President Donald Trump issued two executive orders late last week shaking up the Affordable Care Act, and one could create issues for small businesses.
The order gaining the most attention was Thursday night’s decision to stop funding cost sharing reductions — federal payments to insurance companies that help pay for millions of low-income Americans insurance plans. Two senators have worked on a bipartisan deal to fund the subsidies for two years.
But a second order would remove requirements for basic benefits that are part of the Affordable Care Act. Trump told federal agencies to permit wider use of association health plans, which currently do not meet the requirements for basic benefits such as maternity care.
Brad Wright, an assistant professor at the University of Iowa’s College of Public Health, said the executive order will have little impact on large employers. But it could create issues for businesses employing fewer than 50 people that buy coverage on the ACA exchange.
“Small businesses can band together to provide insurance,” he explained. “But the government under federal law gets rid of any kind of protections you might expect — coverage could be less generous. It’s cheaper but not as robust of an insurance product.”
Wright said that this could create two different insurer pools — similar to what’s already happened in Iowa.
Small businesses employing healthier and younger employees could band together to offer less expensive plans with less coverage, leaving older and sicker people still using the federal small business insurance marketplace, meaning plans will be far more expensive.
ARTICLE CONTINUES BELOW ADVERTISEMENT
“Association health plans can’t deny coverage, but they can charge different premiums to different employers,” he added. “People aren’t going to buy products if they’re not attractive, but at the same time people don’t understand a lot of this stuff … and (with) insurance a lot of times it comes down to price.”
Proponents of health associations say they have more flexibility in setting premiums based on the health of the group, Kaiser Health News notes.
One important thing to remember, Wright said, is that despite the big headlines, none of these changes will happen in the immediate future. The executive order just kicks the rule making process into gear — there are still comment periods and other requirements that have to take place, which could take months.
l Comments: (319) 398-8331; firstname.lastname@example.org