Looking Forward into 2018: Congressional Policy Updates for Employers to Watch
This post was authored by Dan Colacino, Vice President of Underwriting and Compliance at Rose and Kiernan, Inc.
As Congress ended the 2017 session, there were still a number of important issues left unaddressed. They did manage to pass another continuing resolution (CR), to keep the government running through January 19, 2018. A CR is essentially a “kick the can down the road…but not too far down the road” piece of legislation that extends the prior year budget with some additional pieces of legislation thrown in. As we’ve said before, the federal budget year begins on November 1, so the government will now be going almost one-third of the current fiscal year with no budget.
Congress also was able to facilitate partial funding for the Children’s Health Insurance Program (CHIP) better known by its local names: Husky Healthcare in Connecticut, Rite Care in Rhode Island and Child Health Plus in New York State. The program costs the Federal Government approximately $16 to $17 billion dollars annually. The CR included funding for only three months despite the fact that there is near unanimous support in both Houses for the program. Nine million children are covered by this program.
The most surprising issue is the continuing inability of this administration – Executive and Legislative, Democrat and Republican – to understand how health insurance works. The fact that employer-sponsored insurance covers by far the largest number of people in this country should make policymakers take note of how it works. But Congress presses on, and as such here’s what we’re looking at for early 2018:
Congress is still talking about the Cadillac Tax but instead of “repeal” it’s usually discussed in terms of a “delay.” Employer plans, especially those with a collective bargaining component, need to plan further ahead than the end of the year. Right now, the tax is scheduled for plan year 2020, but employers need some certainty as to when to cut benefits, negotiate for increased cost sharing and more in order to avoid the 40% tax. Many previously increased cost sharing assuming the tax was going to be effective in plan year 2018 so the extension to 2020 did nothing but cause many employees to needlessly pay higher out-of-pocket costs.
The Health Insurance Tax (HIT) is imposed on insured health and dental plans but not on self-funded plans. This tax was waived for plan year 2017 but reinstated for plan year 2018 so it is figured into insured premiums for the upcoming year. Rates are set by carriers in late spring for the succeeding year. Employers need their rates 60 to 90 days before the plan renews. Last minute changes cause about as many problems as leaving the tax alone. Another two-year delay is being proposed including 2018, which means returning money taken from policy holders in the current year and probably 2019 if this bill isn’t passed until later in 2018.
Market Stability Legislation applies mainly to individual and small group policies. The Collins-Nelson bill being discussed would provide $10 billion dollars in 2019 and 2020 to fund high risk pools and another $500 million to help states develop reinsurance programs. We’ve spoken before about the lack of effectiveness of high risk pools. Reinsurance works, high risk pools don’t, a position taken by most State Insurance Commissioners but it still hasn’t hit home in Washington. The Alexander-Murray bill would restore the cost sharing reductions (CSR) payments to insurers. As a side note, despite what you hear, CSRs are not a bailout of insurers but a reimbursement of their costs for agreeing to cut deductibles, copays and coinsurance for low income people while not raising the premium to cover the additional costs. They would also make applying for 1332 waivers, a process in the ACA which allows states to develop their own variation of health care reform, easier.
The biggest question for the upcoming year is the midterm elections and whether the Republican majority will remain. Most specifically, if the recently passed tax cut bill will be enough to satisfy voters and demonstrate to them that the Republican agenda is on the right track. History shows that the majority party always loses seats in midterm elections. Just how much will be the question.