Custom Health Option and Individual Care Expense Arrangement Act
Floor Speech
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Mr. SCOTT of Virginia. Madam Chair, I yield myself such time as I may consume.
Madam Chair, the proposals in H.R. 3799 are yet another recycled, futile attempt to sabotage the Affordable Care Act and actually make it harder for workers and families to find affordable, high-quality health insurance.
This legislative package includes two bills that were marked up by the Committee on Education and the Workforce.
The first is the Association Health Plans Act. This act undermines a core promise of the ACA, access to affordable healthcare for all. This faulty legislation may provide lower costs for some enrollees, but it would do so by skimping on benefits and increasing costs for everybody else.
Specifically, the bill would allow association health plans to cherry-pick low-risk, young individuals for a pool separate from the ACA marketplace. You may hear my colleagues on the other side of the aisle tout the bill's nominal protections against discrimination based on preexisting conditions, but they omit the details regarding the other large loopholes that leave consumers vulnerable in this bill, such as charging higher risk groups more so that the plan will not be attractive to them and charging low-risk groups less so that they will be the ones that come in.
In fact, this legislation explicitly authorizes AHPs to set premiums based on the ``specific risk profile'' of employer members, enabling them to charge higher premiums to groups based on their age, gender, and other factors. AHPs could also exclude certain categories of coverage, such as maternity care, mental health, or substance abuse disorder, to dissuade certain groups or individuals from enrolling. Under the bill, association health plans could also evade essential health benefits and other consumer protections under State and Federal law.
It is a bad idea because of simple arithmetic. If healthy, low-risk individuals can leave the Affordable Care Act marketplace risk pool and join a separate association and pay lower rates on average, those that did not get into these plans will, on average, pay higher premiums.
Let's be clear. Only low-cost groups will be in these plans because if you are a high-risk group, the cost will be too much and will not be attractive. If they are high-risk groups with preexisting conditions, older groups, and whatnot, they will not be able to form groups that charge less than the ACA marketplace, and nobody will want to join.
Under the ACA, everybody pays an average. If you have a preexisting condition or do not have a preexisting condition, everybody pays the same, and everybody gets insurance at an affordable cost.
Everybody enjoys all the essential benefits under the ACA. Association plans, for example, do not have to provide coverage for essential benefits like maternity benefits. All the costs of maternity care will be borne by fewer and fewer people.
The average cost of insurance for those not in the plans will slowly grow as the number of association plans grows.
Various versions of this legislation have been pushed by Republicans for decades, but all iterations suffer from the same fundamental flaw, they shift costs to the most vulnerable. That is why more than 30 leading consumer and patient groups have expressed serious concerns with this harmful legislation.
The other bill marked up in the Education and the Workforce Committee was the Self-Insurance Protection Act, legislation that further erodes the ACA by exempting stop-loss insurance from key consumer protections.
The bill would prevent the Secretaries of Health and Human Services, Labor, and the Treasury from regulating stop-loss insurance coverage. Even more troubling, the bill makes it virtually impossible for States to protect consumers from abusive practices by invalidating State laws that regulate stop-loss.
Stop-loss insurance usually covers costs above a catastrophic level, over a million dollars or something like that. They can be written to cover everything over a thousand dollars when they become essentially regular insurance except that they are not regulated. There are no solvency regulations, no benefit regulations, no nothing.
We can all agree that small businesses and self-insured people deserve access to affordable healthcare, and that is what you get under the Affordable Care Act. We should also agree that people deserve basic consumer protections to ensure that they have insurance with quality, solvency, an agency to call if something goes wrong, and coverage for essential benefits. That is why we passed the Affordable Care Act in the first place. It is also why, when Democrats were in charge in the last Congress, we passed the American Rescue Plan and the Inflation Reduction Act to make coverage even more affordable.
The question before us is: Do we want to make sure that every individual can continue to find affordable and quality healthcare coverage, or do we want to pass H.R. 3799 and create roadblocks for Americans seeking care?
Madam Chair, I would hope that we would oppose this bill, and I reserve the balance of my time.
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Mr. SCOTT of Virginia. Madam Chair, I yield such time as he may consume to the gentleman from Texas (Mr. Doggett), the ranking member of the Health Subcommittee of the Ways and Means Committee.
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Mr. SCOTT of Virginia. Madam Chair, I would inquire as to how much time is remaining.
