Tag Archives: Short Term Health Insurance Coverage

Increase in uncompensated hospital care could be one effect of short-term coverage rule

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https://www.healthcarefinancenews.com/news/increase-uncompensated-hospital-care-could-be-one-effect-short-term-coverage-rule?mkt_tok=eyJpIjoiWVdZNE1URmxNREk1T1RsbCIsInQiOiIrbiszc25vVXhkU1NvMkJadnRGTEJhQnNYRDNBcmwyTmFHdnhVem5aS1lZT1wvSkhXYUZqOHNTQTlzZU5iaWtWYjZpN3FydGtadm5Ic1MzMFJwMnFsQWpWWFRZVEdJYkxNM3F4S0QzbHJqSDNSM09iK09tZFZaWTEyWkY0YVIyZGoifQ%3D%3D

Short-term limited duration plans finalized by the Trump Administration on Wednesday could subject patients to catastrophic medical bills and medical bankruptcy, stakeholders told the Departments of Health and Human Services, Labor and Treasury in commenting on the final rule.

Enrollees suffering acute health emergencies, debilitating injuries that lead to permanent disabilities, or the onset of chronic conditions could end up facing financial hardship until they can enroll in an individual or group market plan that provides the coverage they need, according to the final rule.

The rule extends short-term, limited duration coverage from three months to a year, with extensions available for up to three years.

Devastating for hospital ERs

America’s Health Insurance Plans said it was concerned the new plans could catch some consumers unaware and facing high medical expenses when the care they need isn’t covered or exceeds their coverage limits.

Hospitals could be affected by an increase in uncompensated care because the plans are not qualifying health plans mandated to cover the essential benefits of the Affordable Care Act, those commenting on the final rule said.

Stakeholders said the proposed changes could have a devastating impact on hospital emergency rooms, since ERs are required to provide care regardless of coverage status or one’s ability to pay.

“In addition, the lack of coverage of essential health benefits may also lead to an increased reliance on emergency departments as consumers delay or do not seek primary care, exacerbating existing acute and chronic conditions,” the final rule said.

One commenter said this may also lead to increased boarding of mental health patients in emergency departments, where some have an average stay of 18 hours.

If a short-term, limited-duration insurance policy excludes treatment in hospital emergency rooms, there is the possibility that there could be increases in uncompensated care provided by hospitals, according to the departments which issued the rule.

However, there is no reason to believe that all short-term, limited-duration insurance policies will exclude such coverage, the rule said.

In addition, short-term limited duration plans could result in a decrease in uncompensated care if people who otherwise had no insurance become insured.

Many commenters expressed concern that extending the maximum duration of short-term, limited-duration coverage would weaken the single risk pools and destabilize the individual market by syphoning young, healthy individuals from ACA plans. This would leave on the exchanges only those with higher expected health costs and those receiving subsidies in the individual market.

An estimated 70 percent of ACA enrollees receive a subsidy of a premium tax credit.

The departments acknowledge that relatively young, healthy individuals in the middle-class and upper middle-class whose income disqualifies them from obtaining premium tax credits  are more likely to purchase short-term, limited-duration insurance.

“As people choose these plans rather than individual market coverage, this could lead to adverse selection and the worsening of the individual market risk pool,” the rule said.

It could also result in higher premiums for some consumers remaining in the Affordable Care Act market as healthier consumers choose short-term plans and their lower premiums, the rule said.

Individuals who choose to purchase short-term, limited-duration insurance are expected to pay a premium that is approximately half of the average unsubsidized premium in the exchange.

Mixed results

Individual market premiums increased 105 percent from 2013 to 2017, in the 39 states using Healthcare.gov in 2017, while the average monthly premium for the second-lowest cost silver plan for a 27-year-old increased by 37 percent from 2017 to 2018.

Premiums for unsubsidized enrollees in the exchanges are expected to increase by 1 percent in 2019 and by 5 percent in 2028.

In 2019, when the short-term plans go into effect, enrollment in these plans will increase by 600,000. About 100,000 of these consumers will have been previously uninsured.

