By Timothy Stoltzfus Jost
Like many Virginia Democrats, I worked hard to elect Democrats last fall and rejoiced when we flipped both the House of Delegates and Senate. Like many Virginia voters, high among my priorities was protecting Virginians from President Trump’s attacks on the Affordable Care Act (ACA). I am thus disappointed to see the General Assembly supporting parts of Trump’s agenda.
Four cornerstones of Trump’s attacks on the ACA are 1) promoting Association Health Plans (AHPs), which cover small groups and individuals but violate key ACA protections, 2) encouraging insurers to sell short-term limited duration insurance (STLDI) not bound by any ACA requirements, 3) urging states to apply for waivers from ACA protections under section 1332 of the ACA, and 4) undermining ACA health insurance marketplaces. Legislation moving through the General Assembly either supports or only tepidly limits the Trump agenda in each of these areas.
Most egregiously, legislation currently passed by both the House and Senate would adopt much of Trump’s AHP rule as Virginia law. Associations can already market in Virginia but must comply with ACA protections if they market to individuals and small groups. Under the Trump rules, currently blocked as illegal by a federal court order, AHPs need only comply with much more lenient rules governing large group plans.
Proposed Virginia legislation would allow AHPs to market to individual “sole proprietors” and small groups, while violating ACA individual and small group protections. They could, for example, charge older enrollees up to five times what they charge younger enrollees and refuse to cover individuals who work in higher-risk occupations. They are only required to offer high-deductible plans. “Benefits consortiums” under the proposed legislation can also discriminate among small groups based on health status.
The inevitable effect of the AHP law would be to draw young and healthy people out of individual and small group markets, raising premiums for everyone else. Virginia has joined other states in suing to block the federal AHP rule. Gov. Ralph Northam vetoed AHP legislation passed by the Republican General Assembly last year. Why are Democrats bringing it back again?
Second, the AHP legislation would require Virginia to apply to the Trump administration for a “1332” waiver to allow AHPs to violate the ACA. As the Bureau of Insurance has pointed out, such a waiver is not even available for that purpose. Why do Virginia legislators want a waiver that would undermine ACA protections?
Third, proposed legislation would not sufficiently restrict the sale of short-term plans, which are meant to cover brief gaps in coverage, such as between jobs or school terms, and are not subject to ACA consumer protections. Short-term insurers exclude people with preexisting conditions and the services they need. The plans’ cheap premiums draw healthy people out of the individual market, raising premiums for others. The Obama administration limited short-term plans to three months. Under Trump administration rules, they can last 364 days and be extended for 3 years. A dozen states have outlawed the plans or set a three-month limit on them. Bills pending in the House and Senate would allow short-term plans for six months in a year.
Finally, the legislature is considering establishing Virginia’s own state-based marketplace. This could be a great opportunity to improve affordability and coverage in the Commonwealth. But the consumer focus of the proposed legislation needs to be strengthened. The proposed marketplace needs flexibility to pursue policies that go beyond the federal marketplace, for example by extending the time when people can enroll and increasing outreach.
Virginians are understandably concerned about the high cost of health insurance. Gov. Northam’s budget bill proposes a reinsurance program that would substantially lower premiums for unsubsidized people in the individual market. Unfortunately, pursuing legislation that expands AHPs and fails to rein in short-term plans undermines the benefits of reinsurance and a state-based marketplace. Promoting plans that might lower premiums for healthy people at the expense of people who are older or have preexisting conditions is not what we expect from our Democratic majority.
Timothy Jost is an emeritus law professor at Washington and Lee University..