Congress Considers Bills to Reform More than the Affordable Care Act

Proposed legislation addresses wellness incentives, self-insurance and association health plans

Stephen Miller, CEBS By Stephen Miller, CEBS March 6, 2017
Congress Considers Bills to Reform More than the Affordable Care Act
updated on March 14, 2017

Not all health care legislation being debated in Congress is about repealing the Affordable Care Act (ACA). Efforts to protect worksite wellness initiatives,  address the regulation of self-insured health plans and help small businesses band together in shared health plans are also underway.

On March 8, the House Education and the Workforce Committee approved three legislative proposals, sending them to the full House for consideration:

  • The Preserving Employee Wellness Programs Act (H.R. 1313 with related fact sheet), seeks to clarify the rules on how to run employee wellness programs.

  • The Self-Insurance Protection Act (H.R. 1304, with related fact sheet), aims, among other goals, to prevent stop-loss coverage that's often purchased by self-insured employers from being subject to the extensive regulations that apply to health plans.

  • The Small Business Health Fairness Act (H.R. 1101, with fact sheet), which would allow small businesses to band together to offer employees health coverage through association health plans.

"These positive reforms are just a few of the steps we can take to transition to a patient-centered health care system that delivers more choices, lower costs and greater control for working families," said Education and the Workforce Committee Chairwoman Virginia Foxx, R-N.C.

"The last thing hardworking Americans need is to lose access to a flexible, affordable health care plan model because of more bureaucratic overreach," said Rep. David Roe, R-Tenn. "That's why the committee has advanced legislation to protect the ability of employers to customize health care plans for their employees."

Wellness Program Incentives

"Employee wellness programs have long enjoyed bipartisan support because they result in lower health care costs and a healthier workforce," said Foxx, who is the lead sponsor for the wellness programs act. The bill "will ensure employers have the legal certainty they need to offer this innovative benefit, which provides working families with greater control over their health care dollars."

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During a March 1 hearing on the three bills, Allison R. Klausner, newly appointed chair of the trade group American Benefits Council, called wellness programs a "cornerstone" for healthy workforces.

"Not only are these programs important for achieving better health outcomes for employees and their families, they also have the potential to increase employee productivity, improve workforce morale and engagement, and reduce health care spending," said Klausner, who is a principal at Conduent HR Services.

She discussed the need for a uniform set of rules that would make offering wellness programs less burdensome to employers and more helpful to employees, and expressed her support for the Preserving Employee Wellness Programs Act, which she said would be a step toward consistent federal policy.

This measure clarifies "that wellness programs complying with HIPAA [Health Insurance Portability and Accountability Act] and the Affordable Care Act would not violate the Americans with Disabilities Act [ADA] or the Genetic Information Nondiscrimination Act [GINA] merely by offering a reward. This is a step toward consistent federal policy," she said.

Despite Congress's support for wellness programs in recent years, "employers continue to face complex and inconsistent regulations for the design and administration of these programs, most recently resulting from regulations finalized by the U.S. Equal Employment Opportunity Commission [EEOC]," Klausner said.

In 2013, the U.S. departments of Health and Human Services, Labor and the Treasury issued afinal rule on employment-based wellness programs. That final rule implemented ACA provisions that increased the maximum permitted incentive under a wellness program offered in connection with a group health plan to 30 percent of the total annual cost of individual-coverage plan premiums; for programs designed to prevent or reduce tobacco use, the maximum incentive was increased to 50 percent of the cost of individual coverage premiums.

Last May, the EEOC issued final rules that restrict incentives that the ACA would otherwise allow, citing the need for compliance with the ADA and GINA. Under the EEOC's guidance:

  • Wellness programs that ask questions about employees' health or include medical examinations may offer incentives of up to 30 percent of the total cost of self-only coverage, but where the employer offers more than one self-only health plan and does not require the employee to be enrolled in a particular health plan in order to participate in the wellness program, the incentive may not exceed 30 percent of the lowest cost self-only plan the employer offers.

  • The EEOC rules do not permit a higher incentive for programs addressing tobacco use.

The EEOC has imposed "unnecessary burdens" on employers, Klausner argued, and she expressed support for a "consistent federal policy and a regulatory framework that is minimally burdensome while protecting individuals from discrimination."

Fear-Mongering Charges?

Some advocacy groups opposed to wellness program incentives that encourage employees to participate in biometric health screenings have charged that employees who decline "genetic testing" could face penalties under the proposed Preserving Employee Wellness Programs Act, or even that the legislation seeks "compulsory genetic testing of employees." Are these concerns valid? See the SHRM Online article Would Proposed Law Require Genetic Testing for Employees?

[SHRM members-only toolkit:
Designing and Managing Wellness Programs]

Self-Insurance Coverage

The Self-Insurance Protection Act "will ensure employers are able to continue offering innovative, flexible health plans that fit the unique needs of their employees," said Roe, the bill's chief sponsor.

Under self-insured (or self-funded) plans, employers keep the plan premiums and pay the actual cost of the claims themselves, contracting with an insurance company or another third-party administrator to design the plan, process claims and provide administrative services. Self-insured employers, especially smaller ones, often purchase a separate stop-loss policy (also known as reinsurance) from an insurance company to cover extremely large claims.

"Self-insurance offers employers across the country a platform to effectively and efficiently manage their health care expenditures ... to improve outcomes and eliminate waste," testified Jay Ritchie, chairman of the Self-Insurance Institute of America, a trade group, during the hearing. "The self-insured market is focused on creating cost-effective and beneficial outcomes for employees."

But access to self-insured plans "will become further restricted if regulators are permitted to redefine stop-loss coverage as health insurance," as some advocate, he said. The draft proposal would "preclude harmful regulatory action that would limit access to stop-loss coverage, ensuring that many groups seeking to self-insure are able to access the necessary tools to do so," especially small and medium-sized plans.

Association Health Plans

Jon Hurst, president of the Retailers Association of Massachusetts, testified about the need to increase the bargaining power of small businesses in the health insurance marketplace in order to lower costs for employees, and said that association health plans could help to achieve that goal.

"Strategies taken by the Affordable Care Act … have not helped smaller employees. Steps must be taken to better support these smaller businesses in providing coverage. Association health plans are an important answer," he said.

By allowing smaller employers to band together, both within and across state lines, the Small Business Health Fairness Act would "level the playing field for small businesses," Hurst told the committee. "Employees of small businesses deserve the same marketplace rights to obtain comparable coverage at comparable rates as those that work for big business and big government."

The proposal "would lower health care costs for small businesses and help expand affordable coverage for employees who want to purchase insurance through work," said Rep. Tim Walberg, R-Mich, who co-sponsored the measure.

An Opposing View

Lydia Mitts, associate director of affordability initiatives at Families USA, a liberal advocacy group, testified in opposition to the three bills.

"All of these bills would promote the scaling back of employee health plan benefits and shift a greater share of costs to workers," Mitts charged. "These changes would harm access to affordable, comprehensive coverage, particularly for older and sicker workers.

Addressing the Preserving Employee Wellness Programs Act, Mitts contended that "this bill will proliferate the use of wellness programs as a backdoor way to charge sicker workers more for health coverage and will further undercut critical workforce nondiscrimination protections."

There is "no evidence" that incentives to participate in wellness programs lead to sustained improvements in health outcomes or behaviors, she argued.

The Small Business Health Fairness Act, Mitts said, "would exempt association health plans marketed to small businesses from adhering to critical state and federal requirements for small group coverage."

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