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Mr. SCOTT of Virginia. Madam Chair, I yield myself such time as I may consume.
Madam Chair, the gentleman from Michigan talked about the motive of employers. I think the employers want to give good coverage. The problem with this bill is it enables one company to find loopholes to get a good deal for that company even if it results in higher costs for everybody else. That is the problem with this legislation.
Madam Chair, I include in the Record a letter of opposition written by the AFL-CIO.
Among other things, the letter states that this bill undermines comprehensive coverage and subjects workers to financial risk. AFL-CIO Legislative Alert, June 20, 2023.
Dear Representative: On behalf of the AFL-CIO, I urge you to oppose the CHOICE Arrangement Act (H.R. 3799). This package would make two substantial changes in health coverage policy--both harmful to workers.
First, H.R. 3799 will loosen the definition of association health plans (AHPs), opening the door for more employers to establish plans that evade Affordable Care Act (ACA) requirements to cover essential health benefits and participate in market-wide risk pools. Despite what their name suggests, association health plans are not a form of niche coverage for professional associations. Under current rules, AHPs may be established by multiple employers and draw broadly from insurance markets to enroll self-employed individuals. With the ability to set rates based on a limited pool of enrollees, AHPs have been able to offer coverage with lower premiums, but their track record is poor. Too often, these plans misjudged the risks involved and have gone insolvent, leaving enrollees in the lurch. In other cases, enrollees have been defrauded by scammers who exploited the AHP regulatory loopholes.
Second, under the guise of ``protecting'' stop-loss insurance for self-funded group health plans, H.R. 3799 would allow employer health plans to avoid the ACA requirement that insured plans cover essential health benefits. The policy is intended to allow plans that are unable to actually self-fund with adequate reserves to instead purchase a high level of stop-loss insurance. Lack of adequate reserves leave many of these plans, and their enrollees, at risk since stop-loss insurers often retain the right to drop the insurance if medical costs for the group begin to climb. This is not a stable form of coverage.
By allowing plans to offer coverage that does not comply with ACA essential health benefits requirements, both of these policies would allow plans to cherry pick healthier, less-costly enrollees from the small group and individual markets. This will increase premiums for good comprehensive coverage because risks cannot be spread widely to reduce costs for all.
We urge you to protect working people by opposing this legislation that undermines comprehensive coverage and subjects workers to financial risk. Sincerely, William Samuel, Director, Government Affairs.
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Mr. SCOTT of Virginia. Madam Chair, I include in the Record a broad post written by the Center on Budget and Policy Priorities.
Among other things, the post states that the bill will undermine consumer protections, segment insurance markets, and impose new burdens on individuals to navigate an already complex system. [From the Center on Budget and Policy Priorities, June 20, 2023] Health Bills Headed for a Vote in the House Undermine Consumer Protections and Market Rules (By Sarah Lueck)
The House is moving toward a vote on legislation that would weaken Affordable Care Act (ACA) consumer protections and private market rules. Proponents of these changes claim they will increase choices and reduce red tape for employers, but a closer look shows the problems they would create. The legislation would:
Expand association health plans (AHPs). The legislation would allow AHPs, a type of health plan that trade associations, professional groups, and other organizations may offer their members, to cover self-employed individuals and small businesses as if they were large employers. This would exempt them from ACA standards that otherwise apply to health plans in the individual and small group markets. Similar to a Trump-era rule a court struck down in 2019, the bill would segment insurance risk pools: some individuals who are younger and healthier, or small businesses whose employees have that profile, could get plans with lower premiums because they would be priced separately from ACA- compliant coverage and would not have to meet ACA standards, such as a requirement to cover a set of essential health benefits. As a result, other individuals and small businesses remaining in ACA-regulated markets would see higher premiums.
Expand Individual Coverage Health Reimbursement Arrangements (ICHRAs). The legislation would codify provisions similar to a Trump-era rule currently in place that allows employers to forgo offering a regular group health insurance plan and instead offer an HRA (a tax- favored, employer-funded account) that workers could use to buy their own individual insurance coverage. Increasing such arrangements could raise ACA marketplace premiums; they are likely to attract sicker-than-average firms that can spend less to fund an ICHRA than they must pay for a group health plan. And firms may find strategies to shift sicker workers to HRAs, even with guardrails in the legislation meant to prevent this.
