ACA health insurance market poised for election year revamp

Federal maneuvers are launching health insurance and the popular protection of pre-existing conditions back into public discourse in a significant election year in Tennessee.
Photo by Andy Feliciotti via Unsplash

A series of actions from across several federal agencies is lobbing health insurance and the Affordable Care Act, including the widely popular protection of pre-existing conditions, back into public discourse — in a year when Tennesseans will vote on who represents them in Washington and in Nashville.

The structure of insurance policies doesn’t make for tantalizing campaign rhetoric so the upcoming shifts in policy on short-term and association plans may not cut deep into voters’ psyche.

But, the U.S. Department of Justice’s recent decision to not defend the ACA’s shielding of a person’s medical history in future insurance purchasing is likely to strike a chord.

There were an estimated 1.27 million Tennesseans with a pre-existing condition in 2016, according to Kaiser Family Foundation. That’s about 32 percent of the state’s non-elderly adults. People who are covered in plans sponsored by employers are largely shielded from the yearly rollercoaster that has become the individual health insurance market.

The DOJ’s decision to not defend the constitutionality of parts of the ACA — including the protection of people with pre-existing conditions — in a Texas lawsuit (in which Tennessee is one of 20 Republican-led states contesting the eight-year-old federal health law) is a twist for Republicans running for office.

U.S. Rep. Phil Roe, a Republican who represents upper East Tennessee, told Politico “‘I’m not going to have to defend anything I don’t agree with — regardless of who says it’ … when asked if he would defend the administration’s request on the campaign trail this fall.”

This time last year when the U.S. Congress was in the throes of the heated repeal-and-replace debate, four out of five Tennesseans supported the protection of pre-existing conditions, per a Vanderbilt University poll.  

“I don’t see how this is a winner politically,” said Craig Becker, president of the Tennessee Hospital Association, of the DOJ decision on pre-existing conditions. 

The THA opposed repeal of the ACA and supported expanding Medicaid.

Health care access and cost have been at or near the top of Tennesseans’ minds for quite some time, per polls from Vanderbilt, iCitizen, and one commissioned by the Tennessee Justice Center. Tennesseans have expressed support for Medicaid expansion, which is a non-starter for Republicans vying to be governor.

» Dig In:  See what some of Tennessee’s gubernatorial candidates think about the ACA.


Federal guidelines could pave the way to a ‘parallel market’

A series of federal rule making decisions from the U.S. Departments of Health and Human Services , Labor and Treasury — which are set to be finalized in the coming months — could mean that some Tennesseans find themselves considering plans that:

  • don’t cover certain types of care,
  • box them out out of some plans because of their medical history, or
  • potentially face another round of premium increases.

Final federal rules about short-term or association plans haven’t been released. And insurers still have roughly another month before their 2019 rates for exchange plans are due.

The possibility of one or more of these changes is reverberating around the state.

The proposals are raising questions about costs to consumers and providers as well as the make-up of future risk pools in the federally run marketplace, where plans have to meet benefit criteria and cannot discriminate.

(Remember: health insurance, like car and home insurance, is designed to balance claims by having a mix of high and low cost members).

Short-term plans

In the past, short-term plans were a niche market but changes in the individual insurance market, including the loss of the mandate, could boost sales.  

The length of short-term plans could increase up to 364 days,  an increase from the current three month duration — making them an option for people who want to pay less for substantially less coverage.

The number of people in these plans is tough to pinpoint because insurers don’t have to file the information with state officials. A long-time participant in Tennessee’s health insurance landscape said pre-ACA short-term plans were often just a blip in a company’s overall book of business.

But given the changes, they have “the potential to become a parallel market in which you can underwrite,” said Kevin Lucia, senior research professor at Georgetown University’s Center on Health Insurance Reforms.

Short-term plans are notoriously light on what they cover. Some don’t cover injuries from ordinary accidents or activities. Women often can’t find benefits for maternity care or birth control.

»Read more: In Tennessee, no short-term plans cover maternity care and 29 percent cover prescription drugs.

Tennessee’s insurance commissioner Julie Mix McPeak said, in a statement to BirdDog, that “I fully support Tennessee consumers having options when it comes to coverage. The challenge is ensuring that consumers are educated and well-informed about what they’re purchasing.”

McPeak said some people, for example, might be eligible for a tax credit but not know it. She encourages shoppers to contact the Tennessee Department of Commerce and Insurance if they have questions.

There are already short-term plans available in Tennessee and companies have had time to write new plans in anticipation of the market growing, so new ones could hit the market soon after federal officials finalize their rules, said Lucia.

Even insurers that don’t immediately decide to offer short-term plans will have to make decisions in the future about whether staying on the sidelines is a prudent business decision.

“It becomes an issue for any insurer to allow healthy people to go to another insurance company,” said Lucia. “The incentive to sell this stuff became more limited under the ACA.”

Short-term plans could cause headaches when people try to use them.

Vanderbilt University Medical Center tries to identify, before an appointment, what is covered or obtain necessary prior authorizations. The system is working on its “point of service collection” so it can better assess a patient’s financial responsibilities, a spokesman said in a statement.

If short-term plans proliferate there may be an issue of providers not knowing whether they are in or out of a network when a patient calls, the VUMC statement said.

Short-term plans will probably impact hospitals similarly to having more patients being in high deductible health plans (HDHP), Becker said, noting that whether a hospital gets a payment under a HDHP is “Russian roulette unless (the patient’s) got $10,000 in the bank.”

“Hospitals will be watching (short-term plans) to see how much they grow,” said Becker.

Association plans

Association plans aren’t new to Tennessee. Farm Bureau Health Plans remained an option even after the ACA due to a legal loophole.

The Farm Bureau plan, which is available to members but incurs a tax penalty, is a medically underwritten option that prices policies based on people’s health.

So the biggest question for Tennessee, said Lucia, is whether, or to what extent, the state will regulate association plans that could potentially be underwritten in another state but sold in Tennessee.

The state would have oversight and the TDCI is waiting for additional guidance from federal officials, said a spokesman.

The National Association of Insurance Commissioners, of which McPeak is president this year, urged federal officials in a public comment letter to “confirm [that] states retain full authority… to set and enforce solvency standards.”

The association also wants states to have the authority to establish “required service areas” so plans could not choose their territory in ways that discriminate against areas with poorer health or employers with higher cost workers.

Read more:
WSJ: Focus on Health Care Jolts GOP Ahead of Midterms
California Healthline: California’s Attorney General Vows National Fight To Defend The ACA

Photo by Andy Feliciotti (@someguy) on Unsplash


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