Broker blog from Delta Dental

Category: ACA update (Page 1 of 2)

Follow the latest news related to Health Care Exchange plans and the Affordable Care Act.

The 2020 elections and the ACA: What’s at stake for dental insurance

For the dental insurance industry, the upcoming November elections are among the most important in recent history. Depending on the outcome, the Affordable Care Act (ACA) could be affected significantly, which in turn could reduce access to oral health care for millions of Americans.

What’s going on with the ACA?

The future of the ACA is in question. In the case of California v. Texas, scheduled to be heard before the United States Supreme Court on November 10, the court will decide whether the law should be struck down, and which elements may or may not be saved.

A previous Insider Update article looked at how the upcoming Supreme Court nomination might affect the fate of the ACA. We’ll now consider the potential impact of the upcoming elections.

The upcoming election: What could happen?

On November 3, U.S. voters will decide whether to reelect President Donald Trump, a Republican, or replace him with former Vice President Joe Biden, a Democrat. They’ll also decide who will fill many United States Senate and House of Representative seats. Three outcomes are possible: 

  • A clean sweep by the Democrats. Democrats gain control of the White House and Senate, and retain control of the House.
  • A partial sweep by the Democrats. Democrats gain control of the White House and retain control of the House, but Republicans keep control of the Senate.
  • A return to status quo. Republicans keep the White House and Senate, and Democrats retain control of the House.

Current polling data strongly suggests that Democrats will retain the House, so a Republican sweep is unlikely.

How could a Democratic sweep affect the dental insurance industry?

A clean sweep for the Democrats, not surprisingly, would likely preserve and strengthen the ACA, regardless of the Supreme Court’s decision on California v. Texas, said Jeff Album, Vice President of Public & Government Affairs for Delta Dental.

“With Democrats controlling all three branches, Congress can quickly restore almost anything the Supreme Court might strike down, and do so long before the court’s decision becomes effective,” Album said.

Beyond the ACA, industry experts predict a clean sweep could lead to many other outcomes relevant to the dental industry:

  • Medicare could become available to people younger than 65, which could open new Medicare Advantage (MA) markets in which dental is often offered.
  • A dental benefit could be added to Medicare Part B, or as separate Part “T” (for teeth). Depending on the extent of the benefit provided, a Part B dental benefit could create or eliminate opportunities for dental insurers. A comprehensive Part B benefit could replace the private dental coverage purchased by millions of Medicare beneficiaries today, give growth to dental as a part of Medi-Gap policies, and eliminate employer-sponsored retiree dental plans. However, a Part B dental benefit limited to only preventive care could create opportunities for insurers to offer supplemental benefits plans. A Part B dental benefit would also require that all Medicare Advantage plans provide at least the same set of dental benefits, which would result in these plans receiving larger payments from the U.S. Centers for Medicare & Medicaid Services (CMS). About a third of MA plans today don’t offer dental.
  • A “public option” could be created. While the Biden campaign hasn’t offered many details, a public option is conceptually a federal health insurance program to be offered on state Health Insurance Exchanges as an alternative to private plans. It would likely be subsidized for lower income Americans, and partially or fully paid by enrollees who currently don’t qualify for subsidies. While dental coverage isn’t guaranteed to be a benefit for anyone other than children, an intriguing possibility is that it could be made available on a voluntary basis.
  • The public option might even entail automatic enrollment for low-income people into an existing Medicaid managed care or Medicaid fee-for-service plan.
  • Balance billing, or “surprise billing,” by out-of-network providers could become regulated by federal law, but it’s unclear how this might affect dental benefits, if at all.

How about a partial Democratic sweep?

A partial sweep, with a Republican-controlled Senate able to prevent legislation beginning in the House from reaching the president, would likely thwart a public option, strengthening the ACA or adding dental coverage to Medicare. However, a Biden White House could preserve the ACA as it currently exists, and eliminate through executive order moves by the prior administration to weaken it.

“Dramatic change is unlikely,” Album said.

Paired with an unfavorable Supreme Court ruling, however, a partial sweep could spell trouble for the ACA, Album said.

“It makes recovering from an adverse Texas decision in the Supreme Court much harder because the Senate Republicans may support many of the cutbacks an adverse SCOTUS decision could cause,” Album said. “And should the Supreme Court strike the ACA entirely, it’s hard to imagine Democrats and Republican agreeing on replacement.”

And what if we maintain status quo?

Should the country continue with a Republican president and divided Congress, the outcome of California v. Texas is uncertain.

