This page was last updated on April 17, 2017.
In non-legislative action affecting the fate of the Affordable Care Act (ACA), the Trump Administration finalized rules last week that will affect the individual health insurance market in 2018. The Administration asserts the new rules will help stabilize the ACA marketplaces but many analysts and insurers are skeptical that the rules will achieve that goal.
Among other things, the new rules:
- shorten the open enrollment period for ACA plans
- make it tougher to purchase insurance on the exchanges outside of the open enrollment period
- allow insurers to pay a lower percentage of enrollees’ medical costs (resulting in higher out-of-pocket spending for consumers)
- narrow the grace period for individuals who face difficulty in paying their premiums
- allow health plans to further shrink their networks of covered providers, and scale back the federal role in enforcing network adequacy requirements
Some health experts worry that “the changes the administration is making could actually reduce overall enrollment and discourage healthier, and thus less costly, consumers from signing up.” Moreover, they note that the new rules don’t address the two issues most important to insurers, who are currently deciding whether to participate in the ACA marketplaces for 2018: continued funding for the cost sharing reduction subsidies, and enforcement of the individual mandate. Notably, on April 12, 2017, eight major organizations and associations – representing insurers, doctors, hospitals, and businesses – called on the White House and Congress to continue funding the cost sharing reduction subsidies.
In separate Administration action last week, the Centers for Medicare and Medicaid Services (CMS) also released a letter saying that CMS will no longer review certain health plans to guard against discrimination in their pharmacy benefit design. This is significant because some plans have sought to design their drug benefits (e.g., by putting all HIV medications on the highest cost-sharing tier) to discourage enrollment by people with expensive chronic conditions.
Update below posted on March 29, 2017:
Events continue to move fast on the health front in Washington, DC. On Friday, March 24, Chairman Ryan pulled his ACA “repeal and replace” bill without a vote: it had become clear that the bill wouldn’t pass the House. Initially, Speaker Ryan suggested that this failure marked the end of the current ACA repeal effort, stating that “Obamacare is the law of the land.” The Administration, too, indicated that it would move on to other policy priorities. But signals since then have been mixed, with Congressional leaders and White House officials hinting that maybe they will return to healthcare overhaul efforts after all – taking up either a revised version of the same bill, or a new piece of legislation. HFA will closely follow further legislative developments.
At the same time, we will also watch for ACA-related developments outside of Congress. Here are a few of the key issues we’ll be following:
- What happens to the ACA’s cost-sharing subsidies that help certain lower income beneficiaries with out-of-pocket costs? The validity of federal funding for those subsidies is currently tied up in federal court; an end to that funding could prompt insurers to flee the ACA Exchanges. Will the Trump Administration continue to defend funding for the cost-sharing subsidies? Or will Congress now appropriate money to support the subsidy payments? We expect action on these questions later this spring.
- Will the Administration take steps to stabilize – or undermine – the individual insurance market? For example, will the Administration enforce the ACA’s individual mandate, and will they advertise to boost enrollment during the 2018 open period (the Obama Administration relied on these tools to bring healthier and less expensive customers into the insurance risk pool)?
- The Department of Health and Human Services (HHS), now led by Secretary Price, has broad authority to limit the ACA’s reach by administrative rulemaking. HHS could issue rules, for example, narrowing the scope of “essential health benefits” that health plans have to cover – or authorizing states to implement high-risk pools in an attempt to lower insurance premiums for non-high-cost individuals.
- What will happen to Medicaid expansion under the ACA?
- On the one hand, the failure of the House ACA repeal bill may actually spur some holdout states (Kansas, Georgia, Maine, Virginia, and/or perhaps others) to expand their Medicaid programs, extending coverage to childless low income adults.
- But on the other hand, the Trump Administration has already said it plans to grant states more “flexibility” to adopt restrictive requirements as part of their Medicaid expansion programs. We expect that HHS will allow states to implement work requirements, cost-sharing, lock-out periods for non-payment of premiums, etc., for recipients of expanded Medicaid.
We will continue to update you as these and other events unfold . . . .