President Trump Issues an Executive Order
Last Thursday President Trump signed an executive order directing federal agencies to investigate 3 specific items. While the order does not implement regulations, it established a timetable for the federal agencies to report back to the President the feasibility of enacting these provisions.
- Association Health Plans (AHPs) - Within 60 days of the order, the Secretary of Labor is to review the ability for small employers to form AHPs. The Secretary is to consider ways to promote AHPs on the basis of “common geography or industry”. This is intended to allow small employers to come together to self insure or purchase fully insured coverage across state lines.
- Short Term, Limited Duration Insurance (STLDI) - Also within 60 days of the order, the Secretaries of the Treasury, Labor, and Health and Human Services are to consider the expansion of short term health insurance to allow for longer coverage periods and ability for these plans to be renewable.
- Health Reimbursement Arrangements (HRAs) - Within 120 days of the order, the Secretaries of The Treasury, Labor, and Health and Human Services are to review the viability of expanding HRAs. The intent is to allow employers to contribute more to their employees’ HRA account. HRAs are similar to Health Savings Accounts (HSAs) allowing for pretax savings reimbursing employees for out of pocket expenses such as copays, deductible and coinsurance. With HRA plans unlike HSA plans, only the employer can contribute to the account and the money does not stay with the employee if they leave the company.
What’s the bottom line?
First, nothing will happen for employers with January 1, 2018 or earlier renewals.
What is important to us and our clients? Lowering health care costs, lowering health insurance premium, providing access to affordable health care; all of these issues are at the root of a sustainable health care system in the United States.
HEALTH INSURANCE PREMIUMS DON’T GET VOLUME DISCOUNTS
Bringing small companies together and being able to sell across state lines will not lower health care costs. Expanding HRA and Short Term plans will not impact underlying health care costs. The vast majority of cost associated with health insurance (whether fully insured or self insured) is from the medical claims paid. Regardless of where an insurance policy is written, the cost of care is local. It comes back to 2 basic premises—what is the cost of care and how many units are purchased.
Until we see meaningful outcomes data and price transparency, it is unlikely we will see lower costs.
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