A Wreck in Progress

    For six years, Republicans in Washington have been racing headlong after Obamacare, like the neighborhood stray chasing the ice cream truck. Come Jan. 3, they’ll have something they can sink their teeth into.

    That’s the opening day for the 115th U.S. Congress. And that’s when we start to find out if they have more bite or bark on the Affordable Care Act. For what it’s worth, insurance-sector executives say, businesses that have been looking to the east for signals to help shape their employee healthcare strategies—beyond the ones already in place for 2017—shouldn’t expect to see any major changes until at least 2018.

    There’s a reason for that, as Sen. John Cornyn of Texas has precisely synthesized: “It took six years to get into this mess,” he intoned, and “it’s going to take us a while to get out of it.”

    Still, says Joe Agnello of the Lockton Companies, the benefits and insurance brokerage giant, there’s little doubt that “the goalposts are going to move. We’ve spent an enormous amount of time with clients over the past five years helping them prepare for and comply with the ACA. It is going to change.”

    The biggest concerns for plan administrators, then, are how extensive the changes will be, and how fast they might come. House Speaker Paul Ryan is on record saying that the first order of business for Republicans, no longer encumbered with a veto-wielding president, will be addressing the ACA. As Washington insiders attempt to read the tea leaves on what “addressing” means, there’s a growing consensus that first will come the political feel-good move of repealing Obamacare—with a significant string attached, in the form of a winding down, rather than a striking down.

    That gives Congress a little breathing room to make modifications for 2018 and beyond. That’s not nearly as much time as it might sound like: Insurance companies need to have their 2018 rate plans in place next spring, a little more than 100 days from now. 

    Even then, for employers and HR executives, said Jeff Spencer of Holmes Murphy & Associates, “at this point, it’s the old hurry up and wait, but there is going to be change, and until then there’s not a whole lot they can do.” 

    The challenge, Spencer said, is that there are so many meshed gears inside the ACA’s 2,000 pages of legislation (and 10 times that volume of regulatory guidance). “Everything  is interconnected,” he said, and that will take some time to unpack.

    What’s almost a given, brokers say, is that key elements of the ACA like insurance coverage for children of policyholders, up to age 26, and coverage for pre-existing conditions, will be incorporated into the replacement legislation. Then there’s the small matter of a reported 20 million Americans who have secured insurance through the state or federal exchanges. “They’re going to need a safe landing place,” Spencer said, so Congress “can’t wave a wand and make this all go away.”

    Polly Thomas, president of the benefits division for CBIZ in Kansas City, said her biggest hope was that replacement legislation would address the burdens of ACA reporting requirements. “Those are very  labor- and time-intensive for employers,” she said, “and they’re a distraction from things they could be doing to impact cost and quality of their products or services.”

    Even after the Nov. 8 elections that sealed the fate of the ACA in its current form, she said, Washington was still rolling out regulations—directives that quite soon might be rendered moot. “Our guidance to employers,” Thomas said, “is don’t panic; it’s not like something happens next month with their plans. It will be the end of ’17 before anything logistically can happen.”

    Unlike brokers and benefits managers, insurers themselves aren’t yet willing to assess—on the record—what they expect will happen. They’re far more concerned with getting their organizations prepped to pivot with new regulations as Congress acts.

    “We understand that many of our customers have questions about the impact of the election on their health insurance coverage,” said Mary Beth Chambers, corporate communications manager for Blue Cross Blue Shield of Kansas. “It is important to remember that coverage remains in effect for all of our members. We are working with our elected federal officials, as well as our state lawmakers and regulators, to ensure that Kansans have access to high-quality healthcare at a price they can afford.”

    That means sharing ideas for improving the individual market to give consumers more choices and better prices, she said, and working for a robust private marketplace that is predictable and stable. 

    The good news, said Agnello, is that the insurance sector has learned over the past six years—at times, the hard way—how to be more responsive to shifting sands of healthcare policy in Washington.

    “Right after the election, our compliance team had a paper that addressed the high points—it was pretty comprehensive,” he said. “We’re advising clients through webinars, and letting them know we’re prepared to help guide them. We’re very fortunate in that during the run-up to this, we started investing in compliance resources. The joke around here is that the compliance folks were the busiest people over the past five years, but had the election gone the way most people thought, they might be out of a job. Now, they’re the most popular people here.”

    Spencer suggested that anyone with an entrepreneurial mindset might want to be paying particular attention to what’s about to happen.

    “The biggest thing, if you look back six years ago, we were all sitting there asking, what does this mean for us?” he said. “The bill created change in our industry, but it created opportunities for us to expand our business. Any time you put a wedge into an industry—think Uber and taxi service—it creates opportunities. We learned to pivot in the way we do business, and we increased the depth of resources for our clients. That allowed us to grow our business.”

