Without federal leadership, states must safeguard ACA markets

Although the Trump administration and its allies failed to fully repeal the Affordable Care Act (ACA) last year, they took a number of smaller steps that added up to a big problem: The ACA is now weaker.

Unfortunately, the administration is still seeking to undermine the health-care law, moving forward with proposals that would expand association health plans (AHPs) and short-term insurance plans, both of which have the potential to limit the ability of state insurance commissioners to regulate health plans and cause premiums to rise.

While some claim these proposals would be a boon for small business, small business advocates and health-care experts know we must maintain safeguards that promote affordable health-care coverage and stabilized health insurance markets.  

The proposal to expand association health plans threatens both state insurance oversight and market stability. If the administration’s current proposal becomes a rule without offering guarantees that states would retain regulatory authority over these plans, it could wreak havoc on the small-group market.

AHPs are multi-state offerings, so employees covered by these plans might not actually be protected in the state where they live because the regulations created for a specific plan could supersede state laws that protect consumers from rate increases and poor coverage.

Beyond regulatory concerns, small businesses would face imbalanced risk pools: one pool for businesses that want bare-bones plans and one for firms that need more comprehensive coverage. Those that need more robust coverage would have to pay more for it, making it difficult or even impossible for many small employers with older or sicker workers to afford health coverage for their employees.

Another primary threat to state authority and marketplace stability are short-term insurance plans, which the Trump administration proposed extending to 364 days from the current limit of three months. Just like AHPs, these plans do not have to comply with ACA requirements nor do they have to follow rules that prevent insurers form charging more based on factors like gender.

Individuals who would purchase these short-term insurance plans are likely to be younger and healthier, leaving older and sicker workers in the individual marketplace. Authorizing these “junk insurance” plans would create an unbalanced risk pool that disrupts the individual marketplace and raises costs for everyone else who remains in the individual marketplace.

The cost of health insurance is a top concern for small-business owners, and the proposed changes would be harmful for solo entrepreneurs and small business employees by raising rates for individuals dependent on the individual marketplace — which is where many small business employees and solo entrepreneurs purchase health coverage.

In fact, if implemented, these short-term plans are estimated to leave 2.5 million additional people without minimum essential coverage in 2019.

It is impossible for the administration to address all of our concerns if its proposed rules are adopted, but if these rules are finalized, it must affirm that they do not limit the ability of states to regulate association health plans and short-term plans.

Even if the Trump administration does not codify essential safeguards, however, states still have considerable power to proactively strengthen our health-care system.

One option is to establish reinsurance programs, which provide money that can be used by insurers to pay for some of the costliest claims made by customers who purchased insurance through a state’s health insurance marketplace.

What’s more, with the federal government hesitant to make the cost-sharing payments that help lower deductibles for low- and moderate-income ACA customers, states could pick up the slack and make payments of their own.

States should also consider doing more ACA marketing and outreach, lengthening the open enrollment period and encouraging younger, healthier people to enroll in health care.

Given this administration’s commitment to undermining the ACA, states must act to stop premiums from spiking for small businesses and other consumers. States cannot take necessary action, however, unless they have the authority to fully regulate all health insurance plans. Our nation’s job creators are counting on it.    

Former Rep. Mike Kreidler (D-Wash.) is the insurance commissioner of Washington. John Arensmeyer is the founder and CEO of Small Business Majority.