5 Most Misunderstood Changes to American Health Care in 2018

1. The Elimination of the Individual Mandate

Technically the 2019 elimination of the fine on uninsured Americans (i.e. the individual mandate) was part of legislation signed into law less than two weeks before the beginning of 2018. There were considerable fears that the eradication of this fine on people lacking health insurance in 2019 would have a catastrophic effect on this Affordable Care Act (ACA) enrollment season. However, these fears ignored the fact that the vast majority (83 percent in 2018) of government exchange enrollees are subsidized. Given the dramatic reduction in costs for subsidized enrollees ($89 average premium for subsidized versus $621 without subsidies), it is unlikely that a large portion of this population will abandon ACA coverage. It is reasonable to believe the fraction (17 percent in 2018) of exchange enrollees who are unsubsidized will be less motivated to enroll in ACA plans for 2019 given the ACA’s high costs for the unsubsidized.

Health care sharing ministries, often overlooked in these discussions, will likely be affected by the fine’s elimination as well. Since exchange plans entered the market, the four major health care sharing ministries combined membership has experienced explosive growth due, in part, to their enrollees’ exemption from the fine (despite the fact that their coverage is not ACA-compliant). Consequently, it is likely that their aggressive growth will slow considerably in 2019.

2. Voter Concerns About Health Care

Exit polling found that health care was the top concern for more voters (41 percent) in the 2018 midterm elections than competing matters such as the economy or immigration. Though the majority of voters surveyed did not have health care as their top concern, the level of voter interest in this topic will still promote significant media scrutiny around issues such as the cost of health insurance, drugs, and related medical services. The implications of 2018 voter health care concern is yet to be determined for the present administration since the various health care regulatory changes and proposals it has championed won’t have tangible market effects until 2019 and later (e.g. see issues three through five below). If there are a lack of empirically defensible improvements, then it is likely that the administration will receive substantial negative press coverage given the often adversarial relationship between the press and the current administration.

3. Trump Administration Plan for Lowering Drug Costs

The Trump administration unveiled a blueprint for lowering what Americans pay for prescription medications. However, all the proposals contained in the blueprint are not guaranteed to be fulfilled. In fact, the various initiatives within the blueprint are placed into two categories: actions the president may direct Health & Human Services (HHS) to pursue, and actions HHS is actively considering.

Since release of the blueprint, several actions have been taken including the FDA’s approval of more generic drugs in July 2018 than in any other month in the department’s history. New proposals aimed at drug cost reduction continue to be released including the Centers for Medicare & Medicare Services’ plan to base Medicare drug out-of-costs on the actual drug expense paid by pharmacies after rebates are applied instead of the drug list price. Despite this progress, it is still unclear how many of the proposals related to the blueprint will be successfully implemented by the government.

4. Reversal of the Three-Month Coverage Limit for Short-Term Health Plans

For decades in the U.S., short-term plans were transitional insurance options for people who needed temporary coverage due to life events such as job loss or divorce. The maximum duration of these plans were 364 days, roughly the same amount of time people can be excluded from the Affordable Care Act insurance market if they fail to sign-up during the annual enrollment period. In April of 2017, a new regulation approved at the end of the Obama administration was implemented that restricted short-term coverage to less than three months. It was hoped that this move would push short-term enrollees into ACA health plans since the short-term plan restriction quadrupled deductibles for people needing year-long coverage. Instead, after the three-month restriction was implemented, plan selections on government exchanges fell for the second year in a row.

While the reversal of the three-month restriction in October of 2018 garnered considerable press attention, more significant was the attendant change that allowed states to permit short-term plan renewals or extensions for up to 36 months (without any medical underwriting or experience rating past the initial sale of the policy). Within states that choose to adopt this provision, we may see new benefit configurations within the short-term market since the 36 duration changes the insurer economics of these plans.

5. New Association Health Plan Regulation

While association health plans have been since the 1970s, a new June 2018 regulation redefined the conditions under which association can form and also opened up association health plans to the self-employed and gig economy workers. The same regulation introduced multiple measures to discourage fraud and mismanagement among these plans.

Some of the press coverage in response to the new regulation characterized the association health plans as having “skinny” benefits. However, the new regulation does not define association benefit requirements. Instead, existing federal and state regulations on health plan benefits remain in place and apply to association health plans. The major factors that determine which regulations apply to a specific association health plan depends on the size of the association, the state in which it operates, and whether the plan is insured through a third-party insurance company or self-insured. Consequently, despite the flexibility that large group association plans may have with respect to benefit design, they are still subject to numerous benefit requirements relating to issues such as maternity care, pre-existing condition coverage, and preventive care. Additionally, association health plans must also comply with various nondiscrimination requirements regarding plan applicants and enrollees.