As we near the end of another year, it’s time to close the books on 2017 and look ahead to 2018. As we do, it’s helpful to review the big news stories from the last 12 months and determine whether they’ll carry over to the next calendar year or just be interesting moments in history that we can look back on but stop worrying about.
It certainly was an eventful year, one that’s worthy of a series of articles, but we’ll keep it as short as possible. And instead of a timeline of events, we’re separating the big health insurance news stories into two categories: 1) over-and-done-with and 2) ongoing. Hopefully, you’ll find this beneficial as you map out your success strategy for 2018.
The Inauguration of Donald J. Trump: We’re not saying that Donald Trump’s presidency is over and done with. What we’re saying is that a lot of people spent much of 2017 saying “I can’t believe Donald Trump is President” while others were eagerly awaiting his first 100 days and all of the changes they had been promised. As we settle into 2018, we can no longer say this is a new president, and the reality of governing will replace the early push to fulfill campaign promises.
Market Stabilization Rules: HHS, under now-former Secretary Tom Price, released market stabilization rules early in the year that, among other things, shortened the individual open enrollment period from three months to six weeks. The rules remain in effect and will impact brokers and their clients going forward, but they’re now fully implemented and woven into the way we do business; we’re not waiting for additional guidance to learn how they’ll impact our clients.
Anthem-Cigna and Aetna-Humana Mergers: It appears that these two mega-mergers are now dead. They were challenged by the Obama Justice Department and rejected by a federal judge on appeal. At this point, the carriers have dropped their challenges and reluctantly agreed to remain separate companies.
Repeal & Replace Bills: While repeal and replacement of the Affordable Care Act remains a high priority for Republicans, it’s now pretty clear that it’s not likely going to happen in a single piece of legislation. The bills that were introduced this summer were unpopular and failed to pass in the Senate, even the reconciliation bills that could be passed with a simple Republican majority. It appears that the new strategy will be to chip away at the ACA one piece at a time.
Cost sharing subsidies: One way of chipping away at the health care law is to stop making payments to insurance companies for the cost-sharing reductions they provide to low-income individuals with silver-level coverage. That’s exactly what President Trump did shortly before the start of the open enrollment period. While it doesn’t have a direct impact on consumers who qualify for the subsidies—they still receive an enhanced level of coverage—it will likely impact the rates charged by insurers and even their decisions about whether to continue offering coverage in the individual market or not. We expect for this decision by the President to have an impact on the plans offered and premiums charged for 2019 coverage.
Bi-Partisan Market Stabilization Efforts: In an attempt to stabilize the individual market and preserve choices for consumers, there has been a bipartisan effort to pass legislation that would, among other things, guarantee payments of the cost-sharing subsidies for two years. It now appears that this effort would need to be successful for Senator Susan Collins [R-ME] to vote yes on the final tax overhaul bill. It’s unclear, though, whether Democrats will continue to support a market stabilization bill if the individual mandate is repealed.
Individual Mandate: As just mentioned, the Senate tax plan, which narrowly passed on December 1, calls for the ACA’s individual shared responsibility provision to be repealed. Though the CBO says this will increase premiums and cause millions of people to lose coverage, Republicans view a repeal of the mandate as the fulfillment of a campaign promise. If the individual mandate is repealed but the guaranteed issue provision remains, there will undoubtedly be an impact on the premiums charged and plans offered during the next open enrollment period.
Employer Mandate: After years calculating Full-Time Equivalents, determining Applicable Large Employer status, and deciding whether to offer group health insurance or not, companies that failed to provide affordable, minimum value coverage in 2015 and 2016 may finally be paying a penalty. The IRS has started sending out letters to employers that might owe a tax penalty under the employer shared responsibility requirement, and unless something changes, this will continue into 2018.
CHIP Reauthorization: Millions of low-income families rely on the Children’s Health Insurance Program to provide health coverage to their children. Congress, however, let funding for the popular program expire September 30 and appears in no hurry to re-authorize CHIP. If funding is not restored, families may need to add their children to the parents’ health plans. In the individual market, most of these families would qualify for a premium tax credit. This may be something you’ll need to reach out to your clients about in early 2018.
