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

The recent Republican election victories appear to ensure that the Affordable Care Act’s (ACA) days are numbered. But with nearly a fifth of the U.S. economy, and the health care coverage for some tens of millions of U.S. citizens, at stake, the law will not simply be repealed. Something will be enacted to take its place. And some popular features of the law (e.g., protection for those with pre-existing conditions) are likely to survive.

Our previous posts have attempted to outline the alternatives and to handicap their odds. Last week we looked that the Trump/Pence transition plan, “Healthcare Reform to Make America Great Again.” This week we turn our attention to particulars of the program offered by House Speaker Paul Ryan entitled A Better Way. In the next two weeks, we will look at legislative proposals offered by Representative Tom Price (R-Georgia), who is President-elect Trump’s nominee to head the Department of Health and Human Services, and by Senator Orrin Hatch (R-Utah). In future posts, we will speculate on the process by which the various policy prescriptions might become law—including whether the repeal of the ACA will be done quickly (we expect it will), whether there will be a transition period (we expect that the answer is “yes”), and if so how long (anywhere from two to four years).

Unlike the Trump/Pence plan, which consists of a series of high-level bullet points, the Ryan plan is a fairly detailed policy proposal. Hence, while not in actual legislative form, it provides a good sense of some of the likely features of the ACA’s replacement.

Continue Reading The Future of the ACA Week 4: The Ryan Plan, “A Better Way”

The Trump campaign promised to “repeal and replace” the Affordable Care Act. On the campaign trail, candidate Trump was particularly critical of the ACA’s individual mandate, the subsidization of premium charges to older individuals by younger individuals, and the coverage mandates on insurance products offered on the exchanges. In contrast, he was in favor of keeping the ban on imposing pre-existing condition limitations and allowing dependents to remain on their parents’ coverage to age 26. So we are not without some clues as to the details of the ACA’s replacement.

As the campaign promise morphs into legislation, there are some sources that give us a sense of what the future has in store for the regulation of the U.S. health care system. These include:

This post examines the Trump/Pence transition plan. In the next two posts, we will turn our attention to the Ryan and Price plans. All three plans share common features. The particular elements and terms of these plans have been the subject of much study and commentary. Much less is known about how these components will fit together. Nevertheless, we expect that these plans taken together contain many if not most of the elements of the ACA’s replacement.

Continue Reading The Future of the ACA (Week 3): The Trump Plan, “Healthcare Reform to Make America Great Again”

In an earlier post, we reported on a troubling development in the draft 2015 instructions for Forms 1094-B and 1095-B which, if adopted, would have required sponsors of Health Reimbursement Arrangements (“HRA”) to issue separate Forms 1095-B and transmit on Form 1094-C when the HRA was integrated with fully-insured coverage. We argued in that post that this made little sense under the circumstances, as covered individuals were already receiving a Form 1095-B for the fully-insured coverage. We were therefore pleased to see the IRS change course in the final 2015 Instructions. There, the IRS adopted a rule under which,

“An employer with an insured major medical plan and HRA coverage for which an individual is eligible because the individual enrolls in the insured major medical plan is not required to report the coverage under the HRA for an individual covered by both arrangements.”

This rule applies only to coverage provided to active employees and only in instances where the employer sponsors both the fully-insured major medical plan and the HRA, however. Noting residual “confusion” about the reporting obligations that apply to retiree-HRAs, Notice 2015-68 offers some welcome clarification—which is the topic of this post.

Continue Reading The Affordable Care Act’s Reporting Requirements for Carriers and Employers (Part 16 of 24): Reporting for, and Clearing Up Confusion Over, Post-65 Retiree Health Reimbursement Arrangements

Written by Alden J. Bianchi

The Affordable Care Act is the single most important piece of Federal social legislation in more than a generation.  While there was and is broad agreement on the law’s principal goals—to expand medical coverage, increase the quality of medical outcomes, and constrain costs—there is little agreement on the “means whereby.” This is perhaps both unavoidable and unfortunate. Unavoidable given the partisan political environment from which the ACA sprang and in which it now lives; unfortunate because, at bottom, there are few viable alternatives. If Congress was considering health care finance for the first time, as if on a blank slate, no one thinks that they would design anything remotely like our current fragmented system.  But Congress did not and does not have that luxury.

Continue Reading The Affordable Care Act—Countdown to Compliance for Employers, Week 0: Final Thoughts and Acknowledgements

Written by Alden J. Bianchi

While employers sometimes view the Affordable Care Act’s employer shared responsibility (or “pay-or-play”) rules in isolation, they don’t operate that way. Instead, they exist side-by-side with other provisions of the Act. In particular, the Act’s rules providing premium tax subsidies to low- and moderate-income individuals correlate with an employer’s liability for assessable payments. Of interest to employers is that, generally, where there are no individual subsidies, there are no employer penalties.

In a recently issued revenue procedure (Rev. Proc. 2014-37), the Treasury Department announced adjustments to parameters that impact premium tax subsidies. One of the adjustments made changes to a table used to calculate an individual’s premium tax credit. While the adjustments addressed premium tax credits under the Act, it was not immediately apparent what impact, if any, the change would have on employers. As it turns out, the answer is, none.

Continue Reading The Affordable Care Act—Countdown to Compliance for Employers, Week 20: 9.5% ≠ 9.56% (And Why It Matters to Applicable Large Employers)