Where you live matters more
One of the biggest changes ushered in with the ACA was a standard set of rules across all states.
Before the law took effect, consumers buying their own coverage saw tremendous variation in what was offered and what protections they had, depending on the state where they lived.
Most states, for example, allowed insurers to reject people with medical conditions. A few states required insurers to charge similar premiums across the board, but most allowed wide variations based on age, gender or health. Some skimpy plans didn’t cover prescription drugs, chemotherapy, or other medical services.
By standardizing the rules and benefits, the ACA barred insurers from rejecting applicants with medical conditions or charging them more. Women and men get the same premium rates and insurers could charge older people no more than three times what they charged younger ones.
Under the new guidance issued this week giving states more flexibility on what is offered, consumers could again see a wide variation on coverage, premium rules, and even subsidy eligibility.
“It shifts pressure to state politicians,” said Caroline Pearson, a senior fellow at NORC, a nonpartisan research institution at the University of Chicago. That could play into the calculus of whether a state will seek to make broad changes to help people who cannot afford ACA plans, even if the trade-off affects people with medical conditions.
“You risk making some worse off by threatening those markets,” said Pearson. “That is always going to be hard.”
Millions more will join the “buy-your-own” ranks
The proposed rule released Oct. 23 allows employers to fund tax-free accounts – called health reimbursement arrangements (HRAs) – that workers can use to buy their own coverage on the ACA marketplaces.
The administration estimates about 10 million people would do so by 2028 – a substantial boost for those exchanges, which policymakers say never hit the enrollment numbers needed to attract enough insurers and hold prices down.
John Barkett, senior director of policy affairs at Willis Towers Watson, a benefits consulting firm, said he expects employers to “seriously consider” the new market. The infusion of workers will improve options by attracting more insurers, he added.
“These people coming in will be employer-sponsored, they’ll have steady jobs,” Barkett noted, and will likely stick with coverage longer than those typically in the individual market.
Currently more than 14 million people buy their own insurance, with about 10 million of those using federal or state ACA marketplaces. The others buy private plans through brokers.
The proposed rule won’t be finalized for months, but it could result in new options by 2020.
If these workers seeking coverage are generally healthy, the infusion could slow premium increases in the overall ACA marketplace because it would improve the risk pool for insurers.
But, if employers with mainly higher-cost or older workers opt to move to the marketplaces, it could help drive up premiums.
In an odd twist, the administration notes in the proposed rule that the ACA has provisions that could protect the marketplace from that type of adverse selection, which can drive up prices. But most of the protective factors cited by the rule have been weakened, removed, or expired, such as the tax penalty for being uninsured and the federal subsidies for insurers to cover lower deductibles for certain low-income consumers.
Benefits consultants and policy experts are skeptical about how many companies will move to the HRA plan, given the tight labor market. Continued uncertainty about the fate of the ACA marketplace may keep them reluctant to send workers out on their own, they say.
Health benefits are a big factor in attracting and retaining workers, said Chris Condeluci, a Washington attorney who previously worked for Sen. Chuck Grassley (R-Iowa) and served as counsel to the Senate Finance Committee during the drafting of the ACA.
“Most employers believe their group health plan will provide better health coverage than an individual market plan,” he said.
Kaiser Health News is a nonprofit national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation that is not affiliated with Kaiser Permanente.