The new health care reform bill, (American Health Care Act (AHCA)) was just introduced. Eventually we should see analysis of the bill and potential impacts on the health care & health insurance markets. Here are our views on the how the bill may impact Hoosiers.
Indiana Health Insurance Company Tips for Hoosiers
The repeal of the ACA actuarial values for health plans: This will allow for health insurance companies to have more flexibility with plan design, thus it could reduce premiums. It would also create a variety of health insurance plan options in the market.
Increase Tax Credits for 2018 & 2019: Young & old would receive larger tax credits to offset premiums. These tax credits would apply towards off exchange health plans. This is an attempt to stabilize the current individual markets and would have a positive impact on Hoosiers.
Retain Guaranteed Issue: No one can be denied for pre-existing conditions.
Retain coverage under parents plan to age 26: Modify age bands for premium determination: This would allow cost for oldest to youngest to be moved from 3x to 5x. For Hoosiers in their 20’s, this would lower the cost and may increase enrollment. This could help stabilize the market by adding healthy members to the pool.
Keep current open enrollments and special enrollment guide lines: Everyone would obtain health insurance in December, for the following year. This does put a strain on all parties involved. You have 7% of insured populations applying for coverage at the same time. For Special Enrollment Periods (SEP), you will have to provide documentation before being enrolled in a plan. Hoosiers and the rest of country have been able to game the ACA, by getting medical services prior to proving the SEP. This has led to higher premiums.
Impose late Enrollee penalty: If you have not had continuous coverage, not paying into the system, you will be charged a penalty. This will force Hoosiers to maintain continuous coverage. Trust me when I say, there will be a huge learning curve on this issue. The bill states there would be a 30% increase cost penalty if you go without coverage for more than 63 days. That penalty would be applied for a 12 month period. If you look at current premiums, that would be a huge, unaffordable penalty for most Hoosiers. Here is some grey area, the bill states Medicaid companies are not required to provide a certificate of prior coverage, insurance companies are. This could lead to a penalty being imposed for a Hoosier coming off of Medicaid.
Create a State Grant Program: States would be eligible for block grants and that money could be used for health care goals. Examples may be creating cost sharing reductions for at risk Hoosiers. Innovative disease management programs. Every state would be challenged to create health care reform programs to better serve their residents.
Promote Health Saving Accounts: Give more tax incentives for Hoosiers to purchase these plans. This will help Indiana middle class and upper middle class. Under that ACA, this segment of the market has been negatively impacted by cost.
Change Medicaid expansion & funding: Essentially end the Medicaid expansion by 2020, which would have a huge impact on Hoosiers making 138% of federal poverty level. Right HIP 2.0 is insuring around 400,000 Hoosiers. In my experience, these people cannot afford health insurance premiums over $50 a month, nor out of pocket maxes. Indiana would have a challenge to obtain federal grant money to provide health insurance to these folks. The bill would change Medicaid funding to per capital basis. Indiana would have to change it’s current program to be more cost efficient. To do that, there may have to be the development of more narrow networks and lower reimbursement to Medicaid providers.
The repeal of the ACA taxes: This should help to lower insurance premiums and reduce the tax burden on durable medical manufactures. Companies that manufacture medical equipment should free up resources to invest back in their business. We doubt the tax relief would have an impact on what is charged, but if a company could open a new plant more employees create more competition, which could be a good thing.
Cut federal funding to Planned Parenthood: Not sure how many Hoosiers are receiving services from Planned Parenthood, obviously that origination ability to operate would be severely impacted.
Tax Credit Determination: The new system would be based on income and age. The tax credit would be a set amount.
- $2,000 per individual up to age 29 for income up to $75k on single, then phased out to $95k.
- $2,500 per individual age 30-39
- $3,000 per individual age 40-49
- $3,500 per individual age 50-59
- $4,000 per individual age 60 and older For income up to $115k and phased out at $150K
Families can claim credits for up to 5 oldest members, up to limit of $14,000 per year. Income would determine the eligibility and amount.
The tax credits could be applied to short term policies, on and off exchange and Cobra premiums. There is mention to apply the credit towards small companies with non-group health products. The tax credit would be reduced, but still eligible. This could have a large impact on small Indiana companies offering group health.
Excess tax credits: If you don’t use the entire tax credit, you could place the remainder in health saving account. Assuming individual premium are reduced, this could be a huge benefit.
There will be changes to the current bill, just announced was 43 pages of changes to the tax credit and Medicaid funding. This bill if passed, will look very different from it’s original draft.
Tony Nefouse
Indiana Health Insurance Company