A ruling that either leaves the ACA in place, or finds that the law’s individual mandate can be eliminated while leaving the ACA otherwise intact, means little change. But a ruling that the ACA is inseverable from the mandate means millions will lose coverage they have today, with Congress likely unable to respond.

Album predicts that a Republican White House would probably continue to work through executive orders to weaken the ACA and make ACA-non-compliant alternatives more widely available.

The worst-case scenario for the ACA occurs if federal funding for the program is eliminated. As many as 2 million people with Exchange-based dental benefits in the Exchanges could lose that coverage. For insurers, the risk is most acute for those with sizeable managed Medicaid and Exchange business.

“Marketplace changes could be profound,” Album said.

The Supreme Court nomination and the ACA: What’s at stake for dental insurance

In the case of California v. Texas, scheduled to be heard before the United States Supreme Court on November 10, parties challenging the Affordable Care Act (ACA) seek to overturn the law as unconstitutional. What might this case mean for the future of the ACA and insurance more widely?

The usual questions surrounding the outcome of this case have been complicated by the appointment of Amy Coney Barrett, a new justice to the Supreme Court, nominated by President Donald Trump.

What’s at stake for the ACA?

The elimination of the ACA could have significant consequences, including:

  • Decreases or complete loss of state and federal Exchange enrollment, adult Medicaid enrollment and commercial enrollment of dependents up to age 26
  • A reduction or elimination of individual health insurance subsidies, which could erode Exchange enrollment
  • A reduction or elimination of dental benefits for adults in Medicaid

So what’s California v. Texas about, anyway?

The state of Texas, along with a group of other states and individual plaintiffs, is arguing that the ACA is unconstitutional. Specifically, they say that the 2017 changes to tax law, eliminating the penalty for failure to purchase health coverage, essentially eliminated the individual mandate, upon which the entire law depended.

Originally, the individual mandate required most people to have health insurance coverage. It penalized those who failed to comply by requiring them to pay a financial penalty to the IRS. The 2017 Tax Cuts and Jobs Act eliminated the financial penalty, but left the mandate in place.

The Texas-led plaintiffs argue that because the mandate no longer produces revenue for the federal government, it’s unconstitutional. Further, they say that the mandate can’t be severed from the rest of the ACA, so if the mandate is unconstitutional, the entire ACA is unconstitutional.

In December of 2018, a U.S. District Court judge in Texas agreed. In 2019, the case went to the U.S. Court of Appeals for the Fifth Circuit. That court agreed with the District Court’s decision that the mandate was unconstitutional, but didn’t rule on whether the mandate was inseverable.

On the other side, California, together with a group of 18 other states, is defending the ACA.

In an unusual move, the federal government is siding with Texas, though offering arguments to allow some elements of the ACA to continue.

The Supreme Court has agreed to hear the case, scheduled for November 10. It will decide whether the Texas case has merit, whether the mandate is unconstitutional and, if so, whether this invalidates the entire ACA, or whether to let lower courts rule on severability.

Why a new Supreme Court justice matters

Justice Amy Coney Barrett has been confirmed and will fill a vacant seat on the Supreme Court.  

Barrett was formerly a circuit judge on the U.S. Court of Appeals for the Seventh Circuit. She’s considered a political conservative and constitutional originalist, which means she believes the U.S. Constitution should be interpreted as it was understood at the time it was written. As a judge, she has also ruled against the ACA in the past. She replaces Justice Ruth Bader Ginsburg, known for being one of the Supreme Court’s most liberal justices.

What specifically Barrett’s confirmation means in terms of a ruling is unclear, said Jeff Album, Vice President of Public & Government Affairs for Delta Dental.

“We’re not sure how the conservative judges are going to hear this particular case,” Album said. “Conservatives are thought to be originalists or strict interpretationists, and if they were truly to follow an originalist philosophy, striking the entirety of the ACA is not consistent with that.”

That’s because, Album said, if Congress had intended to overturn the ACA, the 2017 tax cut bill would have explicitly called for such an overturn, and the merits of that debated openly in hearings. That this didn’t happen speaks to the intent of Congress, which is an important consideration for a Supreme Court reaching a decision based on originalist thinking.

“Strict interpretationists are loath to reverse an act of Congress,” Album said. “They don’t want to counter Congressional intent, and they certainly don’t want to legislate from the bench. And if you listen to remarks that Amy Barrett has been making in the hearings, she’s gone out of her way to say she doesn’t believe that it’s a judges’ job to do anything other than enforce the Constitution and enforce the law.”