Medicare and Medicaid Cuts: While Senator Susan Collins reports that, in exchange for her yes vote, she received assurances that there would be no cuts to Medicare under the Republican tax plan, other lawmakers concede that both Medicare and Medicaid may be targets for funding cuts to help pay for the tax bill. If so, this will be an enormous fight in the year ahead.
Cadillac Tax: One thing the Republican tax bill does not do is repeal the much-hated Cadillac tax, which is currently scheduled to go into effect in 2020. Though the rules have not been finalized, the ACA calls for a 40 percent tax on high cost health plans. The current thresholds are $10,800 for individual coverage and $29,100 for family coverage, which means that a lot of benefits packages will be considered “Cadillac” plans and be subject to the tax. As we get closer to 2020, the cries to repeal the tax will become even louder.
Association Plans: In October, President Trump signed an executive order that would, among other things, increase access to Association Health Plans by expanding the conditions that satisfy the commonality-of-interest requirements under ERISA’s definition of an “employer.” The executive order also instructs the Department of Labor to “consider ways to promote AHP formation on the basis of common geography or industry.” In 2018, we may see some attempts to form association plans to give individuals and small employers some additional options.
HRAs: The 21st Century Cures Act, which was signed into law by President Obama last year at this time, contained a provision that allowed for Qualified Small Employer Health Reimbursement Arrangements. Basically, employers with fewer than 50 employees that don’t offer a group health plan can now contribute to their employees’ individual health insurance premiums and eligible out-of-pocket expenses. President Trump’s executive order seeks to further expand this option, though it doesn’t specify how. Instead, the order asks the Secretaries of Labor, Treasury, and Health and Human Services to propose regulations or revise guidance that would increase the usability of HRAs. Those proposals are due in mid-February.
Longer Short-Term Plans: In an effort to steer as many people toward the individual market as possible, the Obama administration limited the duration of short-term plans to three months. President Trump’s executive order calls for increasing the coverage durations of these plans and making them renewable. That alone should give you more opportunity to sell short-term coverage. If the individual mandate is repealed, the opportunity will be even greater.
CVS-Aetna Merger: Just this month, pharmacy giant CVS announced that it will by Aetna for a record $69 billion. The move will help the company compete with Amazon, which itself is moving into the pharmacy space, and could change the way Americans receive healthcare. This deal, if it’s approved, will have ripple effects throughout the entire industry. It will be interesting to see how other insurers—and other pharmacies—respond.
Specialty Drugs: Specialty drugs became a big topic of conversation in 2017 and will continue to influence health insurance premiums in 2018 and beyond. Specialty drugs are very expensive and have the characteristic of being able to cure some diseases rather than simply controlling them or treating their symptoms. Though specialty drugs make up a small percentage of all prescriptions filled, they already represent 40 percent or more of the total drug spend.
Reference-Based Pricing: Another big theme in 2018 will be the trend toward “reference-based pricing.” The idea here is to eliminate provider networks and instead pay “in reference” to an existing fee schedule, like Medicare. The hope is that eliminating provider networks and paying based on a fee schedule will expand consumer access but also encourage consumers to shop for healthcare based on cost and quality.
Opioid Epidemic: Unfortunately, the opioid epidemic, which was declared a “national public health emergency” by President Trump in October, isn’t going away. Aside from the countless lives that are tragically lost each year to this epidemic, it’s also having an impact on our heath care costs. Remember, treatment for mental health and substance abuse is an essential benefit under the Affordable Care Act.
Partisan Divide: Yes, unfortunately, all signs point to the current partisan divide in Washington, DC to continue into 2018. And it’s an election year, so it might even get worse. For the insurance industry, that means that nothing will be easy and nearly all legislative and regulatory changes will be one-sided. Bi-partisan solutions on most matters seem unlikely.
Well, we said we’d keep it as short as possible, and still there was a lot of information to share. We thought it was important to provide some detail, though, as many of the big news stories in 2017 will continue to be big news stories in 2018, and that means we’ll have plenty of updates to share going forward. Be sure to check our blog regularly and attend the training webinars we offer—our goal is to help you succeed. Happy New Year! We’ll see you in 2018.