Escape Routes: Lawsuits, Associations and Mandates!

How many times have you seen something in the news and been surprised?

Happens with me and my wife all the time. “Hey baby, did you know Blah-Blah died!?”

“Really? Oh, that’s sad. I really liked her!” We’re big film fans, but we tend to lose track of stars if they aren’t making movies currently. That is, until they pass on and their names resurface in the news.

The healthcare news has been pretty quiet lately, overshadowed by lots of other happenings around the country.

Beyond the headlines, there is a strong current of change coming to the healthcare world in 2018, and it is critical that we stay on top of it. You don’t want the news to surprise you one day, when you find out about changes six months or a year after they happen.

As your friendly, neighborhood Straight Talk guy, I want to take this opportunity to bring you up to speed on a couple of things that could affect your healthcare or health insurance or both.

Looking for Escape Routes
First, let’s remember that some bad legislative and regulatory decisions over aspects of the federal Affordable Care Act during the past eight years have really driven some folks into situations they didn’t want to be in.

Higher rates, fewer choices, tax liabilities and tons of new reporting are some of the downsides of the ACA.

This means people are looking for escape routes — ways out of the ACA’s controlled spaces. In 2018, we will see the expansion of short–term, limited duration medical plans, an association health plan proposal and more lawsuits to throw out the ACA or some of its provisions. We’ve ALREADY seen the penalties in the individual mandate reduced to ZERO beginning in the 2019 tax year.

These are all escape routes. But, for whom? And what do they mean to me? Time to earn my keep.

First, I’ll provide detailed reporting on all of these things throughout the year as significant milestones are met.

Today, I want to give you a working summary of the issues. You can use this to make sure you don’t get ambushed later.

Short–Term, Limited Duration Medical Plans
Short-Term, Limited Duration Medical Plans (STM) plans have been around for years, but under the ACA they were consigned to a weak, low-value position. The main attraction for buyers of STM plans has always been cheaper pricing and more benefit flexibility.

The downsides have been that you have to get a medical screening BEFORE you find out your rates and you might be excluded for pre-existing conditions. In other words, a STM plan is a great option while you are healthy, but perhaps less so if you have any chronic health conditions.

Under the ACA, STMs were limited to 90 days before they reset AND they didn’t count toward your individual mandate obligation. Late last year, the Trump Administration proposed expanding their duration to “less than 365 days.” With the individual mandate fines disappearing (in 2019), and skyrocketing (and unfair) federally mandated pricing for the healthiest among us (kids and millennials mostly), their attraction is likely to jump.

We’ll stay on top of this regulatory process and let you know right here what the Feds’ final decision is on these plans. Keep in mind each will come with a “warning label” to help people understand that there are many things these plans might not cover. More to follow on the STM plan movement as the government publishes more rules.

Can We Start Associatin’ Yet?
A very controversial part of the ACA was the separation of the group health insurance market into a tightly regulated, federal “small” group market and everybody else. Here at Blue Cross, we sell health plans that meet federal design standards to companies with 50 or fewer employees. Everything about these policies is tightly controlled by a federal agency, the Center for Consumer Information and Insurance Oversight (CCIIO).
CCIIO was created by the ACA to control which health plans small companies could buy in the health insurance market, and the plan designs are very limiting for carriers. We have about 30 plans that meet all the federal criteria for small companies.

For companies with more than 50 employees, many ACA rules don’t apply, and we can offer hundreds of options. It’s pretty easy for a larger company to get a plan that costs less, sometimes a lot less, than small companies pay.

What an escape route it would be if a bunch of smaller companies could make the system think they were one larger company and get access to hundreds of plan designs instead of 30! Well, back in October, the President requested the U.S. Department of Labor write a rule just like this. The proposed Association Health Plans rule was issued in January, and it potentially sets the stage for just this escape route.

We are still studying these proposals, and final rules probably won’t be issued for another couple of months, but it’s possible companies will start “associatin’” pretty soon. We’ll need to figure out all the administrative issues if we are to support this movement.

We will be following this “associatin’” here in Louisiana as the regulations become clear. Fortunately for all of us, our state insurance officials and legislature have the authority to regulate such associations as they develop. In the past, before they had this authority, some less-than-reputable characters used associations to bilk many people out of their premium dollars. We certainly want to make sure that these brand-new creations are legitimate, trustworthy and safe for small businesses to use for their healthcare benefits.

Lawyers Gonna Be Lawyers!
About 20 state Attorneys General just filed a lawsuit to do away with the entire ACA. It’s a fascinating case.

You see, back in 2012, the U.S. Supreme Court was forced to rule on three different aspects of the ACA.

The Court upheld the law in a very tight decision. The Justice who was the “deciding vote” pointed out that the individual mandate and its penalties were a tax, and a key to the constitutionality of the entire act.

But, that fine will be lowered to zero starting in 2019. Does that undo the 2012 decision and necessitate that the Supreme Court take another look at the constitutionality of the whole law?

It feels like a long shot, but that’s won’t stop them. We’ll hear about this lawsuit for the whole of 2018, I’m betting.

WHEW! Now you are all caught up on my favorite ACA escape routes for 2018. So much more to come, stay tuned! I’ll be giving it to you Straight!

And you won’t be the one saying, “Honey, I had NO idea!”