The president signed an executive order this morning that purports to open some additional options that are not subject to the basic ACA tenets. The order has not been published as yet, so we are going only on what information is available from the White House website. However, understand that it will take a number of months for Departments of Labor, Treasury, and HHS to develop guidelines, so implementation could be delayed a year or two; not alone considering the level of legal actions likely by many state departments of insurance.
With that said, here is our general understanding of the President’s objectives….
- The president has directed the agencies to develop operational guidelines for AHPs – association health plans. Under this concept, employers could ban together and pool resources to form an association of employers for the sole purpose of purchasing health insurance. Currently, association plans must comply with ACA mandates such as the prohibition on pre-existing conditions and the minimum essential benefits package. This executive order could change this, allowing looser rules for these “across-state-line” plans. AHPs would also be exempt from many state insurance regulations. As you could imagine, some states may find this troubling.
- Similarly, as we understand it, the rules would be relaxed for short-term, individual policies. Under current rules, short-term policies can only be purchased for a maximum of three months and cannot be renewed in order to satisfy the individual mandate. Short-term policies are also subject to underwriting and pre-existing conditions pricing. The executive order proposes 12-month, renewable policies. The president intends that these policies would qualify for the individual mandate. However, these contracts would be regulated by the states which could impose their own Obamacare-like mandates.
- Evidently the order asks the agencies to look into the possibility of expanding the Qualified Small Employer Health Reimbursement Account (reimbursement for individual premiums) to larger employers.
Again, it will take some time for the guidance to be developed. Opponents already speak of how association plans and short-term insurers could cherry-pick the healthiest insureds creating additional stress on the exchange. Further, the selling across state lines needs considerable regulation and guidance; and many states will litigate.
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