Still, that’s not a guarantee that Barrett will rule to preserve the ACA, Album said.

“We know that Amy Barrett is not fond of the ACA,” Album said. “She’s ruled against it many times, so she already has that track record.”

So what if the ACA is struck down? Then what?

If the Supreme Court rules to strike the entire bill, the impacts are “going to be profound,” Album said.

In that scenario, blue states such as California, New York, Massachusetts and Maryland would pass state laws to attempt to preserve some elements of the ACA, Album said, but they might lack federal support for the subsidies people depend on to afford those programs. Few red states, meanwhile, would be prepared to run their own Exchanges without the federally facilitated marketplace. This could lead to enrollment in Exchanges dropping substantially, Album said.

And this could lead to substantial enrollment declines for insurance companies with sizeable managed Medicaid and Exchange business.

About 1.9 million adults who have purchased optional, non-subsidized dental benefits in the Exchanges could lose their coverage. Young adults between the ages of 19 and 26 who were added to commercial employer coverage as a result of the ACA will lose that coverage if the ACA is completely struck.

Congress could decide to provide relief, but its ability to do so is dependent on the results of the November election. We’ll take a closer look at what the election results could mean for these issues in an upcoming article.

However…

Regardless of what happens, Album said, don’t expect anything to happen any time soon. Following the California v. Texas hearing in November, the decision won’t be announced until April or May, and possibly as late as June.

And if the Court agrees that the mandate is severable and sends that question back down to the lower courts, it could take years before that outcome and the additional legal challenges it will face.

A final twist is that while the current administration is arguing that the mandate should be struck down, it’s also urging that lower courts rule which provisions should and shouldn’t be invalidated.

“Even the Trump administration has suggested, and perhaps will argue in the Supreme Court, that some things should be left alone,” Album said. “We just don’t know which things they would cherry-pick in terms of what should be inseverable and what shouldn’t.”

Note: This post was updated to note Barrett’s confirmation to the Supreme Court on October 26.

Policy pops: The long and short of short-term health plans

3‑minute read

Join our guest blogger, Stephanie Berry, as she answers frequently asked questions about short-term limited duration health insurance plans (STLD). Stephanie is a Senior Legislative and Policy Analyst based in Rancho Cordova, California.

On October 2, the U.S. Department of Health and Human Services (HHS) put new rules into effect lengthening the maximum duration for short-term limited duration health insurance (STLD). Prior to the enactment of the Affordable Care Act (ACA), STLD plans were prevalent in the individual market for people who experienced temporary gaps in health coverage, such as losing or changing a job. Unlike “limited benefit” policies, such as cancer-only or hospital-only policies, STLD plans were considered akin to comprehensive medical plans, only differing in their limited term, previously 90 or less days. The new HHS regulations increase the duration of STLD plans, potentially making them more appealing to certain demographics, particularly younger, healthier consumers.

FAQ:

Q: How long can these new STLD plans last?

A: The new rules state that a short-term plan can last up to a year (364 days), and consumers will be able to renew that plan for a maximum of two additional years (up to 36 months). This is a change from the federal rules, which previously limited STLD plans to three months. Individual health plans have been guaranteed renewable since 1996, whereas STLD plans previously terminated at the end of the contract, meaning that a change in health status could cause policyholders to be dropped from coverage.

Q: Do STLD plans have to follow the same ACA rules regarding medical underwriting, pre-existing condition exclusions, etc.?

A: No. The ACA exempted STLD plans from market rules. As a result, the following are permissible under STLD plans:

  • Medical underwriting: Applicants can be excluded or charged higher premiums based on health status, gender, or age
  • Excluding coverage for pre-existing conditions
  • No coverage for essential health benefits that ACA-compliant plans must cover, such as pregnancy, prescription drugs, or mental health care
  • Lifetime or annual limits
  • No limit to out-of-pocket expenses

Q: Can dental be offered as an STLD product?

A: STLD products are meant to compete with major medical plans, and, as a result, there is not a clear role for stand-alone dental carriers in the STLD space.

Q: How do STLD plans differ from Association Health Plans?

A: Think of Association Health Plans as a way for members of associations to band together to purchase large group health insurance. As a result, an AHP could choose an STLD plan as the health insurance plan it offers to its members.

Q: What role do states play in regulating STLD products?

