Require Continuous Health Insurance Coverage in 2017, Insurers Say

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By Sara Hansard

Continuous coverage requirements should apply when people try to sign up for health insurance outside of normal enrollment periods as soon as 2017, health insurers say.

“If the individual mandate is repealed, HHS should take swift action to implement a 12-month continuous coverage requirement” for people attempting to enroll during special enrollment periods, America’s Health Insurance Plans (AHIP) said in its comment letter on the market stabilization proposed rule (RIN:0938-AT14) published Feb. 17 by the Centers for Medicare & Medicaid Services. More than 4,000 comments were filed as of the March 7 deadline.

Continuous coverage is an important element Republicans are proposing in repealing the unpopular individual mandate in the Affordable Care Act. The American Health Care Act moving through the House of Representatives includes a provision under which people would pay a 30 percent surcharge beginning in 2018 for any year they went longer than 63 days in a 12-month period without coverage. But health insurers and the Congressional Budget Office say the provision isn’t punitive enough to keep people from waiting until they get sick to enroll.

‘Strong Incentives’ Needed to Maintain Coverage

“A change to the individual mandate will require strong incentives for consumers to maintain continuous coverage,” AHIP said. Consumers who have gaps in coverage should have to wait until the next open enrollment period to sign up, similar to the policy for most employer-sponsored plans, it said.

The proposed rule, which would cover the 2018 plan year, would require people signing up for coverage through special enrollment periods to verify their eligibility to do so for reasons such as marriage or the birth of a child. Health insurers support tighter eligibility verification to prevent people from waiting until they are sick to sign up for coverage. In February 2016, AHIP and the Blue Cross Blue Shield Association released a report finding that health-care costs were 24 percent higher for people who enrolled through special enrollment periods during the first three months of 2014 than those coming in during the normal open enrollment period.

But consumer groups argue that tighter eligibility verification for special enrollment periods could backfire. An Obama administration 2016 Department of Health and Human Services report on the results of a special enrollment period verification pilot program found that younger consumers are more likely to fail to complete the verification process than older consumers, which could suggest tightening requirements would result in fewer young enrollees. The Affordable Care Act exchanges have so far proved to attract a disproportionately high share of older, sicker enrollees, and they haven’t been as successful at signing up young adults as was originally envisioned when the law was enacted in 2010.

Health insurers largely supported the proposed rule, which included a host of measures intended to shore up the ACA exchanges, where most plans have been losing money since the exchanges opened in 2014. Profitability targets are expected to remain out of reach through 2017 in the individual market, and it will take “another year or two of continued improvements to get to that target,” S&P Global Ratings said in a December 2016 report that focused on Blue Cross Blue Shield companies. Blue Cross Blue Shield plans have been the major participants in the exchanges, while a number of commercial insurers, including UnitedHealth Group Inc., Aetna Inc. and Humana Inc., have pulled back from the ACA exchanges.

Network Adequacy Regulated by States

A provision in the proposed rule that would allow state insurance regulators to set network adequacy requirements “would more fully recognize states’ primary role” for regulating insurance, the Blue Cross Blue Shield Association (BCBSA) commented. The proposal removes federal standards plans must now meet in the 39 federal exchange states for having a minimum number of providers within a set distance from enrollees.

Like AHIP, the BCBSA supported a provision in the proposed rule that would allow an issuer to collect premiums for prior unpaid coverage before enrolling a patient in the next year’s plan, as well as a provision loosening the ACA’s actuarial value requirements for claims coverage. The ACA requires plans to cover at least 60 percent of claims, and the proposal would give insurers more flexibility in meeting that requirement.

Consumer groups were more critical of the proposed rule. The proposal to limit the 2018 open enrollment period to Nov. 1 through Dec. 15 would “cut the next open enrollment period in half, limiting the opportunity to enroll in coverage,” Families USA (FUSA) said.

Looser Actuarial Requirements

Looser actuarial requirements would “weaken cost-sharing requirements for marketplace plans, effectively increasing health insurance deductibles for many,” FUSA said. The proposal is aimed at giving insurers more flexibility to sell plans at lower premiums.

A Feb. 15 FUSA analysis said the change “could easily increase the lowest value silver plans’ deductibles by more than $1,000.” High deductibles and cost-sharing requirements have already been a subject of criticism by ACA opponents, along with sharp premium increases in 2017 by plans trying to price their premiums in line with the older, sicker population they are covering in the exchanges.

The CMS proposed in a separate bulletin released Feb. 17 to delay the deadline for insurers to apply to sell plans in the federal marketplaces to June 21, instead of the current date of May 3.

NAIC’s Comments Mixed

The National Association of Insurance Commissioners had mixed comments on the proposed rule. The state regulators had concerns about the impact of allowing carriers to collect outstanding debts before enrolling customers for the following year. “There is concern that a consumer may have not paid premiums for legitimate reasons (such as, Exchange errors that enrolled the consumer in multiple plans) and that consumers may be required to pay for months during which they had no coverage,” the group said.

Exchange enrollment systems and call centers also may not be able to handle the increased volume of the shorter enrollment period, the NAIC said.

But the state regulators supported the proposal to defer network adequacy regulation to the states. “State regulators have expressed for many years their opposition to unnecessary federal interference in network adequacy review,” the NAIC said. “This interference has proven costly to carriers without increasing protections for consumers.”

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

America's Health Insurance Plans' letter is at http://src.bna.com/m5U.CMS's market stabilization proposed rule (RIN 0938-AT14) is at https://www.gpo.gov/fdsys/pkg/FR-2017-02-17/pdf/2017-03027.pdf. Comments on the proposed rule are at http://src.bna.com/m6w. The Congressional Budget Office's cost estimate of the American Health Care Act is at https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/americanhealthcareact.pdf. Oliver Wyman's Analysis of SEP Enrollment in ACA Nongroup Market, sponsored by AHIP and the BCBSA, is at https://www.ahip.org/Wyman-SEP-Enrollment/. S&P Global Ratings' report, The ACA Individual Market: 2016 Will Be Better Than 2015, But Achieving Target Profitability Will Take Longer, is at http://src.bna.com/kZ1. The Blue Cross Blue Shield Association's comment letter is at http://src.bna.com/m8g. Families USA's comment letter is at http://src.bna.com/m8G. The Families USA analysis of the proposed rule is at http://familiesusa.org/blog/2017/02/president-trump-proposed-aca-changes-favor-health-insurers-consumer-expense. The Feb. 17 CMS bulletin is at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Revised-2017-filing-timeline-bulletin-2-17-17.pdf. The NAIC's comment letter is at http://src.bna.com/m8L.

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