Health care is a contentious issue, with many differing ideas about how it should be governed.
And naturally, the two major US political parties have very different ideas about what the future of health care legislation should look like.
Recently, we held a webinar with guest speaker Chris Condeluci, Principal at CC Law & Policy and a leading expert on the US health care system.
During the webinar, Condeluci explained what we’re likely to see in the coming months and years depending on the results of the 2020 Presidential election.
A Health Care Perspective on the Democratic Presidential Primaries
The Democratic primaries were important from a health care perspective because the candidates had quite different ideas about how things should be done. Depending on which candidate receives the Democratic nomination, we can expect to see a push for a different set of legislative changes.
With Joe Biden winning the nomination, it's probable that we'll see a ‘moderate’ Democratic candidate agenda over the more 'progressive push for Medicare-for-All. That means that there will likely be a push to keep the ACA in place, introduce a public option in the individual market and increase government subsidies for ACA exchange plans.
In Condeluci’s opinion, it would be extremely difficult to push Medicare-for-All through Congress even with a Democratic majority in the House. Instead, a public option and additional price control are the most likely Democratic policies to come into effect. These changes could lead to a more government-controlled health care system.
What if Trump is Re-Elected?
In many ways, predicting the future will be an easier task if President Trump is re-elected this year. During a second Trump term, we can expect:
- A continued push for transparency. This will bring administrative complexities for providers, but many employers are keen for their employees to have this information, as it should help them become smarter consumers of health care.
- Value-based care strategies incorporated into Medicare, Medicaid and private health plans.
- Expansion of medical expenses that may be paid for by an HSA-eligible HDHP or HSA.
On top of these, we can expect a second Trump administration to continue the promotion and expansion of Individual Coverage HRAs (ICHRAs). If Trump is re-elected, there is a strong possibility that his administration will set forth a new set of rules to govern ICHRAs.
What is an ICHRA?
An ICHRA is an employer-funded, tax-advantage health plan that any employer can use to give employees a tax-free contribution to purchase an individual market plan through an HRA. One thing that makes ICHRAs attractive to employers is that they make it possible to offer different levels of contribution to 10 different ‘classes’ of employees:
- Employees in their waiting period
- Employees in different geographic locations (i.e., rating areas)
- Temporary workers employed by a staffing firm
For each class of employee, an employer must decide whether it wants to offer:
- A group health plan; OR
- An ICHRA
An employer can’t offer both plan types to a single class of employees but can choose to offer a group plan to some classes and an ICHRA to others.
Why does that matter? Because employers are unlikely to want to replace the group health plans offered to their full-time employees. However, they may want to offer some level of cover to other classes in order to attract high-quality talent.
Many employers don’t offer any coverage for part-time workers, for instance, so offering an ICHRA with an employer contribution may be a good way to attract and retain strong candidates.
Note that with an ICHRA, contribution levels must be the same for all employees in a particular class, irrespective of seniority. However, an employer may vary the HRA contribution amount by age and family size, to account for the higher health care costs associated with large families and older employees.
ICHRAs and the Employer Mandate
The obvious question an employer might have when considering ICHRAs is: “Will this count towards the Employer Mandate?”
The answer is a resounding yes. Meeting the Employer Mandate with ICHRAs is essentially the same as meeting it with group plans.
- The A-penalty is satisfied if the employer offers an ICHRA to at least 95 percent of full-time employees and dependents.
- The B-penalty is satisfied if the HRA contribution makes the individual market plan “affordable.”
A plan is considered affordable if it enables an employee to afford the lowest-cost silver self-only plan in the ACA rating area where their worksite is located — not where they live. Affordability may also be based on the previous-year cost of the cheapest silver self-only plan.
ICHRAs and Private Exchanges
Many employers want to help employees become better consumers of health care. When it comes to ICHRAs, this often includes helping to connect employees with suitable plan providers.
To aid this process, employers can work with a private exchange that includes all insurance companies selling individual plans within the ACA rating area of an employee’s worksite. Working with an exchange helps to connect employees with individual market plans that they might not have found through their own research.
However, there are transparency requirements to adhere to.
A typical private exchange might maintain a web-based platform that displays information about the different individual market plans available to an employee. In these cases, it’s critical that the platform presents all available plans in an unbiased manner.
An employer cannot work with a private exchange that:
- Limits an employee’s choice of insurance company.
- In any way limits an employee’s ability to select a plan that should be available to them.
- Promotes one plan over another, e.g., with “recommended” or “starred” listings.
To ICHRA, or Not to ICHRA?
The huge role that politics plays in health care legislation and governance can make it difficult for industry players to anticipate the future.
With the Democratic candidates supporting two totally different sets of changes to what we could expect under a second term of President Trump, it becomes hard to plan for the future. Will 2021 be all about ICHRAs, or will we see an expansion of the ACA?
Adding to the uncertainty, there is absolutely no way of knowing how the presidential election will run.
So while it remains to be seen what direction health care legislation will take, we can at least prepare ourselves for the most likely outcomes.
Watch the on-demand webinar to hear more about the future of health care policy from Chris Condeluci.