If you were waiting for changes that would actually help consumers, don’t hold your breath.
Absent the actual repeal the administration sought, it announced rule changes late yesterday affecting consumer access to healthcare and the percent of costs health insurance will cover under marketplace plans. The point of the changes is to incent insurers to continue offering health insurance on the ACA marketplaces. The technical term for this is “market stabilization.”
A cynic might wonder why these changes come out on the even of holidays when most people will be distracted and might not notice.
The rule changes focus on what the insurance industry calls “adverse selection.” Insurers are concerned about people buying coverage only when they expect they will use it, and then dropping it immediately — which forces the insurer to take a loss on the policy. The rule changes are designed to prevent that.
Here’s the basics:
- Silver level plans will cover 66% of consumer medical costs, down from the original 70% requirement.
- The new rules increase also increase subsidies to consumers buying these plans — provided the administration actually commits to making these payments.
At issue are cost-sharing payments that low-income people enrolled under the healthcare law receive to help cover out-of-pocket expenses. Trump has threatened to withhold the payments as a means to force Democrats to negotiate on healthcare legislation.(2)
[Actually, these subsidies can help people making up to $60,000 per year, which is more than “low income.” Half of US households earn less than that.]
- As previously noted, the enrollment period is being shortened from three months to six weeks, starting November 1st. Given the problem that CMS has had in handling the volume of people applying for coverage in the longer period in the past, it’s essential for consumers to apply as early as possible.
- The administration is making it harder for consumers to qualify for special enrollment periods (SEPs). More people will be required to submit supporting documentation than in the past, which will extend the time required for enrollment. If approval is delayed by three months, the consumer will be required to pay for coverage for two of those months.
- Consumers are being restricted in terms of their ability to change levels of coverage using a SEP.
- Insurers can refuse to cover people who have failed to pay premiums for this insurance in the past. If you’ve had coverage and dropped it, you may have to wait a year or more before being able to get coverage again.
- The determination of whether an insurer has an adequate network of doctors and hospitals in a state will be turned over to the state. Some states are much more rigorous than others.
The new rules don’t address some of the key issues challenging insurers:
- Will the government continue to pay subsidies to help people afford insurance?
- Will the government use financial penalties to force consumers to carry insurance?
Trump has said that he would eliminate the penalties and the subsidy, but his bill didn’t pass and no one knows about his current thinking. A negative on the first question will drive insurers out of the market. A negative on the second will raise costs for everyone who needs insurance.
There’s speculation that the reduction in benefits for the silver policy might allow insurers to reduce the cost of these policies. However, any reduction will be subject to higher out-of-pocket costs for consumers who do incur expenses. The net impact isn’t clear.
Are these rule changes even needed? The Congressional Budget Office has stated that it expected the insurance markets to be stable in 2017 without these changes. So, what is the point?
- Virgil Dickson, “White House finalizes ACA rule to strengthen individual market,” Modern Healthcare, 13 April 2017. http://www.modernhealthcare.com/article/20170413/NEWS/170419936?utm_source=modernhealthcare&utm_medium=email&utm_content=20170413-NEWS-170419936&utm_campaign=am
- Associated Press, “Democrats seek to resolve health payments on spending bill,” 14 April 2017.
- Timothy Jost, “Examining The Final Market Stabilization Rule: What’s There, What’s Not, And How Might It Work?” Health Affairs Blog, 14 April 2017. http://healthaffairs.org/blog/2017/04/14/examining-the-final-market-stabilization-rule-whats-there-whats-not-and-how-might-it-work/