Known Knowns

With the federal courts unable to agree whether the federal healthcare reform’s individual mandate is constitutional, the United States Solicitor General is asking the Supreme Court to decide.

Look for the high court to accept the case and issue a ruling before it adjourns in late June 2012.

Regardless of when the Supreme Court finally decides the case, keep in mind two important points. First, these court cases do not roll back the provisions of the Affordable Care Act that have already gone into effect, such as the insurance market reforms. At least not yet. Those provisions will remain in effect unless the Supreme Court holds that the entire law is invalid. Indeed, AHIP—the health carrier trade association—has been filing briefs that take no position on the constitutionality of the mandate but argue that, because the mandate is so inextricably linked with the carrier coverage mandates, the entire law must be thrown out if the mandate is found unconstitutional.

Second, the court challenges are not the only developments to watch. Indeed, the budget debate in Congress will likely have a more immediate impact on healthcare reform. The congressional super-committee, tasked with finding $1.5 trillion in federal spending cuts, will scrutinize the hefty federal expenditures required under the healthcare reform law, such as start-up funding for health insurance exchanges.

Significant changes to these provisions could alter the landscape for health insurance reform, but do not expect the budget process to do away with market reforms, such as the prohibition on lifetime benefit limits, because they are not federal expenditures.

In any case, the regulatory agencies are charging ahead with efforts to develop state-based health insurance exchanges. There are several proposed regulations dealing with operational and eligibility matters, including one that would affirm the power of states to:

• Allow agents and brokers to assist employers and employees in enrolling in exchange plans and in submitting applications for premium tax credits and cost-sharing subsidies
• Allow agents and brokers to participate in the “Navigator” program, which is designed to educate the public about exchanges and assist with enrollment
• Display information about agents and brokers on the websites that exchanges will be required to set up to serve as an access portal for the public.

The proposed rule also directs states to consult with agents and brokers as they design their plans for exchanges. 

While agents and brokers should continue to be engaged in the federal rulemaking process to preserve their roles in exchanges, we should also focus on the states as they develop regulations to govern these vehicles.

As for market reforms, two regulatory developments are notable. First, regulators have begun to develop a federally mandated summary of benefits and coverage that all plans will be required to provide starting in 2012. Second, the Department of Health and Human Services has clarified the need for health reimbursement arrangements that are not integrated with other health coverage (so-called stand-alone HRAs), to seek waivers to comply with the law’s annual limits rule.

The amount employers contribute to HRAs is less than the law’s thresholds for minimum annual dollar limits on benefits ($750,000 for plan years starting September 23, 2010, to September 23, 2011, stepping up each year until 2014, when no annual limit will be allowed). This raised questions about whether stand-alone HRAs would fit in the annual limit framework. Also, should these arrangements use the annual limits waiver program that the Department of Health and Human Services put in place for mini-med and other limited benefit plans? The department has decided that stand-alone HRAs that existed on September 23, 2010, need not apply for waivers from the annual limits restrictions between now and 2014.

Yet more fundamental questions remain unanswered. Should HRAs be exempt from the annual limit rules because they are a funding arrangement rather than health coverage? And what will HRAs need to do after 2014?

The federal health agency has taken the narrowest possible approach to resolving unanswered questions, addressing only the most immediate concern about whether these arrangements now need to seek annual limit waivers. The guidance seems to assume—without providing any analysis—that HRAs are subject to the annual limit requirements in the first place.

The guidance also does not clarify what HRAs will be expected to do after 2014. You might infer that the Department of Health and Human Services would conclude that stand-alone HRAs would have to comply with the annual limit prohibition in 2014. That would render HRAs unviable, though it’s difficult to imagine the health agency making such a bold step by such oblique means.

So while immediate concerns for the future of stand-alone HRAs have been alleviated, the issue bears continued watching.