lots and lots of money. Healthcare, to be blunt, is super duper expensive. It’s not that the costs themselves would go up in a transition to a single-payer system, Vox explains — it’s that the costs are high already. About 16% of our overall economy is related to healthcare, but right now all the spending is scattered. The government pays some, states pay some, private insurers pay some, employers pay some, and end-users — all of us who seek medical care — pay some. It’s hard to get a solid feel for just how high the spending is when it’s broken up all over. To make all of it come from a single, federal source, you’d need funding… and funding means taxes, which are yet another political land mine in the U.S., unlikely to be quickly or easily resolved any time soon.
San Francisco-based business owners may balk at offering their employees health insurance because of the impact it would have on their bottom lines. However, there’s plenty of evidence to suggest that employees with health benefits are more productive and more satisfied with their jobs. For founders, that means higher profitability and greater retention rates.
Before selecting a health care plan that best suits their companies’ needs, however, owners need to know the differences between the most common types of healthcare insurance providers: HMOs and PPOs.
What Are HMOs?
Health maintenance organizations (HMOs) are medical insurance groups that manage health care for their members. They require members to select their primary care physician (PCP) from within their network who will handle the members’ regular medical needs, such as health checkups, prescriptions, and referrals to specialists as needed.
In an instance where an HMO policy holder visits their specialist without their PCP’s referral or receives treatment from a physician or at a medical facility that is not within the HMO’s network, the incurred healthcare costs are usually the responsibility of the policy holder.
What Are PPOs?
Preferred provider organizations (PPOs) are similar to HMOs in that they provide managed health care for their members, but they don’t require the selection of a PCP. As such, PPO members don’t have to get prior approval before consulting with specialists. While they maintain a network of doctors and medical facilities, the members that seek care out-of-network can still have some of their medical costs covered. However, seeking treatment within a PPOs’ network is generally less expensive for policy holders.
Another important difference between HMOs and PPOs is that with HMOs, policy holders make monthly payments to maintain coverage. With PPOs, however, members are billed for medical services on a case-by-case basis.
Which Type of Health Insurance Provider Should You Choose?
The question of whether to purchase a healthcare plan from an HMO or PPO will vary. However, it’s a good idea for business owners to discuss the two plan types with their employees before making their decision. If the majority of your team receives their medical care from a family doctor they’ve had for years, they may be wary of joining an HMO that forces them to get a new PCP.
Conversely, if your workforce is made up of younger, single employees with few ongoing medical issues, the potentially lower out-of-pocket costs offered by PPOs might make that option more appealing.
At the end of the day, employers receive the greatest benefit from offering an employee health care plan when best suits their staffs’ diverse needs.
Canopy Health is a community of caregivers creating an integrated healthcare experience where quality care and coverage are provided by an alliance of top caregivers throughout the Bay Area. They offer refreshingly clear, human care that is achieved by making each unique member’s journey predictable, transparent, and cost-effective.
For more tips and inspiration for small business owners, visit CBS Small Business Pulse San Francisco.