A: States can take action to comply with the new STLD regulations or implement their own restrictions and guidelines, many of which are already enshrined in state law. Brokers should reach out to state departments to understand any additional state requirements. Here are a few examples on how states are reacting to the new STLD regulations:

  • Four states currently prohibit STLD plans, including Massachusetts, New Jersey, New York and California (SB 910 in California was signed by the governor in September). Relatedly, Hawaii enacted a law this year (HB 1520) that bars residents from enrolling in STLD policies if they are otherwise eligible to purchase coverage from the federal health insurance marketplace during an open or special enrollment period. It also limits the duration of an STLD policy to less than 91 days.
  • States can – and have – adopted shorter maximum durations of an STLD policy. For instance, the South Carolina Department of Insurance has restricted STLD policies to 11 months or less, and limits renewals to a total of 33 months or less coverage. (This is intended to distinguish STLD policies from ACA-compliant policies.) Michigan, by contrast, limits STLD policies to six months or less out of any 365-day period.
  • States can impose requirements on disclosure and marketing. The Maine Bureau of Insurance issued a bulletin stating that when offering an STLD policy, a carrier or broker must provide clear language that the policy does not offer protections from pre-existing condition exclusions or guaranteed renewability. Both Nebraska and Iowa require a “free-look” period, whereby the newly-insured can cancel the policy within a set timeframe.
  • States can require STLD products to cover essential health benefits (EHBs) or other ACA-market protections. The Connecticut Insurance Department issued a bulletin to clarify that STLD plans must cover EHBs, and that any renewable STLD plan or any STLD that has a duration of six months or longer is prohibited from excluding coverage for pre-existing conditions. Maine law requires STLD plans to cover preventive health services and bars dollar limits on coverage.

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Policy pops: Is there a role for dental in Association Health Plans?

3‑minute read

Join our guest blogger, Devin McBrayer, as she unpacks the Association Health Plan rule from the Department of Labor and its possible effects on the dental benefits industry. Devin is a Legislative and Policy Analyst based in Sacramento, California.

As you’ve probably heard, the Department of Labor (DOL) recently released the final rule regarding Association Health Plans. This rule makes it easier for small businesses to come together and form an “association health plan” (AHP). This allows businesses to leverage their combined bargaining power to purchase health benefits for their employees. Brokers will play an extremely important role in working with AHPs, especially newly-formed AHPs, which will likely have minimal experience working within the health benefits industry.

The new rule makes three major changes to the regulations concerning AHPs:

  1. AHPs can now form across geographic regions such as counties or states
  2. AHPs can consist of organizations from different industries as long as the organizations are within the same geographic region
  3. Self-employed individuals, for the first time ever, will be able to join an AHP

These changes were not as flexible as some organizations hoped. However, chambers of commerce in Nevada and Texas have already announced their intention to form AHPs to provide health benefits to their members, and we anticipate many more AHPs forming in the next several months.

Although the rule does not specifically mention dental benefits, it does state that AHPs can provide excepted benefits, such as dental or vision, to their members. AHPs that choose to obtain dental benefits for their members will likely want to take advantage of more flexible benefit designs, such as diagnostic-and-preventive-only plans.

Since AHPs are able to act as a large group, they do not have to follow certain ACA requirements such as meeting actuarial value standards or providing essential health benefits, which could bring down the cost of premiums. On the other hand, AHPs must continue to follow existing large group requirements such as providing preventive services without cost-sharing, guaranteed issue, or prohibitions on lifetime maximums.

The DOL rule states that new fully-insured AHPs are allowed to form starting September 1, 2018; existing self-insured AHPs are allowed to follow the new DOL rule starting January 1, 2019; and new self-insured AHPs will be allowed to form beginning April 1, 2019. However, some states already have laws on the books banning the formation of new AHPs, particularly laws that ban Multiple Employer Welfare Arrangements, which encompass AHPs. In addition, some states such as Vermont and Pennsylvania have taken steps to make it more difficult for AHPs to form in their states.

Time will tell whether AHPs will proliferate and there are still many questions that need to be answered as state insurance commissioners come to terms with this new rule. Brokers will be on the front lines and will likely be the first to hear about organizations that are interested in joining together to form an AHP. As always, the Public & Government Affairs team here at Delta Dental will be closely watching what happens next.

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Plain language policy: States move forward to stabilize insurance markets

Join our guest blogger, Stephanie Berry, as she unpacks state reactions to the removal of the ACA’s individual mandate. 

Stephanie is a Senior Legislative and Policy Analyst based in Sacramento, California.

