Days before Republican leaders were forced to pull the American Health Care Act from a floor vote, the House of Representatives passed a bill intended to give small employers greater purchasing power in the group health insurance market.
The Small Business Health Fairness Act (SBHF), which would allow small businesses to band together to offer association group health plans, was largely passed along party lines — only four Democrats defected to join Republicans in their uniform support of the bill.
Association health plans have been among the GOP’s pet policy initiatives for nearly three decades. Legislation could give smaller companies as much negotiation power with insurers as large employers and labor unions. In 2005, a similar bill passed the House, but ultimately stalled in the Senate. Since then, the House has seen several iterations of bills that would allow for association plans, all of which failed to reach a full chamber vote.
The current partisan divide on the issue of small-employer negotiation power reflects opposing ideological views of a core Republican health care tenet — the ability to purchase insurance policies across state lines.
Under the SBHF, trade associations, local Chamber of Commerce chapters and similar business groups would be able to establish fully- or self-insured nationwide association plans that fall outside the state boundary restriction. In turn, The Employee Retirement Income Security Act (ERISA) would be amended to establish the Labor Department’s regulatory authority over the plans.
Association plans may not be a new concept, but the market has dwindled to a mere couple of hundred plans. The Affordable Care Act holds association and all other group plans to the same compliance requirements -- including caps on annual and lifetime coverage limits. It also treats association plans the same as small-group market plans, requiring that their policies include essential health benefits.
Under the SBHF, association plans would have minimum benefit requirements – and that provision draws ire from consumer advocates. It will likely also make the bill unattractive to Senate Democrats, says Joel Wood, senior vice president of government affairs for the Council of Insurance Agents and Brokers.
“I don’t think they can get [the SBHF] across the finish line,” says Wood. “There’s never been traction for association plan legislation in the Senate. There’s even less incentive for Democrats to engage on this now.”
Wood says it’s not even clear whether the bill will attract uniform support from Republicans: Because it passed through the House as standalone legislation rather than through the budget reconciliation process, it only requires 60 votes for passage if brought to a vote on the Senate floor.
The SBHF was part of the so-called “third bucket” of the Republicans’ health care reform strategy.
Along with bills that would relax regulations on both employee wellness programs and stop-loss coverage for self-insured plans, expanded access to association plans was designed to initiate group market reforms that could not be built into the AHCA. When Rep. Paul Ryan’s health care legislation died, many presumed that third-bucket legislation would, too.
But a mere two weeks after Republican leaders and the White House said they were shelving health care reform, lawmakers are already taking steps to revive the initiative.
The House Rules Committee recently passed an AHCA amendment giving health insurers $15 billion over a decade to help subsidize high-cost individual market consumers.
The ACA gave insurers similar subsides, which expired in 2016; the new subsidies would ostensibly lower insurance premiums for everyone in the individual market in the near-term. This comes after Republican members of the House Freedom Caucus withheld AHCA support, in part, because the Congressional Budget Office reported that in its first two years, the bill would increase the cost of health insurance.
Reports are also circulating that the White House is renegotiating with the Freedom Caucus on amendments that would allow states to eliminate the ACA’s essential benefits requirements and community rating restrictions for individual plans.
Critics of those measures say they would effectively nullify the ACA’s pre-existing condition protections by allowing insurers carte blanche in setting premiums, potentially pricing sick individuals out of the market. President Donald Trump has made repeated pledges, however, to preserve protection of pre-existing conditions.
Republicans’ aggressive repeal timeline explains, in part, how they failed to bring the AHCA to a vote. This time, party leaders seem more conscious of over-promising.
“I’m not going to raise expectations,” said White House press secretary Sean Spicer this week on efforts to reintroduce the AHCA. Ryan separately cautioned that the reinvigorated effort is only “at concept stage right now.”
Whatever becomes of AHCA resuscitation efforts or the SBHF, Republicans’ second health care reform bucket — regulatory authority through the Department of Health and Human Services and the IRS — could impact the employer market most significantly of all.
Regulators may ease up on excise penalties, make employers’ reporting requirements less burdensome -- even amend essential health benefit regulations.
The Trump administration has already used its regulatory authority to reduce the ACA’s open enrollment period and reduce enrollment outreach. How aggressively the White House applies its regulatory authority going forward will likely hinge on efforts to reintroduce the AHCA.
“A lot of employers are expecting some regulatory relief,” says Garrett Fenton, an attorney in the benefits practice of Miller & Chevalier. “But the ACA is the law of the land. Until the agencies give clear guidance, employers have to comply with the law on the books.”
After Trump’s win, benefits consultants immediately predicted that the employer market would transform from heavily regulated to the “Wild West” overnight, says Fenton.
The GOP’s clumsiness in advancing reform has clearly tempered that expectation, placing brokers back in their familiar positions of helping employers comply with the ACA.
“You don’t want your clients operating health plans in violation of the law,” says Fenton. “On top of the regulatory risk that would bring, it also introduces litigation risk by raising fiduciary issues under ERISA and potential employee lawsuits. The only answer consultants can give employers on the potential for regulatory relief is that they have to comply with the ACA for the time being.”