New ACA Marketplace Rules, Good for Insurance Companies Bad for Consumers

On April 13, 2017 the Department of Health and Human Services released its final “marketplace stabilization” rule. (You may remember that we blogged about the proposed rules when they were released in February.) Regardless of that title, the Marketplace showed signs of stabilization in 2016 under current law. The administration could have capitalized on that progress but instead these rules just fulfill the wish list of insurers, but come at a high price for consumers.
Overall, the rules will make enrollment more difficult, premiums and out-of-pocket costs more expensive, and health insurance networks less adequate; none of which keeps the promises of the administration of better, cheaper, healthcare for everyone. Furthermore, many of the changes could worsen market stability by making it harder for younger, healthier people to enroll in coverage.
Below is a short summary of some of the major provisions of the rule:

  • Further hurting consumers who lose coverage when they can’t make ends meet – The rule will allow insurers to deny coverage to individuals reenrolling in a plan until they have paid back any outstanding debt from the previous year, and will let insurers apply premium payments for current coverage to old debt first. Anecdotal evidence from enrollment assisters suggests that sometimes consumers are erroneously charged premiums when switching from one plan to another. This “debt” can be difficult to correct. Furthermore, this provision essentially locks anyone out of the Marketplace if they fall behind in their payments and can’t catch up, especially in areas where there is only one insurer.
  • Less time to enroll – The rule shortens the 2018 enrollment period by a month and a half to Nov. 1 – Dec. 15. This was shortening was originally planned to occur for the 2019 Open Enrollment. While there has always been some confusion from consumers about the multiple deadlines during open enrollment, shortening the enrollment window may make it less likely that young and healthy people who are less motivated to get coverage will sign up.
  • Making enrollment harder for people with changing circumstances – In response to insurer allegations that consumers use special enrollment periods to get coverage once they get sick, the Obama administration started requiring verification after enrollment for certain Special Enrollment Periods (SEPs) and then auditing some applications on the backend. The new rules will require verification for all SEPs before the person can enroll in coverage. In addition, the rule requires a person to have been previously enrolled in coverage to be eligible for an SEP for marriage and a permanent move. The idea behind these rules is to limit sick people from enrolling outside of open enrollment, but creating administrative hurdles also reduces the likelihood younger healthier people will enroll.
  • Increasing consumers’ out-of-pocket costs – Since the beginning of the ACA, it was recognized that it can be difficult for insurers to hit an exact target on the percent of service that a plan covers (a.k.a the actuarial value). So when an insurer is required to cover 70 percent of services in all silver level plans it really means they can cover 70 percent of services plus or minus 2 percent, giving them a the sort of margin of error. However, under the new rules the margin of error can go as low as 4 percent. Two additional percentage points may not seem like a lot, but it can have a big impact on consumers by increasing their out-of-pocket cost (however, people getting additional help paying out-of-pocket costs will still get that help). The rule also has the seemingly unintended consequence of lowering the buying power of subsidies, meaning it could increase the cost of premiums for many of the 84 percent of people who purchase coverage with subsidies. Read more details and see examples here.
  • Reducing access to Essential Community Providers (ECP) – The rule reduces the requirement for plans to include ECPs in their networks. ECPs are defined as providers that serve predominantly low-income, medically underserved individuals. This includes: Federally Qualified Health Centers (FQHCs), Ryan White HIV/AIDS Program Providers, Family Planning Providers, Indian Health Providers, Hospitals, and a variety of others. Currently 30 percent of ECPs in an area must be included or the insurer has to provide a written narrative explanation. The rule would reduce this requirement to 20 percent.

While much of the country has their eyes on congressional efforts to repeal the Affordable Care Act it will be important to stay vigilant both towards legislative changes and administrative changes such as these rules in order to safeguard the consumer protections and historic coverage gains we have experienced since the ACA’s implementation.

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