Enrollment in the ACA exchange in 2019 is expected to decrease by 200,000.

By 2028, enrollment in individual market plans is projected to decrease by 1.3 million, while enrollment in short-term, limited-duration insurance will increase by 1.4 million, according to the final rule.

The net result will be an increase in the total number of people with some type of coverage by 0.1 million in 2020 and by 0.2 million by 2028.

Benefits of short-term plans include increased profits for insurers of these plans and potentially broader access to providers compared to ACA market plans.

Short-term plan shortcomings include high deductibles and cost-sharing requirements.

For example, in Phoenix, Arizona, the out-of-pocket cost-sharing limit for a 40-year-old male can be as high as $30,000 for a 3-month period. Another commenter pointed out that in Georgia, a plan had a 3-month out-of-pocket limit of $10,000, but did not include the deductible of $10,000, resulting in an effective 3-month out-of-pocket maximum of $20,000.

ACA plans also have high premiums and out-of-pocket costs, the rule said. In 2018, deductibles average nearly $6,000 a year for bronze single coverage and more than $12,000 a year for bronze family coverage.

Matt Eyles, president and CEO of America’s Health Insurance Plans said, “Consumers deserve more choices, particularly those who do not qualify for federal subsidies and must pay the full premium.  Consumers should clearly understand what their plan does and does not cover. The new requirement for short term plans to make clearer disclosures to consumers is an important improvement. We also appreciate that the rule affirms the role of states to regulate these plans, including the option to reduce the duration period for short-term coverage.”

 

 

SHORT-TERM HEALTH PLANS ALLOWED UP TO 3 YEARS

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https://www.healthleadersmedia.com/finance/short-term-health-plans-allowed-3-years

A final rule expands access to non-ACA-compliant plans, which the Trump administration has touted as cheaper alternatives to full coverage.

KEY TAKEAWAYS

Only about 200,000 people are expected to exit the ACA exchange market as a result of the final rule.

Gross premiums for marketplace plans are expected to rise 1% next year attributable to this policy change.

The administration notes that ‘these products are not for everyone,’ so buyers should review their options carefully.

Beginning this fall, consumers will be allowed to buy short-term limited-duration health plans renewable for up to three years, the Trump administration announced Wednesday morning with a newly finalized rule.

The policy change expands access to lower-grade coverage options the Obama administration had restricted to three months, without a renewal option, in light of the Affordable Care Act. The looser rules finalized Wednesday allow terms up to 12 months, renewable up to 36 months.

While critics contend the short-term options will pull younger healthier beneficiaries out of ACA-compliant exchange plans, driving up premiums for sicker populations left behind, the administration says any negative effects will be minimal and outweighed by the market benefits of having more options.

James Parker, MBA, a former Anthem executive who serves as director of the Health and Human Services Office of Health Reform and as one of four key senior advisors to HHS Secretary Alex Azar, said the administration doesn’t expect a mass exodus from the ACA exchanges to these short-term options.

“What we do believe, however, is that there will be significant interest in these policies from individuals who today are not in the exchange and, in many cases, have been priced out of coverage as insurance premiums have significantly increased over the past four to five years,” Parker said during a call with reporters Tuesday evening.

Randy Pate, a deputy administrator of the Centers for Medicare & Medicaid Services who oversees individual and small-group markets as director of the Center for Consumer Information and Insurance Oversight, said the administration expects about 600,000 people to enroll in the short-term plans next year as a result of the expanded access. Only an estimated 200,000 will leave the exchange market as a result of the final rule, he said.

This shift is expected to increase gross premiums for marketplace plans by 1% next year, with net premiums decreasing by 6%, Pate said during the call.

