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By Monica E. Oss

You may have missed the announcement, since there has been so much coverage of immigration policy in the past week; but on Tuesday, Labor Secretary Alexander Acosta announced new and final rules for health insurance for small businesses and self-employed individuals. While there are many elements to the new rules, one key issue is that health plans will not be required to cover the Patient Protection & Affordable Care Act-mandated (PPACA) essential health benefits, which includes ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and addiction treatment services, prescription drugs, rehabilitative and habilitative services, laboratory services, preventive and wellness services and chronic disease management, and pediatric services. This new rule is effective August 20, 2018, with the new rule applying to fully-insured AHPs starting September 1 and self-insured AHPs in 2019 (see Definition of “Employer” Under Section 3(5) Of ERISA-Association Health Plans).

I think that this is the beginning of the end of parity for treatment of behavioral health disorders (see President Donald J. Trump Helps Millions Of Americans Employed By Small Businesses Gain Access To Quality, Affordable Health Coverage and Changes Proposed For PPACA Via HHS Rule Change On CSR Payments & New Presidential Executive Order).

The core of the new rules is in the “association health plan” (AHP) concept that would allow small businesses, including self-employed workers, to band together by geography (including across state lines) or industry to obtain health care coverage as if they were a single large employer. This is based on the executive order’s proposed reinterpretation of the Employee Retirement Income Security Act (ERISA) rules to allow employers in the same industry to band together to form large groups for the purposes of self-insuring or negotiating purchased health benefits.

The wrinkle is in what is the “minimum” benefit package in these plans. The PPACA mandated that all individual and small group health plans sold through the health insurance exchange marketplaces are required to cover a set of essential health benefits (EHBs), which includes mental health and addiction treatment (see Feds To Allow States To Decide on Essential Health Benefits and Information on Essential Health Benefits (EHB) Benchmark Plans). However, the new rule does not require AHPs to cover the established EHBs, noting that “such a mandate could reduce AHPs’ flexibility to tailor coverage to the particular needs of the members of the group or association offering the benefits, and thereby reduce access to AHPs by making them less attractive options for providing affordable coverage” (see Trump Administration Expands Use Of Health Plans That Skirt ACA Consumer Protections).

At this point, it appears that the anti-discrimination protections that apply to large business will also be applied to AHPs. “AHPs may not charge higher premiums or deny coverage to people because of pre-existing conditions, or cancel coverage because an employee becomes ill.” And, annual or lifetime limits (see About Association Health Plans ) are not permitted. In addition, these plans purportedly must comply with the Mental Health Parity and Addiction Equity Act (MHPAEA) standards for behavioral health benefits that currently apply to large employer plans (see Trump’s Association Health Plans Will Be Like Big Employer Plans: DOL). However, without a minimum benefit floor, these protections are weak at best.

What is the likely impact on the overall U.S health system? Up to 4.3 million people are projected to leave the individual and small group insurance markets to enroll in association health plans (see Association Health Plans Could Spark 4.3 Million People To Drop ACA Coverage). This means four million people who are underinsured – as well as a continued rise in premiums for those individuals who maintain their PPACA insurance plans.

Insurance companies and consumer groups have voiced concerns about the move. America’s Health Insurance Plans (AHIP) put out a statement with some reservations, noting that the rule could “lead to higher premiums for consumers who depend on the individual or small group market for their coverage” and “may put consumers at greater risk of fraudulent actors entering this market” (see AHIP Comments on Final Rule Expanding the Use of Association Health Plans). The American Hospital Association and the AARP have also expressed concerns about expanding the use of AHPs (see Insurers, Hospitals Slam Trump Admin’s Association Health Plan Proposal). And a group of 26 consumer groups— including the National Alliance on Mental Illness, the March of Dimes, and the American Heart Association—came out against the rule, saying that it will “severely weaken key protections for Americans with pre-existing health conditions or other serious or chronic health conditions” (see Final AHP Rule Weakens Key Protections for Americans with Pre-existing Conditions Says Patient and Consumer Groups).

For provider organizations, the issues of uncompensated care loom large. But it is communication with consumers that concerns me. While there is certainly consumer disgruntlement with the current high deductibles and high copayments in their health plans (see Out-Of-Pocket Health Care Costs – Down For Most, Up For Some), those plans that have major coverage gaps are a problem of even greater magnitude of consumer financial risk.

My colleagues at OPEN MINDS asked me why I see this as the “beginning of the end” of parity. It all has to do with health plan competition for consumers. The data shows that the health insurance market is an “imperfect” market with consumers making decisions without full knowledge—and often with a short-term financial perspective (see Health Insurance And Imperfect Competition In The Health Care Market). When offered a cheaper option (even if it is a “skinny” health plan, aka a “low-coverage” health plan), consumers often select those options. And since health plans need volume to make management of financial risk work, the move away from a standard benefit set will trigger the “race to the bottom” in health insurance-the same market situation that I saw at the start of my career. If this market landscape continues, we can anticipate additional requests to limit benefits in order to have “competitive” plans.

There are likely to be more (and likely significant) changes to this coverage landscape with the partial repeal of the PPACA and currently proposed regulations (see Despite Attacks on Obamacare, the Uninsured Rate Held Steady Last Year). Look for our coverage of what happens and what it means for strategy in the year ahead. And, for more on this topic, join us The 2018 OPEN MINDS Executive Leadership Retreat in Gettysburg, Pennsylvania on September 19, 2018 for the keynote address, “Key Issues Shaping The Market: What Executives Need To Know To Succeed,” by William Lopez, M.D., CPE, Senior Medical Director-Behavioral Health, Cigna Behavioral Health.

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