Perhaps the most immediate and serious problem facing the nongroup insurance market is what to do with counties that “go bare”—that is have no insurers offering exchange insurance plans for 2018. This appears to be the situation in the Kansas City area after Blue Cross and Blue Shield of Kansas City announced that it will no longer offer exchange coverage in 32 counties in Western Missouri and Kansas as of 2018. It also seemed like this would be the situation in the Knoxville, Tennessee area, although Blue Cross and Blue Shield of Tennessee recently stated that it would probably fill the void. There remains the real possibility that additional counties, indeed possibly whole states, will lack health insurance offerings through the exchanges for 2018.
Senators Alexander and Corker, both Republicans from Tennessee, earlier introduced legislation to address this issue. The Alexander/Corker Health Care Options Act (HCOA) would provide that if no qualified health plans were offered through an exchange in a rating area or county, the Secretary of Health and Human Services would certify that this was the case. The individual responsibility requirement would then not apply in such counties. Individuals would be free not to purchase any coverage at all, or to purchase excepted benefit or short-term coverage that does not comply with the Affordable Care Act (ACA).
Individuals would also be permitted under the HCOA, however, to receive premium tax credits to purchase off-exchange plans, which might remain available even after all insurers had left the exchange. Premium tax credits would not be available in advance for these plans, only at tax filing time. This would make them of little value for lower-income enrollees, who would not be able to pay full premiums in advance and hope for repayment the next spring when they got their tax refunds. It is also far from clear that off-exchange plans would welcome the enrollees they are trying to avoid by not selling on exchange.
In fact, the Alexander/Corker bill is designed to support plans offered by the Tennessee Farm Bureau and is thus to a considerable extent a Tennessee-specific solution. Tennessee is perhaps the only state in the country that continues to permit the sale to new applicants of ACA-noncompliant major medical coverage, which the bill would subsidize.
The McCaskill Bill
On May 22, 2017, Senator Claire McCaskill (D-MO) introduced legislation that would provide a different solution for “bare” counties. She would require HHS, together with Treasury and the Office of Personnel Management, to establish, within three months of the date of enactment, a mechanism to allow individuals from bare counties to purchase premium tax credit-subsidized coverage through the District of Columbia SHOP (small group exchange).
The D.C. Health Link—a “state-based” exchange—is one of the healthiest exchanges in the country. D.C. has no off-exchange market available and the D.C. exchange covered 74 percent of eligible D.C. residents in 2016. Unlike what happened in many other parts of the country, effectuated enrollment grew in D.C. for 2017 over 2016. Only 4 percent of enrollees receive premium tax credits, compared to an average of 83 percent nationwide.
The D.C. SHOP exchange has the most enrollees of any in the country—almost 60,000—since it is the only way by which small employers can get coverage in D.C. It is also the only way members of Congress and their personal staff can get federal employee coverage. The D.C. exchange has four insurers participating in the small group market and two in the individual market.
Enrollment through the D.C. exchange seems in some respects like an obvious way to cover bare counties. At least one of the D.C. exchange individual market insurers and, I believe, three of the small group insurers offer nationwide provider networks, which could cover enrollees virtually anywhere in the country—just as they now do members of Congress and their staff–regardless of where they get care.
Senator McCaskill announced that her plan would allow individuals to get the same coverage Congress members have. Congress is covered through the D.C. small group exchange (as odd as it seems to think of Congress as a small business). Senator McCaskill’s plan would also offer individuals in bare counties D.C. SHOP exchange coverage. But, the small group exchange is not set up to administer premium tax credits and cost-sharing reduction payments, and thus, without significant changes, could not provide affordable coverage to enrollees from bare counties.
Senator McCaskill’s bill would require the D.C. SHOP exchange to offer individuals enrolling from bare counties premium tax credits and cost sharing reduction payments “that the individual would be otherwise eligible for if enrolling in health insurance coverage in the individual market through the Exchange operating in the State of the individual.” But neither the insurers participating in the D.C. exchange nor the exchange itself are currently capable of determining the premiums or premium tax credits appropriate to the rating areas where coverage might be needed. Indeed, it is not even clear how premium tax credit amounts would be set, since premium tax credits are supposed to be based on the second-lowest cost silver plan available in a rating area, and by definition no insurers would be available in the covered rating areas.
Premiums charged currently by D.C. exchange insurers would clearly be inappropriate for determining the amount changed to bare county enrollees, or for calculating their premium tax credits. Insurers participating in the D.C. SHOP Exchange set their premiums for 2017 based on the favorable D.C. market. They could expect to draw a much less favorable risk pool from bare counties. D.C. exchange rate increases for 2017 were comparatively modest compared to other parts of the country. Insurers would presumably want much higher increases if they potentially had to cover costly, mostly rural, areas through the country.
A Better Approach?
A better solution might be for the D.C. Exchange to administer a program that would not rely on its own insurers but rather on Federal Employee Health Benefits Program (FEHBP) insurers, which are located throughout the country. The program might look like the original version of the ACA’s multistate program. The FEHBP is community rated, so premium tax credits could simply be based on the community rate, with an additional add-on payment for cost sharing reductions. FEHBP carriers are available throughout the country with reasonable provider networks, so choice should be available in bare areas.
