Expansion in sales of two kinds of health plans likely to have modest impact on industry

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Skinny and association health plans likely to have modest impact on industry


New federal regulations allow expanded access to health coverage exempt from key provisions of the Affordable Care Act (ACA), reviving sales of short-term, limited duration coverage for terms of less than a year and making it simpler for businesses and self-employed workers to unite to buy association health plans.

An additional 6 million Americans will buy these plans by 2023, according to estimates from the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT), suggesting these regulations likely will have a relatively modest impact on the US health industry, which by 2023 will serve more than 330 million Americans.

Most of the 6 million new customers likely will be drawn from the small group and individual markets

Insurers and associations likely will take advantage of the freedom from some ACA provisions to craft plans with lower monthly premiums and tailor them to appeal to younger, healthier populations. In an August op-ed published in The Washington Post, HHS Secretary Alex Azar wrote: "Starting about two months from now, thanks to this president, insurers and states will have more freedom to offer consumers more options."

Most of the 6 million new customers likely will be drawn from the small group and individual markets, according to the CBO/JCT. Some customers would have been otherwise uninsured. The pool of ACA customers likely will grow sicker and poorer over time. Healthcare providers in some states likely will face small increases in the numbers of under-insured Americans seeking care.

The promulgation of the new regulations, which apply to some associations on Sept. 1, and allow for sales of short-term, limited duration insurance for contracts of less than 12 months starting on Oct. 2. These regulations are part of a strategy by the Trump administration and Republican lawmakers to repeal and replace the ACA, at least in part, through legislative, regulatory, budgetary and legal actions. In 2017, the administration halted federal payments to insurers to defray cost-sharing subsidies for some low-income ACA customers. The Tax Cuts and Jobs Act of 2017 reduced the ACA penalty for failing to maintain a certain level of health coverage to $0 starting in 2019.

Despite the changes, the 10-year outlook for coverage is one of relative stability

In part, this is because most of the decisions do not effect most Americans’ coverage. Most Americans under the age of 65 – 158 million in 2018 according to the CBO - obtain coverage through employers, a group that largely won’t be impacted by the new regulations. The ACA exchanges also have proven relatively resistant as most Americans buying individual coverage receive federal premium tax credits subsidies, cushioning them from premium increases.

Health coverage for Americans under 65 likely to remain stable

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Benjamin Isgur

Health Research Institute Leader, PwC US

Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Nikki Parham

Health Industries Advisory, Partner, PwC US

George Mansour

Health Industries Advisory, Principal, PwC US

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