Individual Obamacare Plans Could Cover Less Under HHS Proposal

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By Sara Hansard

A Trump administration proposal giving states more flexibility in setting Obamacare benefit requirements could lead to an individual health insurance market that is inferior to group coverage.

That was the take from pro-Affordable Care Act analysts on the Department of Health and Human Services’ proposed payment rule ( RIN:0938–AT12) governing exchanges and broader health insurance markets in 2019. The Notice of Benefit and Payment Parameters, the first major Trump administration HHS rule, is expected to be finalized in early 2018; it was proposed in November.

Giving states more power to regulate their own health insurance markets has been the major theme of the Trump administration HHS, and the proposal would give states more leeway in designating benchmark health plans on which the ACA’s comprehensive essential health benefits (EHB) requirements are based. That could help reduce costs and premiums, which rose sharply in 2017 and will rise again in 2018, but it could diminish the ACA aim of making the individual health insurance market more like employer group market coverage.

Other Proposed Changes

The payment rule, which is the primary update implementing ACA policies, also would end the federal Small Business Health Options Program (SHOP) as an online enrollment tool, allowing small group plans that cover up to 50 employees to enroll through brokers or directly with health plans beginning in 2018. The SHOP exchanges weren’t successful in attracting many small employers, who are not required to offer employee coverage under the ACA. States operating their own SHOP exchanges could continue to operate them or design SHOP exchanges to meet the needs of their state.

Standards for the ACA’s medical loss ratio, which requires health plans to spend at least 80 percent of premiums on medical claims or quality improvements, would be loosened, and states would have an easier time requesting adjustments to it.

States would be given greater authority to ensure health plans meet ACA qualifications in the 39 states using the federal HealthCare.gov exchange, and network requirements would be loosened. Risk adjustment rules would be modified so plans that enroll healthier members would have reduced liability for making payments to plans that enroll sicker members.

The threshold for reviewing unreasonable rate hikes would be raised from 10 percent to 15 percent. Premiums rose about 20 percent on average for 2017, and they are expected to increase about the same amount for 2018 as insurers try to recoup exchange losses and make up for payments discontinued by the Trump administration to cover cost-sharing reduction subsidies for low-income people required by the ACA.

People who assist ACA enrollees in signing up for coverage, known as navigators, would not have to be physically present in exchange service areas. In a controversial move that many thought would hurt 2018 enrollment, the Trump administration in September cut funding for navigators by 40 percent shortly before 2018 open enrollment began Nov. 1. About 8.8 million people enrolled in the 39 federal exchange states during the 2018 open enrollment, which ended Dec. 15, the HHS announced Dec. 21. The number was stronger than expected. Enrollment in state-run exchanges wasn’t included in that total.

The proposal signals “another round of changes for navigators,” Karen Pollitz, a senior fellow with the Kaiser Family Foundation, told Bloomberg Law Dec. 21. New contracts with navigator groups must be agreed to in spring 2018, she said. “We’ll be interested in the dollar amount of new grants, and what changes they make” for qualifications and duties, she said.

State Essential Health Benefits

Most states currently use their state’s largest small group plan as the benchmark for defining essential health benefits. The proposal would allow them to select another state’s benchmark plan, replace one or more of the EHB categories from another state’s benchmark plan, or select a new EHB benchmark plan.

“The EHB flexibility allows so much mixing and matching that it could be used to patch together a plan that is not representative of employer-based coverage as required by the statute,” Joel Ario, a managing director of Manatt Health and the former director of the HHS exchange office in the Obama administration, told Bloomberg Law Dec. 21. “We do not want to go back to days when individual coverage was inferior to group coverage,” as was the situation before the ACA requirements took effect in 2014, he said.

Some EHB requirements have been hard to meet, such as pediatric oral and vision care and habilitative services, Pollitz said. States may try to find benchmark plans in other states that have lower requirements for those services, she said.

Some states may want to reduce premiums by choosing plans in other states that have fewer benefits, Chris Sloan, a senior manager at health-care policy consultant Avalere Health, told Bloomberg Law Dec. 21.

However, “There’s not that much difference in the EHBs state to state,” Sloan said. Further, states that are most inclined to try to reduce premiums already have more limited benefits, he said. “It’s not like New York’s going to go pick Alabama’s benefits.”

The EHB proposal isn’t likely to have a substantial impact on benefits, Sloan concluded.

Tighter Subsidy Verification

Requirements for signing up outside of normal open enrollment periods would be tightened, and moderate- to low-income people who receive advance tax credits to help them pay premiums could lose the payments if they don’t file tax forms the following year verifying their eligibility.

Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms, told Bloomberg Law Dec. 21 that one of her concerns about the proposal is tighter standards to verify eligibility for premium subsidies, and cutting off subsidies for people who don’t file tax returns.

People have been receiving notices before they are cut off from the subsidies if they don’t file tax returns the following year verifying their eligibility for the subsidies. Under the proposal they would only receive a general notice that goes out to all enrollees reminding them to renew their coverage.

“That could result in a number of people not being aware they should take some action to retain their subsidies,” Corlette said. Requirements for greater documentation of eligibility for subsidies could lead to some people, particularly if they’re healthy, not pursuing the subsidies, she said. That could lead to a sicker, high-cost pool of enrollees in the exchanges.

For 2015, about 1.8 million taxpayers who received advance premium tax credits hadn’t filed tax returns through the end of October 2016, according to a Jan. 9 letter to Congress from former Internal Revenue Service Commissioner John Koskinen.

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

To contact the editor responsible for this story: Brian Broderick at bbroderick@bloomberglaw.com

For More Information

The HHS Notice of Benefit and Payment Parameters for 2019 is at https://www.gpo.gov/fdsys/pkg/FR-2017-11-02/pdf/2017-23599.pdf.Weekly Enrollment Snapshot: Week Seven is at https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-12-21.html.The Jan. 9 letter to Congress on ACA tax filings is at https://www.irs.gov/pub/newsroom/commissionerletteracafilingseason.pdf.

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

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