Skimpy Coverage Concern Takes Center Stage in Health Rule Debate

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By Madison Alder

The Labor Department proposal that would make it easier for small businesses to join together to offer health benefits to workers is raising concern that sicker workers won’t be covered.

The DOL’s proposed rule, which would change the definition of “employer” to make it easier for associations to create health plans for their self-employed and small business membership, wouldn’t require the plans to cover the essential health benefits mandated by the Affordable Care Act. The essential benefits require plans in the individual and small business marketplace to cover things like pregnancy, childbirth, and mental health services.

Those who criticize the absence of required benefits say the cheaper and less substantive plans--often called “skinny” or “skimpy” plans--would lure healthy people away from the ACA marketplace, leaving behind a sicker population that could drive up marketplaces costs or force insurers to exit.

Supporters of the proposal, however, say an association would look out for its members’ needs much like large employers, which are not required to cover the essential health benefits under the ACA--though they often do because of their diverse population of employees with varying health needs.

The DOL proposed the rule after President Donald Trump asked it to consider expanding access to association health plans in an October 2017 executive order. The debate over required benefits in the public comments will likely prompt a response from the DOL. The comment period ended March 6.

Essential Benefits Wanted

The final DOL rule should include language that mandates minimum benefits and that doesn’t necessarily have to be the essential benefits under the ACA, Mark A. Hall told Bloomberg Law. Hall is professor of law and director of the health law and policy program at Wake Forest University.

Minimum benefits could be similar to the 10 benefits required of individual and small business plans under the ACA or even slightly scaled back, but they are needed, Hall said. The way the proposed rule is written, “it would let people decide if they want full benefits or partial benefits” by allowing them to select an ACA plan or a plan with likely less coverage, he said.

Hall, who submitted his comments and suggested changes to the proposed rule in a letter to the DOL, said the final rule should also adopt language preventing an association health plan from forming for the sole purpose of providing insurance--a fundamental part of the current rule. The lack of minimum required benefits for large employers isn’t an issue for true employer groups because they create plans designed to cover groups with a range of health issues, Hall said.

Big Groups Aren’t the Issue

The National Association of Realtors®, a group whose members said they would take advantage of the rule change should it be finalized, told Bloomberg Law it would look out for its members’ needs when creating its plan.

“As a voluntary trade organization, we exist to serve the membership,” said Marcia Salkin, managing director of public policy for NAR. The “last thing a trade organization would want” would be to offer its membership subpar products.

A health care lawyer and actuary told Bloomberg Law large groups like real estate agents that have formed for reasonsother than to provide health care, aren’t the issue. Smaller, less organized groups would likely experience issues such as rate-setting and retention of members.

Before the ACA

Coverage for benefits like maternity care and substance abuse treatment often weren’t covered by non-group plans before the ACA’s essential health benefit requirement kicked in several years ago, according to health policy nonprofit Kaiser Family Foundation.

The 2017 analysis found that before the ACA minimum requirements started, 75 percent of non-group plans didn’t cover delivery and in-patient maternity care, 45 percent didn’t cover substance abuse disorder treatment and 38 didn’t cover mental health services. The analysis came as Congress was considering the Republican-led American Health Care Act, which would have repealed and replaced the ACA and given states the chance to alter the essential health benefit requirements.

Some of those findings may also translate to the absence of minimum required benefits in the proposed association health plan rule, Gary Claxton, vice president of the Kaiser Family Foundation and director of its health care marketplace project, told Bloomberg Law. Associations may be more likely to offer less benefit coverage for maternity care and mental health without minimum requirements, Claxton said.

Nondiscrimination Provision

Another issue prior to the ACA was health screening, which made it difficult for people with existing health problems to find affordable care, Claxton said. The DOL’s proposed rule includes a provision protecting against discrimination based on various health factors would prevent that from happening again.

The nondiscrimination provision builds on current protections under the ACA and the Health Insurance Portability and Accountability Act and defines how to apply those rules to an association. Under the protections, an association would not be able to create a plan that restricted or denied membership based on health factors outlined in HIPAA, which was amended by the ACA, like health status, a medical condition, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, and disability.

“If the nondiscrimination provision isn’t finalized, that could have pretty big impact,” Claxton said. Removing the provision could mean healthy people would get low rates and unhealthy people would get high rates.

Some groups say the rule should be removed.

The American Dental Association said in a letter to the DOL that the rule would be “detrimental” to existing association plans that already can vary their benefits to reduce costs for members. The provision also wouldn’t afford association plans the same discretion as large employers, which do not have the same protections. The association declined Bloomberg Law’s request to elaborate on its letter.

The National Kidney Foundation said it agrees with the provision but wants the final rule to go further and require plans to cover the ACA’s essential health benefits.

“There’s certainly a need for lower costs, but the danger is the trade-off of the benefit packages,” Tonya Saffer, senior health policy director for the National Kidney Foundation, told Bloomberg Law. Without essential benefits, the rule could bring the market back to a time before the ACA when health plan coverage was more inconsistent, Saffer said. “That’s a real concern.”

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