The D.C. Exchange already has experience in working with the Office of Personnel Management, which operates the FEHBP program as well as the program through which the D.C. Exchange covers members of Congress. The FEHBP program already covers an older workforce, so the risk pool might not change considerably if it was asked to cover bare counties. But this is not what McCaskill’s bill contemplates.
Appellate Court Reverses Dismissal Of Sex Discrimination Case Stemming From Denial Of Gender Reassignment Services
On May 24, 2017, the Eighth Circuit Court of Appeals reversed in part a lower court’s decision dismissing a sex discrimination claim against an employer and insurer in Tovar v. Essentia Health. Brittany Tovar had sued her employer, Essentia, and its third-party administrator, Health Partners, claiming sex discrimination in violation of Title VII of the Civil Rights Act, the Minnesota Human Rights Act (MHRA), and section 1557 of the Affordable Care Act because Essentia’s employee medical plan had denied payment for treatments for her son’s gender dysphoria, including medications and transgender surgery, on the grounds that the plan did not cover gender reassignment services.
The district court had denied Tovar’s claim against her employer as Title VII and the MHRA only prohibit discrimination against employees on the basis of sex. The alleged discrimination was against Tovar’s son who was not an employee, rather than against Tovar who was. The Eighth Circuit affirmed this dismissal.
The Eighth Circuit, however, reversed the district court’s holding that Tovar could not sue Health Partners, the third party administrators, under section 1557. The appellate court rejected the district court’s finding that the injury Tovar suffered was not traceable to Health Partners, because the plan was self-funded. The court concluded that if Health Partners had provided Essentia with a discriminatory plan document, Tovar’s injuries could be traced to Health Partners. Moreover, Tovar alleged sufficient injury to ground standing as she claimed she had paid for some of her son’s medication because of the claim denial. The case was remanded for further proceedings in the district court.
Judge Benton, dissenting from the majority opinion, contended that Health Partners should not be held liable for a discriminatory plan design, which was the responsibility of Essentia, the self-insured employer, not its third party administrator. None of the judges reached the question of whether section 1557 properly applies to gender identity discrimination, an issue actively under consideration in other courts and by HHS.
Three Tweaks To ACA And AHCA Premium Tax Credits Clear House Panel
On May 24, 2017, the House Ways and Means Committee approved by largely party-line votes three small pieces of legislation related to the premium tax credits in the Affordable Care Act and American Health Care Act that could move on through the House. HR 2372 would clarify that veterans who are eligible for but not enrolled in Veterans Affairs’ health care programs would be eligible for AHCA tax credits, as they are now for ACA tax credits. HR 2579 would allow AHCA tax credits to be used to purchase unsubsidized COBRA continuation coverage. This was the case with the original AHCA, but the option was dropped in the amendment process.
A third bill, HR 2581, would require the verification of citizenship or lawful alien status by the Social Security Administration or Department of Homeland Security before an individual could be determined eligible for advance premium tax credits, “using a process that includes the appropriate use of information related to citizenship or immigration status, such as social security account numbers (but not individual taxpayer identification numbers).” The intent of the provision, apparently, would be to require individuals to have social security numbers before they could get premium tax credits, as of 2018 under the ACA and then in 2020 under the AHCA. The bill would not count the time taken for verification as a gap in coverage for continuous coverage requirements and would allow individuals to defer their retroactive premium payment obligation for a month if delays in verification would have otherwise required them to pay two or more months in retroactive premium payments.
Calculating Basic Health Program Payments To States
On May 17, 2017, CMS released additional guidance on the funding of the Basic Health Program for 2018. The Basic Health Program (BHP) is an option available to the states under the ACA for offering coverage to individuals with incomes between the Medicaid eligibility level (138 percent of the federal poverty level) and 200 percent of the FPL that is better tailored to the needs of that population. As of this date, only New York and Minnesota have established BHPs.
States that implement a BHP are entitled to receive 95 percent of the funds that would have been spent on premium tax credits and cost-sharing reduction payments for BHP enrollees had they instead been enrolled in marketplace coverage. The methodology for determining this amount for 2017 and 2018 was published by CMS in February of 2016.
The May 17, 2017 guidance provides updated values for the variables in the earlier published formula. These include a value for reconciling the amount of premium tax credits that qualified health plan (QHP) enrollees would have received based on their estimated income at enrollment with those they actually received based on their tax filings (97.41 percent), updated applicable percentages to be used to determine the percentage of household income that individuals with various incomes must spend on premiums before premium tax credits apply, and the projected premium trend factor that will apply from 2017 to 2018 (5.3 percent). States may use this projected premium trend factor for calculating their payments from the federal government or may opt for payments based on actual 2018 QHP premiums.
States may also choose to have federal BHP payments retrospectively adjusted to reflect the actual health status of the BHP population or to receive payments based on the assumption that the BHP population has the same risk profile as the general population.