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Alden Bianchi is the Practice Group Leader of the firm’s Employee Benefits & Executive Compensation Practice. He advises corporate, not-for-profit, governmental, and individual clients on a broad range of executive compensation and employee benefits issues, including qualified and nonqualified retirement plans, stock and stock-based compensation arrangements, ERISA fiduciary and prohibited transaction issues, benefit-related aspects of mergers and acquisitions, and health and welfare plans.

At this writing, the prospects for success of the latest Republican effort to replace the Affordable Care Act appear bleak—but the Graham-Cassidy bill on which the GOP has pinned its last-ditch hopes highlights a major political and policy flashpoint in the fight to repeal, replace, or repair the law: the degree to which states should be free to innovate and experiment by adopting non-standard health insurance product designs in their individual and small group markets. Under current law, there is little flexibility. Proposals abound to change this, but to do so invites consequences with which lawmakers must be prepared to deal—involving complex economic and actuarial issues and fundamental questions regarding the role of the federal government and the states in health care.

This post addresses these issues.

Continue Reading Fractal Geometry, Actuarial Risk, and §1332 Waivers—The Role of the States in Reforming Health Care

Mull v. Motion Picture Ind. Health Plan educates employers on the basics of the requirements of the Employee Retirement Income Security Act (ERISA) governing plan documents and summary plan descriptions. The lessons are sobering, particularly as they relate to group health plans. Although compliance with these requirements is neither difficult nor expensive, many employers nevertheless ignore them. The decision in this case might—and, in our view, should—encourage them to reconsider.

Continue Reading The Ninth Circuit Weighs in on ERISA’s Plan Document and Summary Plan Description Requirements: Mull v. Motion Picture Ind. Health Plan

On August 1, Massachusetts Governor Charlie Baker signed into law H. 3822, “An Act Further Regulating Employer Contributions to Health Care” (the “Act”). The purpose of the Act is to shore up the finances of the Commonwealth’s Medicaid program and its Children’s Health Insurance Program (CHIP), which in Massachusetts are combined into a single program called MassHealth. MassHealth covers about 1.9 million low income, minor and disabled Massachusetts residents, and it costs about $15.6 billion annually.

Continue Reading Massachusetts Employers Face $200 Million Increase in Health Care Costs under MassHealth Amendments

With its “employer mandate”—i.e., the requirement that applicable large employers make an offer of group health coverage to substantially all full-time employees or face the prospect of a penalty—the Affordable Care Act (ACA) opened a fault line in the previously monolithic market for group health insurance. There is large cohort of American workers who, before the ACA, were not offered major medical coverage under an employer-sponsored group health plan. These employees are sometimes referred to as the “contingent” workforce. They include part-time, seasonal and temporary employees, as well as employees whose work schedules are generally irregular or intermittent. Found predominantly though not exclusively in industries such as staffing, restaurants, media and advertising, transportation and hospitality, among others, these workers tend to be on the lower end of the pay scale. They also often have significant “deferred” health issues (a euphemism for undiagnosed conditions owing to lack of previous access to health care). The ACA provided “applicable large employers” (those with 50 or more full-time and full-time equivalent employees) with an incentive to cover these workers.

Continue Reading The Rise of the Group Health Insurance Captive

Senate Majority Leader Mitch McConnell recently gave a candid assessment of the chances of getting an Affordable Care Act (ACA) replacement bill through the Senate, saying “I don’t know how we get to 50 (votes) at the moment.” That succinctly captures the political dilemma. There has long been broad bipartisan agreement that the nation’s health care system was in need of repair. Something had to be done to contain rapidly rising health care costs, increase the quality of medical outcomes, and to expand coverage. But there was little or no bipartisan agreement on how to do it. Indeed, no major health care initiative since Medicare was enacted in 1965 has enjoyed true bipartisan support.

Continue Reading Can Congress Get to “Yes” on Replacing the Affordable Care Act?

In an effort to make up for a funding shortfall in the Commonwealth of Massachusetts’ Medicaid program, state policymakers have proposed solutions that include a “play-or-pay” option under which employers who fail to offer major medical coverage, or who offer coverage but have low take-up rates, would be required to pay an additional “employer contribution” to the Commonwealth based on multiple factors and complex computations. Another option would make up the shortfall with an across-the-board increase, similar to a payroll tax increase, in the Employer Medical Assistance Contribution (or “EMAC”), which helps defray Medicaid financing.

