How the outcome of the presidential race is likely to influence health benefits
It’s not the biggest issue on the mind of the voters, but regardless of who becomes the next president, some big changes are in store for the healthcare market and the Affordable Care Act.
Recently James Klein, president of the American Benefits Council (ABC) spoke at MetLife’s 2016 annual symposium in Washington D.C. about the impact of the presidential race on the U.S. benefits market.
“If Secretary Clinton wins, she has talked about preserving the [ACA], but making some other changes to it like repealing the Cadillac Tax and expanding the types of families who qualify for subsidies,” Klein says. “On the other hand, the republicans want to repeal the whole thing and start all over again.”
Clinton’s proposals are in line with ABC recommendations for improving the healthcare law. Those include the repeal of the Cadillac Tax, which imposes an annual 40% excise tax on healthcare plans with annual premiums exceeding $10,200 for individuals or $27,500 for a family. Aimed at employers who offer these plans, the tax is slated to take effect in 2018 and only applies to that portion of the premium that exceeds the threshold.
The ABC would also like to see the law modified to permit employers to fund a “health reimbursement account,” which employees could use to purchase coverage through the public exchanges, along with the repeal or curtailing of COBRA (Consolidated Omnibus Budget Reconciliation Act).
The Republican Agenda
Apart from repealing the ACA, Klein said that one of the key planks of the Republican agenda is to allow health insurance to be sold across state lines. In other words, an individual or a business would be permitted to purchase insurance in a given state, even though they reside or operate in another state.
“There is a provision in the Affordable Care Act (ACA) called an inter-state compact,” Klein says. “This allows insurers to sell coverage among the states that participate [in the compact].”
Under section 1333 of the ACA, two or more states may enter into compacts under which insurance plans may be offered in all the participating states, subject to the laws and regulations of the state in which they were written.
“On the other hand, the republicans want to repeal the whole thing and start all over again.”
Five states—Maine, Rhode Island, Wyoming, Georgia and Kentucky—have already gone beyond this and enacted some type of state law allowing health insurance to be purchased out-of-state, according to the National Conference of State Legislatures (NCSL). Large employers with 500 or more employees, meanwhile, are not regulated by state laws when it comes to purchasing insurance, but are covered under the federal ERISA law administered by the Department of Labor.
Klein says republican candidates, like Donald Trump and Ted Cruz, want to take the ACA compacts further by allowing individuals companies of all sizes and to purchase insurance from any state they desire.
“If I live in Maryland, but I want to buy a policy from a company in Arkansas, then I should be allowed to do that,” Klein argues. “The presidential candidates have not been very specific on what it is they have in mind, but as long as a policy is licensed, individuals should be able to buy it regardless of where they live; and more specifically the insurance company can market itself in a different state than where they are located.”
Regardless of who wins in November, Klein notes that, starting next year, states will receive more latitude with regards to how they implement the ACA at the state level. According to the Centers for Medicare & Medicaid Services, the ACA permits a state to apply for a State Innovation Waiver to pursue innovative strategies for providing its residents with access to high quality, affordable health insurance, while retaining the basic protections of the ACA.