As we reported recently, ending the penalty for individuals who choose not to purchase medical coverage (the individual mandate) could further destabilize the individual market. However, state policymakers aren’t waiting for further federal action on the ACA — leading to a notably active regulatory year as states are taking matters into their own hands. Here’s a summary of activity:

Weakening ACA regulations

Idaho unveiled a plan that openly defies the ACA by announcing earlier this year that the state would allow health plans to be offered that don’t comply with the ACA’s regulations on pre-existing medical conditions, essential health benefits, annual caps on benefits, and other key tenets of the law. These plans, of course, would be quite a bit cheaper than ACA plans and are designed to attract younger, healthier individuals. Because Idaho announced its intention to skirt ACA regulations, the federal government responded that it would step in and enforce the law if the state followed through with its plan.

Similarly, the Iowa legislature enacted a bill that allows non-ACA compliant plans to exist by creating an exemption for plans offered by the Iowa Farm Bureau, an association that is meant to serve Iowa’s farmers. To pass federal muster these plans cannot be called health insurance and therefore, cannot be regulated by the federal government or the Iowa Department of Insurance. It is likely that we will see other states follow suit.

Establishing reinsurance programs

Several states have introduced legislation to create state reinsurance programs — a way for carriers offering individual health insurance to get compensated for covering high healthcare costs. While bills are making their way through the legislatures in Louisiana, New Jersey, and other states that would require the state to apply for a federal waiver, Maryland has already enacted legislation that will support a reinsurance program by levying a surcharge on medical and dental carriers. This enacted legislation was designed to mirror the federal tax that was suspended for 2019.

Imposing state individual mandates

Finally, state legislatures — particularly those with state-based exchanges — are attempting to impose their own individual mandate that would require individuals to maintain health care coverage or pay a penalty. Legislation has been introduced in Connecticut, Vermont, New Jersey, Maryland, and Washington, but currently, only New Jersey’s bill — AB 3380 — appears close to enactment, while the bill in Washington has already died. It remains to be seen whether these individual mandate bills will be able to gain more traction this year or next.

Stay tuned for more health care policy updates from Delta Dental, and get to know our policy experts.

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Policy pops: How tax reform may affect dental enrollment

3‑minute read

Join our guest blogger, Devin McBrayer, as she unpacks the Job and Tax Cuts Act of 2017 and its likely effect on dental benefits enrollment. Devin is a Legislative and Policy Analyst based in Sacramento, California.

government workers walking down stairs

When most people think of the Affordable Care Act (ACA) and the increase in Americans with insurance coverage, medical insurance is the first thing that comes to mind. What’s sometimes overlooked is the significant growth in dental insurance, particularly among adults.

Pediatric dental is considered an “essential health benefit” in the ACA, meaning insurance must cover it. Dental carriers are also able to offer stand-alone family dental coverage on the health insurance exchanges as long as the pediatric benefits are included. This has made dental coverage more widely available to the 1.9 million people who purchased stand-alone dental coverage through the marketplaces in 2017.

Dental coverage could be threatened, however, due to the Job and Tax Cuts Act of 2017. This bill effectively repealed the mandate requiring most Americans to have health insurance by eliminating the financial penalty for lack of coverage.

Without the individual mandate, it’s likely that medical and dental insurance enrollment will decrease in the coming years. The Congressional Budget Office, a non-partisan agency that conducts analyses for Congress, predicts that the U.S. will have 8–13 million more people living without health insurance by 2026.

Stand-alone dental plans on the exchanges in particular will struggle to sustain enrollment in the marketplace, because stand-alone dental plans cannot be purchased unless an individual has already purchased a medical plan. If consumers choose not to purchase medical insurance because they no longer have to pay the penalty, then those consumers will also not be able to purchase dental on the exchange.

Adding more strain on the uncertain future of the exchanges, heathier and younger people who believe that they do not need insurance are most likely to drop their coverage. The exchanges could soon face a scenario where older or sicker individuals will choose to keep their coverage, and healthier, younger people will choose to drop their coverage. An unhealthy risk mix, due to healthier people leaving the exchanges, would likely cause health insurance premiums to rise even higher.

On the bright side, open enrollment totals for health insurance exchanges in 2018 exceeded expectations. Nearly 65% of state-based exchanges saw an increase in their overall enrollment. Only time will tell if the exchanges can sustain their enrollment, while also maintaining a healthy risk mix, after the tax reform bill repealed the individual mandate.

Despite the uncertainty facing the marketplace, Delta Dental is still working hard to ensure that consumers continue to have access to the dental care that they need.

For more thought leadership from Delta Dental, subscribe to Insider Update, our newsletter for brokers, agents and consultants.

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