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Wednesday, February 15, 2017

President Trump's Proposed ACA Changes Favor Health Insurers at Consumers’ Expense

Lydia Mitts

Former Associate Director of Affordability Initiatives

Caitlin Morris

Director of Affordability Initiatives

In its first regulatory act, the Trump Administration has laid the groundwork to ensure that “TrumpCare” will cost consumers drastically more, if they are able to sign up for health insurance at all. This tips the balance in favor of insurers at the expense of consumer protections. 

HHS proposed rules would increase out-of-pocket costs for consumers and erect barriers to getting health coverage through the ACA marketplaces

Today, the Trump Administration announced proposed changes to the individual health insurance market for 2018. The proposed rules, which govern the Affordable Care Act, would increase costs to consumers and make it harder for people to enroll in coverage through the marketplaces.

Billed by the Trump Administration as a rule on “Marketplace Stabilization,” the set of proposed changes are anything but. Combined with the uncertainty caused by Republicans’ intention to repeal the ACA, the proposed changes would only undermine the stability of the individual insurance market and weaken coverage and financial assistance for millions of individuals that rely on the health insurance marketplaces created by the Affordable Care Act (ACA). 

The proposed rule does nothing to blunt the threat of repeal for consumers or improve the long-term stability of the marketplace.

In an effort to suppress meaningful comments from consumer groups and other stakeholders, the Administration has provided only a 21-day comment period, an unprecedented departure from standard comment periods for rules of this significance. 

Here’s how the proposed rule would harm consumers in the marketplace:

  • Weaken cost-sharing requirements for marketplace plans, effectively increasing health insurance deductibles for many: The Administration has proposed to allow insurers to sell marketplace plans with even higher deductibles and cost-sharing at every metal level. Specifically, the rule would reduce the minimum actuarial value of plans in each metal level by 2 percent. While 2 percent doesn’t sound like much, this translates into drastically higher cost-sharing. Looking at silver plans, Families USA did its own analysis of the potential impact of changing a plan from 68 percent actuarial value to a 66 percent actuarial. Looking at two hypothetical plan designs, we found that this proposed policy could easily increase the lowest value silver plans’ deductibles by more than $1,000.

    The administration even admits in the preamble to the rule that this policy change is a bad deal for consumers. The preamble states:

    In the short run, the impact of this proposed change would be to generate a transfer from consumers to insurers. The proposed change in AV could reduce the value of coverage for consumers, which could lead to more consumers facing increases in out-of-pocket expenses, thus increasing their exposure to financial risks associated with high medical costs.

    This policy change amounts to an about face from President Trump’s previous claims that he planned to lower deductibles. 

    The proposed rule would have particularly devastating effects on the amount of financial assistance that more than 8 in 10 lower- and moderate-income people receive to reduce their monthly premiums. Because the amount of people’s assistance is tied to the premium for second-least expensive silver plan in their local market, under this proposal that assistance would very likely be tied to the cost of even lower-value silver plans with higher deductibles and cost-sharing. 

    The end result is that people would end up getting less financial help than they do now. These people would have to pay more in premiums each month in order to avoid seeing their deductibles and other cost-sharing increase drastically.  Either way, their costs would go up. 

  • Shorten the annual window for people to enroll in coverage: The Administration has proposed to cut future open enrollment periods in half, from November 1 to December 15 rather than November 1 to January 31. This would significantly limit the opportunity for people to become aware of their coverage options and enroll in coverage within the given timeframe. This essentially guarantees that fewer people will enroll in coverage. It would also very likely result in the enrollment of fewer healthy people—who are less aware of coverage options but would serve to improve the risk pool for everyone.

  • Create more difficult processes to enroll throughout the year: The Administration has proposed to tighten rules for people enrolling in coverage outside of the open enrollment period. These “special enrollment periods” (SEPs) were designed for people to get coverage when they experience certain life changes, such as losing health coverage or having a child. The proposed rules would require consumers to prove their eligibility for an SEP before they enroll, a change that will create further roadblocks to consumers getting coverage. Fewer than 5 percent of consumers eligible for SEPs actually enroll in coverage, but when SEP rules have been tightened in the past, even fewer people enrolled due to the cumbersome process, particularly young adults who help balance the risk pool and bring down costs for everyone.

  • Tighten rules around grace periods: The Administration has proposed to scale back the ACA provision that provides people who receive financial assistance with a 90-day grace period to pay their premiums. This change would put these individuals at risk of not being able to maintain continuous coverage when they are unable to pay their unpaid premium in full. This can happen easily to people with tight budgets who experience a life emergency. 

  • Eliminate standards for network adequacy: The Administration has proposed to eliminate federal protections to ensure that consumers have access to necessary doctors and hospitals once they enroll in coverage. It also weakens requirements for insurers to include providers in their networks who serve predominantly low-income, medically underserved populations. This change will result in insurance enrollees having to travel farther for care, wait longer for appointments, or forgo care or pay high out-of-network costs due to lack of in-network providers.

  • Seek comments on future ways to erode protections for people with pre-existing conditions: While not proposing any policy changes immediately, the Administration indicates in this rule that it is considering future policies that threaten protections for people with pre-existing conditions. For example, the Administration is seeking comments regarding whether to change policies to allow insurers to once again exclude coverage of pre-existing health conditions if people have a short gap in health coverage (more than 63 days). Not only could this gut nondiscrimination protections, it is a legal overreach that the Administration doesn’t have authority to enact through regulations. They even acknowledge this in the preamble, stating that they “seek input on which policies would effectively do so [promote continuous coverage] consistent with existing legal authorities.”

What Can You Do? 

  • Submit comments during the public comment process. The public comment period is open through March 7. If you’re unable to draft your own comments, Families USA will make template comments available. Stay tuned. 

  • Amplify the message that this rule will harm consumers. If implemented, this rule will have a very real negative impact on consumers’ ability to find and enroll in affordable coverage options. Use the press and social media to help spread the word about the harm these rules pose and put pressure on the Administration not to finalize the rules as proposed.

  • Mobilize your state officials and other stakeholders to tell the Administration that these policies will not stabilize the market as intended. State officials can be effective messengers during a public comment period. Engage with them about the impact of the proposed rule on consumers, share your comments, and encourage them to submit their own.