Is Another Obamacare Exemption on the Horizon?

Congress is eyeing modifications to health plans sold to expatriates, but some fear it could hurt millions of immigrant workers.

MIAMI, FL - FEBRUARY 21: Dr. Martha Perez examines Maria Lebron in a room at the Community Health of South Florida, Doris Ison Health Center on February 21, 2013 in Miami, Florida. Florida Gov. Rick Scott reversed himself on February 20, and now is callling for an expansion of Medicaid to Florida residents under the federal Affordable Care Act. (Photo by Joe Raedle/Getty Images)
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Clara Ritger
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Clara Ritger
April 29, 2014, 5:11 p.m.

The Af­ford­able Care Act doesn’t al­ways eas­ily trans­late to for­eign mar­kets, so the House voted 268-150 Tues­day to ex­empt health plans provided to ex­pat­ri­ates who live abroad for more than six months from key re­quire­ments of the law.

But op­pon­ents of the bill fear this would cre­ate a loop­hole that could leave mil­lions of im­mig­rant work­ers without the pro­tec­tions of the ACA.

Ac­cord­ing to Demo­crat­ic Rep. John Car­ney, a co­spon­sor of the bill, Con­gress de­cided to re­vise the health law be­cause law­makers nev­er in­ten­ded for the ACA’s re­quire­ments to ap­ply to such plans. If the Sen­ate ap­proves the bill, these plans would not be re­quired to cov­er such es­sen­tial health be­ne­fits as emer­gency ser­vices or such pre­vent­ive care as vac­cin­a­tions or can­cer screen­ings.

However, the ex­pat­ri­ate plans must still meet the min­im­um value re­quire­ments of the health law, mean­ing that they must cov­er at least 60 per­cent of the costs as­so­ci­ated with the plan be­ne­fits. The plans would also have to com­ply with ex­ist­ing laws passed pri­or to the Af­ford­able Care Act, such as the Em­ploy­ee Re­tire­ment In­come Se­cur­ity Act, which of­fers pa­tient pri­vacy pro­tec­tions and safe­guards for re­tire­ment plans.

In­sur­ance com­pan­ies of­fer­ing ex­pat­ri­ate cov­er­age would be ex­empt from the taxes and fees put in place by the Af­ford­able Care Act for those plans. This pro­vi­sion, the bill’s sup­port­ers say, en­sures that U.S.-based in­sur­ance com­pan­ies re­main com­pet­it­ive in the glob­al mar­ket, where for­eign com­pan­ies do not have such fees as­so­ci­ated with of­fer­ing cov­er­age.

Be­cause of that ex­emp­tion, the bill would res­ult in losses of $1.4 bil­lion over 10 years, ac­cord­ing to es­tim­ates from the Con­gres­sion­al Budget Of­fice and the Joint Com­mit­tee on Tax­a­tion.

Without the pro­posed changes, the bill’s spon­sors say, in­sur­ance com­pan­ies would off­shore the op­er­a­tion of those ex­pat­ri­ate plans to avoid the health law’s fin­an­cial lim­it­a­tions. Such a move could mean a loss of 1,200 do­mest­ic jobs, 500 of which are in Car­ney’s home state of Delaware. Car­ney co­sponsored the bill with Cali­for­nia Re­pub­lic­an Dev­in Nunes.

Im­pend­ing in­sur­ance-fa­cil­ity clos­ures are in large part what’s driv­ing the push to get the bill ap­proved.

While there is wide­spread agree­ment that the bill rem­ed­ies a prob­lem for U.S. cit­izens liv­ing and work­ing abroad, a num­ber of Demo­crats — led by Rep. Henry Wax­man of Cali­for­nia — ar­gue that it cre­ates a loop­hole that could deny the pro­tec­tions of the Af­ford­able Care Act to as many as 13 mil­lion im­mig­rant work­ers clas­si­fied as leg­al per­man­ent res­id­ents of the United States. That’s be­cause com­pan­ies would have an in­cent­ive to switch im­mig­rant work­ers to ex­pat­ri­ate plans that do not of­fer the full be­ne­fits re­quired by the Af­ford­able Care Act.

The bill’s bi­par­tis­an group of sup­port­ers say that was nev­er their in­tent — nor do they be­lieve that will hap­pen. They say ex­pat­ri­ate plans are in­her­ently more ex­pens­ive to ad­min­is­ter be­cause of re­quire­ments to main­tain pro­vider net­works in mul­tiple coun­tries and to re­im­burse in mul­tiple cur­ren­cies. They ar­gue that any be­ne­fit-cut­ting that com­pan­ies may try would be out­weighed by the ba­sic ad­min­is­trat­ive cost of of­fer­ing an ex­pat­ri­ate plan.

The Joint Com­mit­tee on Tax­a­tion an­ti­cip­ates some be­ne­fit-cut­ting from the draft law, but also some in­cent­ive for em­ploy­ers to add cov­er­age where they would not.

“We an­ti­cip­ate that this bill would cause some em­ploy­ers who would of­fer ACA-com­pli­ant plans un­der present law to of­fer less gen­er­ous ex­pat­ri­ate plans, and would lead oth­er em­ploy­ers who offered no cov­er­age un­der present law to of­fer ex­pat­ri­ate plans, thus res­ult­ing in off­set­ting ef­fects on ex­change sub­sidies and over­all cov­er­age,” said JCT Chief of Staff Thomas Barthold in an email to Con­gress.

How the Sen­ate will handle the bill re­mains to be seen. But the White House has is­sued a state­ment that it does not ap­prove of the Ex­pat­ri­ate Health Cov­er­age Cla­ri­fic­a­tion Act in its cur­rent form, and would like to see ne­go­ti­ations re­opened on the bill.

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