GOP health reform: Why employers should monitor individual market plans

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As GOP senators debate a replacement plan for the Affordable Care Act, EBA spoke with Suzanne Spradley, chief compliance officer at insurance brokerage and consulting firm NFP, for her take on what benefit advisers and executives need to have on their healthcare coverage radar. What follows is an edited version of the conversation.

EBA: What do benefit advisers need to know about the GOP Senators’ effort to repeal the ACA?

Suzanne Spradley: Right now, it’s very questionable if the GOP Senate will be ready to bring it to a vote and get it passed with Sen. Ted Cruz (R-Texas) adding on an amendment [that says states can underwrite a barebones plan that an insurance carrier could offer so long as they also offer an appropriate ACA-type plan]. When you move that dial, you are going to lose the centrists. There are more of those centrists in the Senate — and the GOP leaders can only afford to lose two — than there on the hard right.

Senate Majority Leader Mitch McConnell (R-Ky.) has submitted [the Cruz amendment] to the CBO to get scored because they think it will increase access and will drive down premiums by having this option. The problem is that the young and healthy will want to buy those cheap, low coverage plans and that leaves the sick in the other plans. There's a concern of adverse selection and driving up the cost for those who actually need the greater coverage.

EBA: What’s the likelihood of that happening?

Spradley: I think there's too much pushback on the Cruz amendment to get it passed, unless the CBO report comes back so positive that they're able to sway some Republicans to their side. Otherwise, it's dead in the water.

EBA: What should benefit advisers and benefit executives inside companies have on their radar? Open enrollment season will be here before we know it. Should they assume that any new health reform won't be rolled out right away or that it will be gradually implemented?

Spradley: They should assume that nothing will happen very quickly and if it does, it will be to the benefit of the employers, such as the retroactive repeal of the employer mandate. Otherwise, from their standpoint, it will be status quo. If anything, they will improve the reporting compliance mechanisms and there are efforts to ease the administrative difficulties for employers.

For advisers, they need to stay up to date with the news so they can ease their clients’ concerns. So much of the rhetoric around the repeal has been negative and that really surrounds the individual markets. The employer market is stable and strong.

Employers should watch what Congress does with essential health benefits because that could affect their annual limits and requirements.

EBA: Could changes have a larger impact on smaller employers rather than larger employers?

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Spradley: Yes, certainly the small-group market is less stable, and it can impact small employers with employees on [their health plans] more from a volatility standpoint. I think of the insurance sector including Medicaid as an entire ecosystem and even employers should be concerned about what happens in the individual market. Because once those markets become unstable, you can see the transfer of cost into the large-group market. You can also see the government reaching in and wanting to control that market more, which then could lead to them wanting to control all markets. I think the entire system needs to work in a healthy manner.

EBA: We've seen a number of major insurers leave Obamacare. Is there scenario where the major insurers would come back into the plans?

Spradley: Certainly. I can’t speak to all the reasons they pulled out, but my understanding is that they didn’t have enough of the healthy and young in their coverage pool and you need a mix to bring the prices down sufficiently. I think the carriers would like to be in the market if they could find stability. They were in the markets before ACA. They found a balance there previously and I think they could come back and find the balance again.

There are things the government can do to stabilize the market but I don’t know where that line is for the carriers to cross back over.

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