  • The wrong direction? When the administration announced its plans earlier this year to expand access to short-term coverage options, American Hospital Association President and CEO Rick Pollack called it “a step in the wrong direction for patients and health care providers.” If consumers are unaware of the limits on their skimpy coverage, it could ultimately drive bad debt for hospitals, he said.
  • Disclosure requirements beefed up: The final rule includes additional language to make sure consumers know what they are buying, Pate said. “We fully recognize these products are not necessarily for everyone, but we do think they will provide an affordable option to many, many people who have been priced out of the current market under the Obamacare regulation,” he said.
  • There’s an opportunity for insurers. As consumers gain interest in their short-term options, insurers will have an opportunity to meet the rising demand. “The impact is going to vary depending on the insurer, whether this is a business they have been in in the past and whether they have been longing to get back into it when consumer interest reached an acceptable level,” Christopher Holt, director of healthcare policy with D.C.-based think tank American Action Forum, told HealthLeaders Media. “There also could be some who see it as a new opportunity to claim a share of the marketplace they’re not reaching.”
  • But insurers have some skepticism. Matt Eyles, president and CEO of America’s Health Insurance Plans, wrote a letter to HHS in April. “We are concerned that substantially expanding access to short-term, limited duration insurance will negatively impact conditions in the individual health insurance market, exacerbating problems with access to affordable comprehensive coverage for all individual market consumers,” Eyles wrote.
  • Trump administration boosters: Beyond simply opening a door to longer short-term plans, the Trump administration has touted these and other non-ACA-compliant options as viable rescue mechanisms for individuals squeezed by rising premiums. Navigators, who have been tasked in past years with helping people sign up for exchange coverage, will now be encouragedto provide information on short-term and association health plans as well.
  • States can block: The final rule released Wednesday addresses the federal government’s definition of short-term limited-duration health insurance, but states retain the authority to impose stricter regulations, Pate said. They can limit or even ban the plans altogether.

While lawmakers seem to have backburnered their aspirations for broad healthcare reform in the near-term, Parker said the administration will continue taking incremental steps to improve affordability of coverage.

 

 

Short-Term Plans Could Bring Long-Term Risks to California’s Individual Market

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Short-Term Plans Could Bring Long-Term Risks to California’s Individual Market

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The Trump administration is considering changes to federal rules regulating short-term, limited-duration insurance (“short-term plans”) that could result in the expansion of these plans in California.

This report, written by Georgetown University’s Center on Health Insurance Reforms, provides an overview of short-term plans and the current market for these plans in California. It explains how changes to federal policy around short-term plans might affect California’s individual health insurance market and describes policies that various states are pursuing in response to these changes.

Key points include:

  • Short-term plans are exempt from the Affordable Care Act’s consumer protections. Insurers can deny coverage based on preexisting conditions, not cover certain services, and limit what they will pay for services. For example, many short-term plans currently available in California do not cover maternity and newborn care, mental health and substance use services, and outpatient prescription drugs. They also limit the total amount that plans will pay per day in the hospital and for particular services, such as surgeon fees, in addition to imposing a maximum the plan will spend toward claims covered by the policy.
  • Short-term plans are rare right now in California, but that could change. There is only one insurer currently selling approved short-term plans in California, and fewer than 10,000 policies in effect across the state. But if the Trump administration changes federal rules, and there is no change in California law, enrollment in short-term plans is likely to grow. Under these conditions, the Urban Institute projects that over 600,000 Californians would enroll in short-term plans in 2019.
  • Enrollment in short-term plans could contribute to destabilizing Covered California and increasing premiums. Short-term plans are likely to siphon off healthier and younger consumers from Covered California, which would increase premiums for those remaining in the ACA-compliant market.
  • States are taking action. Colorado, Massachusetts, Michigan, New Jersey, New York, and Rhode Island have taken steps to ensure that short-term plans don’t destabilize their individual health insurance markets. A bill is currently pending in the California legislature banning short-term plans altogether.

The full report is available under Related Materials below.

Related Materials

Short-Term, Limited-Duration Insurance and Risks to California’s Insurance Market (PDF)

 

Health Care’s New ‘Skinny Plans’: Winners and Losers

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https://www.wsj.com/articles/health-cares-new-skinny-plans-winners-and-losers-1524654000

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Trump’s ‘skinny plans’ offer a cheaper alternative to the Affordable Care Act, but may have far less coverage.

