State insurance laws do not apply to to all policies.

By Ana Radelat, CTMirror.org

If the Affordable Care Act is abolished as the result of a legal battle over the health care law, not only will more than 300,000 state residents lose coverage, but a majority of those in Connecticut could be affected.

That’s because Connecticut laws aimed at protecting consumers apply only to a minority of health insurance policies that cover state residents, and are limited in their scope and effectiveness.

State insurance laws do not apply to those who may obtain their coverage through certain policies offered by employers. For instance, state laws mandating coverage known as “essential benefits” protections for those with pre-existing conditions and other state laws apply to only about a third of the health insurance policies that cover Connecticut residents.

State laws regulate policies that cover about 670,000 people in the state. But they don’t apply to most policies that provide Connecticut residents their health care coverage.

State laws don’t apply, for example, to coverage offered to employees by companies that self-insure. A self-insured company is one where the employer assumes the financial risk of providing health care benefits to its employees.

Many employees don’t know that their companies are self-insured because their employers have contracted with an insurer like Aetna or Cigna to process claims and manage coverage. But, according to the Connecticut Department of Insurance, in 2018 about 1.2 million Connecticut residents were covered by these types of policies.

If the ACA disappears, the federal law’s protections for people on self-insured plans – including allowing children to be on a parent’s policy until they are 26 and bans on limiting  annual dollar limits on claims – would not be mandated. An employer could drop those provisions.

Three judges on the New Orleans-based 5th Circuit Court of Appeals are weighing the latest legal challenge to the Affordable Care Act and could very well decide the controversial law’s future.

That lawsuit, known as Texas v. United States, was brought by 18 state attorneys general from Republican-leaning states. It argues that the ACA is unconstitutional because Congress has rolled back the tax penalty Americans once had to pay if they didn’t have health insurance. The requirement is called the individual mandate.

Connecticut, meanwhile, joined a group of Democratic attorneys general, led by California’s Xavier Becerra, that argue the rest of the ACA remains valid, despite the end of the tax penalty.

The abolition of the ACA would most directly impact nearly 268,000 Connecticut residents who obtained coverage through the law’s expansion of Medicaid, known as HUSKY D in the state, and the more than 66,000 who now benefit from ACA subsidies that help them purchase insurance.

But the effects of the law’s repeal would be felt by many more people, in different ways, said Ted Doolittle, Connecticut’s health care advocate.

“It would be super disruptive,” he said. “In addition to the horrible impact on people, it will have an impact on the state’s insurance industry.”

That industry has benefited as federal subsidies have allowed more people to purchase health insurance policies.

State law would allow Access Health CT, the state’s ACA marketplace, to continue to sell policies. But very few are expected to be able to afford those policies without the ACA’s subsidies, which bring down the cost of premiums for low-and-moderate income Americans and, in some cases, eliminate or reduce co-payments and deductibles.

Doolittle said some Connecticut residents may be able to “dig deeper” to pay for individual insurance policies, but the state won’t be able to help those who find that without federal subsidies, they can no longer afford insurance.

“Where would that money come from?” he asked.

Others would also feel the impact of the end of the ACA, which has been steadily closing the “donut hole” in Medicare Part D, which covers prescription drugs.

Instead of having to pay the full cost of medications while in the donut hole, beneficiaries now pay a percentage of the cost — and that percentage has been declining since 2011. Under the ACA, the donut hole for brand named drugs was closed completely this year.

“Without the ACA, that donut hole would come back and there’s nothing Connecticut could do about it,” said John Aloysius Cogan, Jr., a health insurance expert at the University of Connecticut School of Law.

The end of the ACA would also allow insurers to charge as much as five times the premium for an older person than a young one and charge women more than men for coverage.

Cogan has suggested some steps the state could take to blunt the impact of the demise of the ACA.

One is to require insurers to offer comprehensive coverage to anyone regardless of their health status, preexisting conditions, or gender and bar them from setting premiums bases on these factors.

Another is creating a state-based individual mandate that would bring down the cost of insurance by requiring everyone, including the young and healthy, to purchase coverage.

Cogan also says Connecticut should consider capping payments to hospitals. He said research suggests hospitals with lots of market power raise costs because they can demand higher rates from insurers. Maryland has a rate-setting process that controls what hospitals can charge.

Connecticut residents don’t frequent hospitals or doctors any more often than residents of other states, Cogan said, but health insurance premiums are “really expensive” in the state.

“That’s because providers can charge really high prices,” Cogan said. “And they can do that because they have control over the market.”

Still, Cogan said, the abolition of the ACA would have an enormous impact in the state.

“Connecticut can do a few things to make it not so bad,” he said. “But hundreds of thousands would lose coverage.”

And other Connecticut residents may see unwelcome changes in their coverage.

CT Mirror reporter Jenna Carlesso contributed to this story. 

Reprinted with permission of The Connecticut Mirror. The author can be reached at [email protected]. 

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