As Congress ends the 2017 session, there are a number of important issues left unaddressed, primarily due to partisan feuds in both Houses. They did manage to pass another Continuing Resolution (CR), to keep the government running through January 19, 2018. A CR is basically 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 10/1 so the Government will now be going almost 1/3 of the current fiscal year with no budget.
This year, they managed to add a partial funding of the Children’s Health Insurance Program (CHIP) better known by its local names; Husky Healthcare in CT, Rhode Island Rite Care in Rhode Island and Child Health Plus in NYS. The program costs the Federal Government approximately $16 to $17 billion dollars annually. The CR included funding for only 3 months ,which brings funding from 10/1 to 12/31 in spite of the fact that there is near unanimous support in both Houses for the program. 9 million children are covered by this program
Going forward into 2018, the most frustrating issue is how little this administration, Executive and Legislative, Democrat and Republican, know about how health insurance works. The fact that employer sponsored insurance covers by far the largest number of people in this country would make one think that the policymakers would pay attention to how it works. But Congress presses on so 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 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, etc. to avoid the 40% tax. Many previously did increase cost sharing assuming the tax was effective for Plan Year 2018 so the extension to 2020 did nothing but cause employees to 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 appears in insured premiums for the upcoming year. Rates are set by carriers in late spring for the following year. Employers need their rates 60 to 90 days before the plan renews. Another 2 year delay is proposed which will include 2018 which means returning money to policy holders for 2018 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 futility and lack of effectiveness of high risk pools. Reinsurance works, high risk pools don’t, a position taken by most State Insurance Commissioners but 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, this is 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. It 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 to apply for.
The biggest question for the upcoming year is the midterm elections and whether the recently passed tax cut bill will be enough to satisfy voters that the Republican agenda is on the right track and whether the Republican majority will remain. History shows that the majority party always loses seats in midterm elections. Just how much will be the question.