 

New, more-limited health plans may draw consumers away from Affordable Care Act coverage and drive up prices on insurance sold in the health law’s marketplaces. These “skinny” plans offer lower premiums, making them an attractive alternative for young, healthy buyers.

New, more-limited health plans may draw consumers away from Affordable Care Act coverage and drive up prices on insurance sold in the health law’s marketplaces.

These “skinny” plans offer lower premiums, making them an attractive alternative for young, healthy buyers.

‘What The Health?’ It’s Nerd Week

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https://khn.org/news/podcast-khns-what-the-health-its-nerd-week/

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The Trump administration this week issued the rules governing next year’s Affordable Care Act insurance marketplaces, and they make some potentially large changes that could result in higher premiums and fewer benefits.

Meanwhile, states are going different ways in addressing the health insurance markets in their states in response to the federal activity. And House Speaker Paul Ryan announced his retirement — leaving an intellectual void among House Republicans when it comes to health care.

This week’s panelists for KHN’s “What the Health?” are:

  • Julie Rovner of Kaiser Health News
  • Stephanie Armour of The Wall Street Journal
  • Sarah Kliff of Vox.com
  • Paige Winfield Cunningham of The Washington Post

Among the takeaways from this week’s podcast:

  • The federal rules for the ACA’s marketplaces could dramatically alter how state regulators determine what plan benefits must be covered.
  • Those rules also change some conditions allowing people to qualify for exemptions to the requirement to have coverage — and they make those exemptions retroactive to 2017. So, some people who opted not to buy insurance and paid a penalty for 2017 may be able to file for refunds from the government.
  • Insurance companies are concerned about a number of the new provisions, including those that might drive healthy consumers away from the marketplaces and alter how insurers are compensated for having unusually high numbers of expensive customers.
  • An announcement from the White House this week said the administration is hoping to extend the work requirements that some states are seeking for Medicaid to other safety-net programs.
  • California and Maryland are among the states looking at ways to shore up their individual insurance markets in light of the changes being made at the federal level.

 

The politics of ACA rate hikes will be 2016 in reverse

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https://www.axios.com/politics-aca-rate-hikes-2016-in-reverse-63e401ef-03b7-4c11-a2b3-7410e1322c63.html

Protester holds sign saying "ACA Saves Lives"

We are about to see a replay of the 2016 election fight over premium increases, but this time in reverse. Last time, it was the Republicans hammering Democrats for the rate hikes. This time, it will be Democrats accusing Republicans of driving up premiums by sabotaging the Affordable Care Act.

What to watch: It’s going to be a balancing act for the Democrats. They can (and will) score political points by blaming Republicans for the coming premium increases, but another campaign debate about rising premiums could also undermine the ACA by focusing on its continuing problems.

In 2016, fear of rising premiums jumped the individual market, and a majority of Americans came to believe that rising premiums were somehow affecting them when only a small share of the public was impacted. That undermined the ACA and may have affected the election.

This time, Democrats will be on the offensive, buttressed by polling that shows the public sees Republicans and President Trump owning the ACA’s problems. Democrats are sure to call out Republicans and the administration for steps they have taken to undermine the law.

These include:

  • Eliminating the penalty for not buying insurance.
  • Failing to pass stabilization legislation.
  • Developing regulations to allow the sale of short-term policies and the wider sale of association health plans.

Taken together, these actions provide more options for the healthy, but will drive up rates overall.

Reality check: Last year, far more Americans came to believe they were affected by premiums increases than the relatively small number of unsubsidized people in the non-group market who were actually affected.

Our August 2017 tracking poll showed that fully 60% of the American people believed they were negatively affected by the premium increases, when in reality, just a sliver of the public — the unsubsidized people in the individual health insurance market — were actually affected.

The numbers that matter, per Kaiser Family Foundation estimates:

  • Affected: 6.7 million
  • Unaffected: 319 million

No doubt the broader public’s fears about rising premiums fueled cynicism about the ACA. Some political scientists say it contributed to the Republican victory in 2016.  In fact, premiums for most Americans with private coverage have been growing at a 3% clip, a historically moderate level.

