House Health Proposals Would Undermine Consumer Protections and Expand High-Income Tax Benefits

House committees are moving to consider several bills that would allow more health plans to sidestep consumer protections in the Affordable Care Act (ACA) and expand health-related tax benefits for higher-income people. Proponents of these changes claim they will reduce health costs and red tape for small businesses, but a deeper look shows the problems they would create.

• Create unregulated telehealth-only plans. One bill up for consideration in the House Education and Workforce Committee would let employers offer workers standalone telehealth-only plans and exempt the plans from providing ACA consumer protections or meeting other federal laws that otherwise apply to employer coverage. Other “excepted benefits” plans have that designation because they are limited in scope (like dental and vision plans) or supplement what’s covered under traditional health insurance (like long-term care plans). But telehealth is a way of receiving care and a source of referrals to additional services ― it should not be treated as separate coverage. The vast majority of employers (87 percent of small firms and 96 percent of large firms) include telehealth benefits in their largest health plan.

  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.

  Being enrolled in a telehealth policy without a regular health plan would mean that people might be able to consult with a physician about a health issue. But if they needed a prescription filled, a follow-up lab test, a physical examination, a trip to the emergency room, or serious interventions like surgery or chemotherapy, they would be on the hook for those bills. Telehealth benefits could be designed to mimic more comprehensive health coverage. But they would still leave big holes, as some fixed indemnity plans (another type of excepted benefit) do.

  Moreover, the bill would allow complex health benefit structures that are already sowing confusion for workers. People offered telehealth-only plans at their job alongside more comprehensive options may select the low-premium alternative, not realizing that they are entirely uncovered for numerous acute and chronic health care needs. Moreover, people offered only telehealth plans may not realize they remain eligible for far better coverage and financial help through the ACA marketplace because the employer offer doesn’t meet minimum standards.

• Expand association health plans (AHPs). Another Education and Workforce Committee bill 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.

• Increase Self-Insured Employer Plans. Another bill the Education and Workforce Committee is considering 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.

• Expand health savings accounts (HSAs). HSAs overwhelmingly benefit high-income people and exacerbate racial and ethnic inequities in coverage access and wealth accumulation. The accounts often serve as lucrative tax shelters for wealthy people while doing little to cover people who are uninsured or to improve health care affordability. HSAs come at a steep cost to the federal government. Yet broadening HSA tax benefits is a linchpin of House Republicans’ health care agenda. (Some HSA proponents want to entirely “break the link” between the accounts and high-deductible health plans.)

  HSA tax benefits currently are only available when someone has a high-deductible health plan that meets certain federal rules. But the Ways and Means Committee is expected to take up various proposals to expand HSAs by allowing health plans to more easily qualify for HSA tax benefits as if they were high-deductible plans, even as more services are available before the deductible must be paid. This would broaden the inequitable tax treatment of HSAs, allowing more high-income people to save and reap the tax benefits.

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 these House bills would undermine consumer protections, segment insurance markets, and exacerbate inequitable tax benefits. They don’t address these challenges — they would make them worse.