Plus, these arrangements require employees to do considerable work compared with signing up for an employer plan--they must apply for and select a plan, set up premium payments, and understand what expenses the ICHRA covers. Also, workers offered an ICHRA could be confused about whether the offer renders them ineligible for a marketplace premium tax credit--that is, whether it constitutes an ``affordable'' employer offer that precludes credit eligibility. And while employers must give workers a notice of HRA rules, they needn't personalize them to tell individual workers whether their plan is affordable. These complications for employees could drive down coverage.
Increase self-insured employer plans. Another provision would encourage more small employers with healthier workers to self-insure (meaning that the employer bears the financial risk), rather than offering a fully insured health plan (for which an insurer bears the risk). Specifically, the bill would protect a complex self-insurance arrangement known as level funding from tighter regulation. Similar to AHPs, this scheme allows small firms with healthier workers to provide plans that avoid ACA small-group market premium and benefit standards without being a large employer or taking on the risk of self-insurance. This provision would make level funding an even more common way for smaller firms to avoid having to offer plans that meet ACA market rules--this would raise premiums for small businesses that remain in the fully insured, small-group market if small firms with younger and healthier workers move to self-insure.
House committees recently approved other health bills that raise concerns. The Ways and Means Committee moved to expand health savings accounts (HSAs), which overwhelmingly benefit high income people and exacerbate racial and ethnic inequities in coverage access and wealth accumulation. HSA tax benefits currently are only available when someone has a high-deductible health plan that meets certain federal rules. But the committee approved a bill that would allow high- deductible plans to cover telehealth services pre-deductible, while still qualifying for HSA tax benefits. It is estimated to cost $5 billion from 2025 through 2033.
Another bill, approved by the House Education and Workforce Committee, would let employers offer workers stand-alone telehealth-only plans and exempt the plans from providing ACA consumer protections or meeting other federal laws that otherwise apply to employer coverage. The bill would exempt telehealth plans from, for example, covering mental health care at parity with other care and providing preventive services at no cost to enrollees. The plans could also impose annual and lifetime limits on coverage and sharply limit the types of conditions they would address.
Additional policy changes are needed to make health coverage and care more affordable for many people, despite the ACA's significant benefits for individuals and small businesses. But the legislation heading to the House floor is misguided. It would undermine consumer protections, segment insurance markets, and impose new burdens on individuals to navigate an already complex system.
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Mr. SCOTT of Virginia. Madam Chair, I am prepared to close, and I yield myself the balance of my time.
Madam Chair, I regret that my Republican colleagues continue to relitigate the Affordable Care Act. However, what we have seen is not new. It is what we have seen time and time again over the last 13 years. They continue using every tool they can to undermine the ACA and limit access to quality healthcare, weaken consumer protections, and increase average costs.
The provisions of this package do nothing to lower overall healthcare costs for workers and their families. In fact, for most consumers, the result of this legislation is that while some may save a little bit, most consumers will end up paying more.
Madam Chair, I strongly urge my colleagues to oppose the bill, and I yield back the balance of my time.
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Mr. SCOTT of Virginia. Madam Chair, I thank the gentlewoman for yielding.
Madam Chair, I rise in support of this amendment. Association health plans have a long, well-documented history of cutting costs for themselves by cherry-picking the cheapest people to cover and leaving the more expensive behind. This raises costs for everybody else and causes premiums to go up in the rest of the market. Republicans have been pushing this idea for decades, and experts have consistently found it to be harmful.
The Affordable Care Act made a number of reforms to commercial insurance markets, including a requirement that plans in the individual and small group markets cover essential health benefits such as maternity care and prescription drugs. The ACA also prevented these plans from charging higher rates based on health status and limited the premium amount that older people could be charged compared to younger people. This was a vital protection that ensured that an age tax would not make coverage unaffordable for older individuals.
This legislation has no protection without this amendment. The bill is entirely silent on discriminatory pricing against older people. In fact, by explicitly allowing associations to base premiums on risk factors of each employer within the group, it actually invites them to charge older Americans much more.
This amendment would ensure that older workers are protected by providing in this bill that it would not take effect until the Secretary of Labor certifies that it would not have the impact of raising premiums for older workers.
I thank the gentlewoman from Connecticut for her leadership on the Education and the Workforce Committee.
Madam Chair, I urge my colleagues to support the amendment.
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