The Centers for Medicare and Medicaid Services (CMS) issued a proposed rule with reforms it says “are critical to stabilizing the individual and small group health insurance markets to help protect patients.”
We reported two weeks ago that the Trump administration had submitted a rule intended to stabilize the markets, but details were not then available. We followed up last week with news of two preliminary drafts of the rule.
The proposed rule includes the following changes:
Shortening the open enrollment period (from three months to six weeks)
Requiring additional documentation for individuals who use HealthCare.gov to enroll for the first time when outside the open enrollment period
Lowering the amount of guaranteed coverage for some Silver plans
Giving insurers more time to change their plans for 2018 before they are finalized
Allowing insurers to collect premiums for prior unpaid coverage before enrolling individuals in a subsequent year’s plan offered by the same insurer (to avoid lapses in coverage)
- Deferring to states’ reviews of qualified health plans with regard to provider networks
With regard to reducing the amount of guaranteed coverage in some plans, the Federal Registry contends that giving insurers additional flexibility could help stabilize premiums and increase issuer participation, which “in the longer run … [could] ultimately provide some offsetting benefit to customers.”
The proposed rule does not include changes that must be made through the legislative process, such as those pertaining to the ACA’s income-based subsidies. Public comments will be accepted until March 7.
Separately, the Internal Revenue Service said it would continue to accept tax returns for processing even if taxpayers have not indicated their insurance coverage status. While the agency noted that this does not excuse taxpayers from following the law or paying what they owe, the decision aligns with the executive order signed last month that gives federal agencies leeway in enforcing certain aspects of the ACA—in this case, the individual mandate penalty. Before the executive order was signed, the IRS had planned to start automatically rejecting returns this year that were missing this information, also referred to as “silent” returns.
Our Take: We can’t help but notice that three of the six changes in the rule are punitive to consumers, or at the least, will make it harder to enroll. The other three are favorable to insurers (which might be a good thing if it keeps them engaged in the exchanges.)
The IRS enforcement—or lack thereof—is an effort to weaken the mandate. We’ve argued on several occasions why this is a bad idea, if any elements of the ACA are to be retained.
Taken in combination with the Ryan plan (below), which focuses on tax credits and health savings accounts (HSAs), it’s clear that the Trump administration and Republicans in Congress aren’t interested in providing health care for all Americans. And certainly they aren’t concerned with middle to lower-middle income voters, because the benefits of tax credits and HSAs won’t accrue to them. Their goal is to ensure that Americans have access to health care services, not provide a vehicle for universal coverage, like Medicare.
The fact that this is their goal is fine; it stems from a different paradigm than the Democrats in Congress. The result, however, is that many Americans not covered through their employers (or through Medicare, Medicaid, or other government program) will lose their health insurance. Assuming that the Medicaid expansion money will go away, states that expanded will be forced to return to pre-ACA eligibility requirements.
If that’s the case, we can expect a rise in emergency department use and uncompensated care, which puts us back to where we were in 2008. This is what is making hospital and health systems executives nervous.
A simpler fix would be to pay the risk corridor payments they have been holding out on and promise not to pull their budgetary shenanigans again through legislation. In turn, that would encourage insurers to return to the exchanges, increase competition and reduce premiums paid by consumers. This would be consistent with their philosophy of focusing on access to health care rather than trying to reach universal coverage.
Wait. That’s Obamacare. [sigh]