    Anyone looking to Day One of the Trump administration for decisive action on the ACA is likely to be disappointed. For the past six years, Republicans could rally around opposition to Obamacare and a Democratic president while they controlled Congress—they had a unified target. Now, health policy experts say, it’s likely that opposition will come from many different perspectives, with varying animosity toward differing provisions of the ACA. And, this being the season of Christmas, Capitol Hill’s past is fraught with key initiatives that inspire lots of people involved to hang their own particular ornaments on a bill.

    Getting all those voices aligned with legislation that can still advance through both houses will take some time—and even the concept of a timetable is creating early divisions between those most ardently calling for immediate repeal and those cautioning against rash action that could swell the ranks of the uninsured and cause a voter blowback in 2018. 

    In general, though, Republicans are expected to coalesce around a strategy of repealing the ACA in a largely symbolic act, delaying implementation of that repeal long enough to produce a thoughtful counter-plan, then adopting that by 2018, potentially for coverage beginning in 2019.

    In the House, Paul Ryan has promoted his Better Way plan, framed largely by key elements of a proposal that Georgia Congressman Tom Price has introduced in the House every year since 2009. Price, it’s worth noting, is Trump’s pick for secretary of Health and Human Services, a key regulating body for the ACA. The framework for his suggested replacement legislation has been incorporated into Ryan’s call for a post-ACA world. 

    Among other things, it would:

• Provide tax incentives for individuals buying health insurance, rather than the current mandate and its penalties for opting out—penalties that are largely toothless, because the government doesn’t collect unless a tax refund is due to an individual.
• Maintain the ACA’s coverage of pre-
  existing conditions by providing federal block grants to states, based on their commitment to create high-risk pools for people with such ailments.
• Expand health-savings accounts to cover pre-tax medical expenses. In a related development, the Senate passed legislation earlier this month allowing small businesses with fewer than 50 employees to offer Health Reimbursement Accounts without penalty, a move that brought cheers from groups like the National Association for the Self-Employed. The House had passed that measure the previous week.
• Allow for sales of insurance across state lines to create greater competition and potentially reduce rates.

    “From the things I have read out of the Better Way plan, states would gain more control over Medicaid with block grants, and that’s a good way to unwind that portion of the ACA,” said Spencer. “The rest, right now, is just a conceptual framework, in my opinion. To get bipartisan support, they’re going to have to navigate things to get a competitive market in the exchanges. Trump was elected in some measure on the basis of his call for repeal, but they’ve got to find a safe landing place for millions of people who have that insurance now.”

    One key to making a replacement plan work, Agnello said, is a better mechanism for enticing people into the system.

    “One tightrope they have to walk is the individual mandate,” he said. “If you look at the individual mandate, it had penalties in place that would drive people without incentives to participate in the exchanges. What we’ve seen in the last renewal cycle was that penalties weren’t nearly significant enough to create a healthy pool in those exchanges.” 

    As result, he said, insurers had little choice but to drive up rates across the country, or pull out of the exchanges altogether. One of the chief benefits of the ACA, according to insurers, brokers, business executives and healthcare providers, has been the incentives it provided for companies to rethink their benefit strategies and focus on improving the overall employee health.

    “We get some good data that allows us and employers to do some good things for employees around wellness,” Agnello said. “With the data available nowadays, there are a lot of signs and that an unhealthy work force hurts the productivity of the American work force, it leads to more disability and workers compensation claims. If we can keep employers incentivized to provide those programs, it will have impact on those issues.”

    One challenge Spencer cited is the ACA’s provision granting employers the ability to create a premium differential of 50 percent between wellness and non-wellness rates. But the EEOC has argued that such plans violate equal employment rights of those facing higher premiums.

    “When they initially set out to be responsible for their own health and use care less, it was a more sustainable financial model, a lot of clients embraced it, and it worked great for those that bought in,” Spencer said. “But for the country as a whole, I don’t think we’re there yet.” The way the provision has been modified, he said, has made it harder for employers to ask employees to be healthier.

    “In the employer world, there’s still a significant amount of opportunity,” he said, especially with bigger companies. Changes in population health likely will be driven at the employer level, he said.

    Regardless of what the final pieces will look like, Lockton’s Agnello says business is generally looking to Washington for one thing: some consistent guidance. “Our clients aren’t asking for a big thank you or an attaboy from the federal government for spending time, energy and expense in providing healthcare to their employees,” he said. “They  just don’t want the government  to make it harder, more complicated or more expensive. 

    “Which, unfortunately, is exactly what ACA did.”