Republican gains may boost short-term health rules first, strategist predicts

Republicans may not be able to use their election gains to make major changes in the Affordable Care Act until 2026, but they could increase the maximum duration of short-term health insurance policies to 12 months, from 3 months, quickly.

That’s the assessment of Jeff Smedsrud, the chief executive officer of FlexBenefits, a supplemental health insurance benefits provider.

Early winners could also include other “non-medical health benefits” arrangements, such as fixed indemnity health insurance policies, association health plans and health care sharing ministries, Smedsrud predicted in a commentary.

“Familiarize yourself with the work of the Paragon Institute,” Smedsrud said. “Those are the folks that will be driving health care policy.”

Smedsrud is a longtime health insurance marketer and product developer.

Related: To protect workers from medical debt, help fill their coverage holes

Earlier in his career, he started insurance design and distribution firms such as Healthcare.com and Pivot Health, a health insurance program developer and marketer.

The backdrop: The members of Congress who created the Affordable Care Act package in 2009 and 2010 left some products out of the scope of the rules that set benefits design and pricing requirements for major medical insurance.

The ACA drafters were tough on major medical insurance because they wanted to create a way for health insurers to provide major medical insurance without considering the applicants’ health status.

One ACA provision excludes health care-cost sharing ministries, or religious organizations that use members’ dues and voluntary contributions to help pay for members’ care.

The ACA scope also excludes traditional “excepted benefits,” or the health insurance products and related products that have been excluded from most of the requirements in older benefits-related laws, such as the Employee Retirement Income Security Act of 1974 and the Health Insurance Portability and Accountability Act of 1996.

Excepted benefits basics: Short-term health insurance has traditionally provided temporary insurance for new college graduates, people who have lost their jobs and other people without permanent major medical insurance in place.

Short-term policies often offer much lower premiums, lower deductibles and access to broader provider networks than the cheapest ACA-compliant individual major medical markets, but the issuers may put applicants through a medical underwriting process, impose exclusions for health problems they already have, set low limits on coverage and exclude coverage for mental health care and ordinary prenatal care and maternity care.

In recent years, Democratic presidential administrations have tried to limit the policy durations to three months, to keep people from using them in place of major medical coverage. Republicans have tried to extend the maximum duration to 12 months to 36 months, to make it easier for people to use the policies as an alternative to major medical coverage.

Association health plans give small employers a way to team up to buy coverage under the jurisdiction of regulators outside their home states. In states with expensive mandates, this may help cut costs considerably.

Fixed indemnity policies pay specified amounts of cash when insured people get one or more of the specific types of care described in the policy or suffer one or more of the conditions listed in the policy.

Paragon: The Paragon Health Institute is an independent research center, or think tank, created by people who worked for the White House National Economic Council during Donald Trump’s first term as president.

The institute has posted papers on ideas for updating the current ACA framework, ways to lighten regulatory restrictions on non-medical health benefits products and proposals for expanding use of health savings accounts and similar types of accounts to pay for care.

Paragon analysts tend to support the argument that any government health programs should focus mainly on providing cash for patients and offering patients as much flexibility as possible to use the cash as they see fit.

The process: Smedrud suggested that changes to Medicare Advantage and Medicare supplement insurance products will probably be modest.

Any major changes that do occur will probably happen slower than employers, brokers and benefits consultants expect, Smedsrud added.

“Nothing ever happens in politics quickly,” Smedsrud said.

Another challenge may be the fact the U.S. Supreme Court’s recent ruling on Loper Bright, a case that that overturned the court’s “Chevron doctrine,” has limited federal agencies’ ability to use new regulations to change their rules.

But the fact that many judges in federal appeals courts and at the U.S. Supreme Court could lighten the impact of the new Loper Bright doctrine, Smedsrud said.

The prices: Smedsrud warned that insurers may see all of the new flexibility for coverage buyers as a potential source of risk for the insurers.

“Carriers will adjust to the new reality by protecting themselves, and that likely means higher premiums,” he said.

The benefits professional’s role: “Put your clients first,” Smedsrud said. “It is the one constant in all the swings to the left or right by politicians. Help your clients find exactly what they want and guide them toward good solutions.”