HHS Moves to Stabilize Obamacare Markets

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By Sara Hansard

Health insurers got help from the Trump administration Feb. 15 to make their Obamacare exchange plans more profitable, but the proposed regulation didn’t include changes in the premium differential that can be charged for older enrollees.

The Department of Health and Human Services market stabilization proposed rule (RIN:0938-AT14) would make changes in 2018 to the Affordable Care Act special enrollment periods, the annual open enrollment period, guaranteed availability, network adequacy rules, essential community providers and actuarial value requirements. It also announces upcoming changes to the qualified health plan certification timeline.

The proposed rule follows the announcement Feb. 14 by Humana Inc. that it is leaving the marketplaces in 2018 because the company’s plans are losing money. Humana followed UnitedHealth Group Inc. and Aetna in pulling back from the marketplaces. Most plans have lost money in the exchanges due to a sicker than expected population of enrollees, and both supporters and critics of the 2010 health-care law are grappling with ways to make the individual and small group health insurance markets sustainable.

The proposal is HHS Secretary Tom Price’s first attempt to stabilize the troubled ACA markets since he took office. The proposal is scheduled to be published in the Federal Register Feb. 17, with comments due March 7.

Age Ratings

The Centers for Medicare & Medicaid Services, which issued the proposal, declined to comment on why the regulation didn’t include increasing the premium differential for older enrollees to 3.49 to 1, from 3 to 1. That proposal, which had been widely reported to be under consideration, would have made it less expensive for young adults and more expensive for older adults.

The AARP announced Feb. 15 it was launching a series of ads against the “age tax.” The 38 million-member organization for seniors released a report Feb. 7 by actuarial consulting firm Milliman Inc. finding that changing the ACA’s age ratings to better reflect actual medical costs for older enrollees, as many conservatives have suggested, would cost older people over $3,000 more a year than they current pay but only minimally affect overall enrollment and would increase federal spending.

ACA supporters said the proposal would lead to higher cost sharing for consumers and narrower networks. Others said the proposal would help insurers modestly, and could serve the purpose of persuading insurers to stay in the marketplaces for at least another year while Congress and the administration sort out their stated plans for repealing and replacing the law.

Cost Sharing, Narrow Networks

“The biggest complaints about the marketplace plans has been high cost sharing and narrow networks,” Timothy Jost, a consumer representative with the National Association of Insurance Commissioners and an ACA supporter, told Bloomberg BNA Feb. 15.

The proposal loosens federal oversight of network adequacy, removing the standards plans now must meet for having minimum numbers of providers within set distances from enrollees. Instead, the proposal defers to state regulators, Caroline Pearson, senior vice president with consultant Avalere Health, told Bloomberg BNA Feb. 15. The National Association of Insurance Commissioners has done a considerable amount of work on network standards, and state regulators have called for giving more flexibility to states.

The proposal widens the de minimis range for actuarial values, which would allow the most popular silver tier plans to cover 66 percent of average claims. Currently they must cover at least 68 percent of claims. That could reduce premiums but raise out-of-pocket costs for annual deductibles or other types of cost sharing, Jost said. Further, lower premiums would also reduce subsidies, he said.

The actuarial value change would give insurers more flexibility in how benefits could be designed, Katie Allen, executive director of the Council for Affordable Health Coverage (CAHC), told Bloomberg BNA Feb. 15.

“It will allow them to have more tools to keep costs lower on the premium side,” she said. The CAHC represents employers, health insurers, pharmaceutical manufacturers, patient groups and providers.

Limited Time to Develop New Plans

The proposal may be challenging to implement for 2018 given the amount of time it takes for carriers to design their plans and get them approved by regulators, Milliman Inc. consulting actuary Hans Leida told Bloomberg BNA Feb. 15. “A lot of carriers have already put a lot of effort into that for this cycle,” he said.

The open enrollment period for 2018 would be shortened to six weeks, from Nov. 1 through Dec. 15, similar to the open enrollment period for Medicare and the employer market.

That will likely result in fewer people enrolling but will also probably mean insurers will get a full year’s worth of premiums, Jost said. Many people sign up for the exchanges, which enrolled an estimated 12 million people in 2017, but many drop their plans during the year.

The 2017 open enrollment period was three months, from Nov. 1, 2016, through Jan. 31, 2017.

People enrolling outside of normal open enrollment periods would have to verify eligibility, for reasons such as the birth of a child or marriage, before their coverage would take effect under the proposal.

ACA supporters have argued that tightening the special enrollment verification requirements could backfire by discouraging young people from enrolling.

But insurers have done studies showing that claims costs are higher for special period enrollees, indicating that many people may be gaming the system by finding ways to sign up when they get sick.

Paying Overdue Premiums

Under the guaranteed availability proposal, enrollees would have to pay overdue premiums before enrolling with the same insurer the following year, John McGowan Jr., a partner with law firm BakerHostetler in Cleveland, told Bloomberg BNA Feb. 15. McGowan represents insurers and employers.

Insurers have called for tightening the 90-day grace period during which insurers must continue to cover people who haven’t paid premiums.

Under the proposal people in states where there are many insurers could change plans, but in the many states where there is only one insurer, enrollees “can’t game it any more” by not paying premiums and re-enrolling the following year, McGowan said.

The CMS also said it intends to release a revised proposed timeline for qualified health plan certification and rate reviews for 2018 to give insurers additional time to implement proposed changes.

Enticing Insurers to Stay in Exchanges

It remains to be seen whether the proposal will give insurers enough confidence to remain in the marketplaces, according to the health-care industry experts interviewed.

ACA supporters criticized the proposal. Health insurance groups commended it.

“These proposals would help stabilize the current individual market and are a good start toward improving the functioning of the marketplace, so that any longer-term reforms can begin on a better footing,” Alissa Fox, senior vice president with the Blue Cross Blue Shield Association, said in a release Feb. 15.

“If the Administration is serious about strengthening the Marketplace, they will reduce uncertainty and focus on keeping the Marketplace stable and growing—not focus on changes that will raise deductibles, reduce access to physicians and put limitations on the ability for people to get coverage,” former acting CMS Administrator Andy Slavitt told Bloomberg BNA in an e-mail.

Patient groups also were critical.

Cancer patients who lose employer-sponsored coverage because they are too sick to work or need to relocate “need to be able to enroll in health insurance quickly and without gaps in coverage,” Chris Hansen, president of the American Cancer Society Cancer Action Network, said in a release.

The proposed special enrollment verification requirements could be challenging to meet “and will likely overwhelm an already overburdened verification system,” he said.

Proposed changes to requirements that essential community providers be covered “could significantly reduce the number of in-network specialized cancer providers patients can see and limit their ability to seek and afford the best possible care,” Hansen said. Essential community providers serve high-risk, special needs and underserved people.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com

For More Information

The proposed rule (RIN 0938-AT14), which is to be published in the Federal Register Feb. 17, is at https://www.federalregister.gov/documents/2017/02/17/2017-03027/patient-protection-and-affordable-care-act-market-stabilization. AARP's report, Impact of Changing the Age Rating Limit for Health Insurance Premiums, is at http://www.aarp.org/ppi/info-2016/Impact-of-Changing-the-Age-Rating-Limit-for-Health-Insurance-Premiums.print.html.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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