Monthly Archive: December 2015

Numerous tweaks to ACA’s health insurance reforms add to law’s complexity

Most everyone would agree the Patient Protection and Affordable Care Act’s health insurance market reforms are complex. Adding to the complexity is their staggered, stop and go implementation as Congress and the administration apply various changes and adjustments. It also demonstrates the iterative nature of the law that continues to evolve nearly six years after it was enacted in March 2010.

The most recent addition comes in the federal budget measure signed into law late last week to fund the federal government though the end of the current fiscal year ending next fall. The measure suspends for 2017 the health insurance provider fee levied on health insurers under Section 9010 of the statute. It also pushes out the effective date of the 40 percent excise tax on high cost employer-sponsored group health plans – known as the “Cadillac tax” – to apply to plans effective in 2020 versus 2018 and makes the tax deductible. That gives unions and state and local governments that offer relatively generous plans and most likely to feel the effects of the tax more time to determine their compliance or avoidance strategies. The bill also requires a review of the suitability of indexing the tax adjustment amount to the Blue Cross/Blue Shield standard benefit option of the Federal Employees Health Benefits Plan.

The budget bill also extends a pre-existing budget provision barring the administration from allocating funds to bail out one of the Affordable Care Act’s premium stabilization programs designed to minimize premium volatility for plans sold on state health benefit exchanges. The risk corridors program levels loss experience among health plan issuers so that issuers with lower than expected claims make payments to issuers with higher than expected claims. Problem is, as this Milliman analysis explains, the playing field isn’t level. That’s because of a tweak applied in late 2013 delaying another provision of the Affordable Care Act under transitional regulatory relief. It authorized states to temporarily allow individual and small group plans to offer coverage not compliant with minimum benefit designs mandated by the law – which some states opted to do. That in turn affected claims experience among health plans, throwing the risk corridors mathematics out of whack and substantially shorting plan issuers expecting risk corridor payments. The one year suspension of the fee assessed on health plans offers plan issuers suffering higher than expected claims costs on plans written in 2014 through 2016 some offsetting financial relief before the risk corridors and reinsurance premium stabilization programs expire in 2017.

Last week’s budget bill is the third legislatively enacted change to the Affordable Care Act’s insurance market reforms in 2015. It closely follows another that allows states to elect to define their small group health insurance markets as those serving employers with 50 or fewer employees rather than 100 beginning in 2016 as the law originally required as well as the repeal of ACA Section 1511 in November’s Bipartisan Budget Act of 2015. Section 1511 requires large employers of more than 200 full time employees to automatically enroll new full time employees in one of the employer’s health plans.

(This updated version corrects and expands on a previous version of this post that incorrectly referenced ACA Section 4375)


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Colorado becomes second state to consider ACA Section 1332 waiver to fund single payer health insurance

A recently approved ballot measure will give Coloradans the final say on whether to scrap the state exchange in favor of a single-payer system.

Source: Colorado voters set to decide the fate of health exchange – StateScoop

Colorado becomes the second state where the Patient Protection and Affordable Act’s Section 1332 waiver could be used to fund a single payer system starting in 2017. In this case, it would take the form of a proposed state-sponsored health insurance cooperative funded by a 6.67 percent employer payroll tax that’s up for voter ratification in November 2016.

According to the story, the tax would raise $25 billion per year. If the federal government approves the Section 1332 waiver — which allows states to opt out of public health benefit exchanges and the shared responsibility mandates on individuals and employers if the state can provide coverage that’s as accessible and affordable as under the Affordable Care Act — another $11.6 billion in federal funding could be provided annually to fund ColoradoCare.

Vermont was the first state that planned four years ago to transition from the exchange to a single payer system in 2017 under the 1332 waiver. That plan was abandoned early this year due to concerns over its financial viability and burden on the small New England state’s budget. In more populous Colorado and its larger tax base, it could be easier for the numbers to pencil out.

For a state-based single payer system, a key determinant of its actuarial viability is likely to be the health status of its residents. The numbers look propitious in the Rocky Mountain State, which has a strong outdoor exercise activities culture and ranks high on health status indicators nationally.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

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