This post argues in favor of the latter option. We are of the view that an across-the-board increase in EMAC payments, would be vastly preferable because of its simplicity and ease of administration. The “play-or-pay” option would not only be extremely complicated to comply with and enforce, but, as we explain below, it may be preempted by federal law, i.e., the Employee Retirement Income Security Act of 1974 (ERISA).

Continue Reading Efforts to Shore up MassHealth Should Favor Simplicity and Avoid Potential Conflict with Federal Law

The stunning failure of the U.S. House of Representatives to pass the American Health Care Act (AHCA) (which we previously reported on here) has political and policy implications that we cannot forecast. Nor is it clear to us whether or when the Trump administration and Congress will make another effort to repeal and replace, or whether Republicans will seek Democratic support in an effort to “repair,” the Affordable Care Act (ACA). And we are similarly unable to predict whether and to what extent the AHCA’s provisions can be achieved through executive rulemaking or policy guidance. The purpose of this post is not to assess why the AHCA failed, or to speculate on the outcome of any future legislative efforts to repeal and replace the ACA, but rather to offer some thoughts about how the AHCA’s failure will impact employers in the near term. As our title suggests, the news may not be all that bad.

Continue Reading The Future of the Affordable Care Act Week 8: An Employer’s Guide to the Collapse of the American Health Care Act (Spoiler Alert—the News is Not all Bad)

For employers who want to attract and retain the best talent, a robust benefits package is a must. But with political shifts and changing compliance burdens, keeping up with benefits requirements is a daunting task.

First and foremost, employers are concerned about the future of the Affordable Care Act (ACA). The ACA has recently been in the news as a result of the failure of the Republican controlled Congress to pass the American Health Care Act (AHCA). Based loosely on a whitepaper issued by House Speaker Paul Ryan entitled A Better Way, the AHCA was passed by two Committees of the U.S. House of Representatives that collectively were intended to “repeal and replace” the ACA. (We explained the Ryan proposal here, and we cover the implications of the collapse of the AHCA here.)

Continue Reading Mintz Levin Third Annual Employment Law Summit–Panel on Employee Benefits and the future of the ACA . . .

On March 6, 2017, after years of promising, GOP lawmakers in the House of Representatives introduced the “American Health Care Act” (AHCA), the first concrete legislative proposal detailing the initial provisions designed to repeal and replace the Affordable Care Act. The bill is a joint effort of the House Energy and Commerce and Ways and Means Committees, and it closely hews to the “Better Way” proposal previously outlined by House Speaker Paul Ryan (which we discussed here.)

The bill currently is the subject of widespread media scrutiny and intense criticism, not only from Democrats, but from Republicans who argue that the bill either goes too far or not far enough. Assuming a bill ultimately passes and is signed into law, it almost certainly will contain significant changes—for example, relating to the timing of the repeal of Medicaid expansion. Nonetheless, we believe the broad contours of any final legislation are likely in place and thus we offer this analysis of the major provisions.

Continue Reading The Future of the Affordable Care Act Week 7: The American Health Care Act

A recent report from the nation’s top actuaries takes a sobering look at the challenges policy makers face in creating a viable individual (i.e., non-group) health insurance market—a critical component of any plan to replace the Affordable Care Act. Published by the American Academy of Actuaries, the report, entitled An Evaluation of the Individual Health Insurance Market and Implications of Potential Changes outlines, without a hint of partisanship, the necessary conditions for a sustainable individual market, examines the extent to which those conditions are currently being satisfied, and discusses the implications of proposed changes to either improve the ACA insurance market reforms or (as is most likely the case) replace them with an alternative approach.

The paper offers an unvarnished explanation of the impact of the relevant actuarial principles that informed the ACA and that must be negotiated in the process of its replacement. Any policy maker hoping to expand (or at least to expand access to) health insurance coverage, control rising health care costs, and increase the quality of medical outcomes—the three goals of the ACA—would be well advised to read this paper. The actuarial principles expounded in the paper appear to transcend law and politics and any ACA replacement plan that fails to take them in account may face significant, if not insurmountable, hurdles in achieving its objective.

Continue Reading The Future of the Affordable Care Act Week 6: Focus on the Individual Health Insurance Market