Health Care Industry Post-ACA Mandate Repeal | Spire Group, PC
When Congress passed federal tax reform legislation late last year, lawmakers included a repeal of the Affordable Care Act’s (ACA) individual mandate. As a result, starting in 2019, individuals will no longer face a penalty if they fail to get health insurance. Businesses involved in health care will need to carefully track whether the mandate’s repeal reduces coverage rates, raises premiums, and lowers the demand for care services, all of which could negatively impact the industry.
However, several states have enacted or considered their own individual mandates. Federal and state policymakers are also considering further changes that could alter health care businesses, including association health plans (AHPs), medical device tax repeal, Medicaid expansion plans and looser health plan minimum requirements.
More Uninsured, Higher Risk
The latest estimates from the Congressional Budget Office and Joint Committee on Taxation predict an increase of 3 million uninsured persons through 2019. Other model estimates predict that the growth in the uninsured population could be even larger. Without a penalty to entice more people to buy insurance, healthier individuals may choose to forgo purchasing coverage. That could lead to practitioners having to serve a higher risk pool of users, fewer of whom have adequate coverage to ensure payment for services, shouldering those with coverage to shoulder those additional costs.
Flexible Alternative Plans
Some of the decline in coverage could be offset by plans to provide access to more flexible health care plan arrangements. For instance, the Department of Labor has proposed rules to allow businesses in a similar region or industry to jointly purchase health insurance plans through AHPs. Meanwhile, certain states want to allow individuals to purchase short-term, limited duration insurance (STLDI) plans.
While AHPs and STLDIs could make more affordable available, critics worry that the plans may not offer generous enough coverage. In fact, 11 states and the District of Columbia have sued the labor department on the grounds that the proposed AHP regulation violates existing law.
Another debate that will affect coverage levels involves states seeking to add work requirements to Medicaid. Those efforts have faced pushback and litigation as well.
Medical Device Tax Repeal
Another change in health care costs could come via the proposed repeal of the ACA’s medical device tax. The U.S. House passed repeal legislation already this year, though the proposal faces an uphill battle in the Senate. Academic research has shown that the medical device tax has reduced health care industry research and development spending and cost tens of thousands of industry jobs.
States Pursuing Their Own Individual Mandates
In the wake of the individual mandate repeal, some states are seeking to fill the void by adopting their own mandate. New Jersey, Vermont, and Massachusetts have all adopted legislation to impose an individual health insurance mandate and others are considering similar proposals. One study on the enactment of state-based individual mandates found that these proposals could reduce the amount of uncompensated health care, offsetting some of the impact of the repeal of the federal mandate penalty.
The most recently available data via the Kaiser Family Foundation suggests that the health care market has remained fairly stable and profitable thus far in 2018, despite the impending repeal of the individual mandate penalty. However, the report notes that “some areas of the country…are more fragile,” and that hospitalization data indicates a potential sign of concern for individual market risk pools.
As it stands, the health care industry will need to closely monitor several policy debates in the near-term to better assess how big of an impact the repeal of the individual mandate penalty may have.
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