The bottom line: As the midterms approach, Republicans’ first impulse may be to attack the law to rev up their base as they have done before. The tradeoff they face is that they now own the ACA in the eyes of the public, including the problem of rising premiums which they will have helped to create.

And Democrats now have a chance to score political points on the ACA for the first time — but the risk is a disproportionate public reaction, much like in 2016, that undermines the law they worked so hard to pass.

 

 

Five Worrisome Trends in Healthcare

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https://www.medpagetoday.com/publichealthpolicy/healthpolicy/72001?xid=fb_o_

healthcare; insurance; drugs; drug companies; Government-run Insurance Program Sure to Backfire | iHaveNet.com

A reckoning is coming, outgoing BlueCross executive says.

A reckoning is coming to American healthcare, said Chester Burrell, outgoing CEO of the CareFirst BlueCross BlueShield health plan, here at the annual meeting of the National Hispanic Medical Association.

Burrell, speaking on Friday, told the audience there are five things physicians should worry about, “because they worry me”:

1. The effects of the recently passed tax bill. “If the full effect of this tax cut is experienced, then the federal debt will go above 100% of GDP [gross domestic product] and will become the highest it’s been since World War II,” said Burrell. That may be OK while the economy is strong, “but we’ve got a huge problem if it ever turns and goes back into recession mode,” he said. “This will stimulate higher interest rates, and higher interest rates will crowd out funding in the federal government for initiatives that are needed,” including those in healthcare.

Burrell noted that 74 million people are currently covered by Medicaid, 60 million by Medicare, and 10 million by the Children’s Health Insurance Program (CHIP), while another 10 million people are getting federally subsidized health insurance through the Affordable Care Act’s (ACA’s) insurance exchanges. “What happens when interest’s demand on federal revenue starts to crowd out future investment in these government programs that provide healthcare for tens of millions of Americans?”

2. The increasing obesity problem. “Thirty percent of the U.S. population is obese; 70% of the total population are either obese or overweight,” said Burrell. “There is an epidemic of diabetes, heart disease, and coronary artery disease coming from those demographics, and Baby Boomers will see these things in full flower in the next 10 years as they move fully into Medicare.”

3. The “congealing” of the U.S. healthcare system. This is occurring in two ways, Burrell said. First, “you’ll see large integrated delivery systems [being] built around academic medical centers — very good quality care [but] 50%-100% more expensive than the community average.”

To see how this affects patients, take a family of four — a 40-year-old dad, 33-year-old mom, and two teenage kids — who are buying a health insurance policy from CareFirst via the ACA exchange, with no subsidy. “The cost for their premium and deductibles, copays, and coinsurance [would be] $33,000,” he said. But if all of the care were provided by academic medical centers? “$60,000,” he said. “What these big systems are doing is consolidating community hospitals and independent physician groups, and creating oligopolies.”

Another way the system is “congealing” is the emergence of specialty practices that are backed by private equity companies, said Burrell. “The largest urology group in our area was bought by a private equity firm. How do they make money? They increase fees. There is not an issue on quality but there is a profound issue on costs.”

4. The undermining of the private healthcare market. “Just recently, we have gotten rid of the individual mandate, and the [cost-sharing reduction] subsidies that were [expected to be] in the omnibus bill … were taken out of the bill,” he said. And state governments are now developing alternatives to the ACA such as short-term duration insurance policies — originally designed to last only 3 months but now being pushed up to a year, with the possibility of renewal — that don’t have to adhere to ACA coverage requirements, said Burrell.

5. The lackluster performance of new payment models. “Despite the innovation fostering under [Center for Medicare & Medicaid Innovation] programs — the whole idea was to create a series of initiatives that might show the wave of the future — ACOs [accountable care organizations] and the like don’t show the promise intended for them, and there is no new model one could say is demonstrably more successful,” he said.

“So beware — there’s a reckoning coming,” Burrell said. “Maybe change occurs only when there is a rip-roaring crisis; we’re coming to it.” Part of the issue is cost: “As carbon dioxide is to global warming, cost is to healthcare. We deal with it every day … We face a future where cutbacks in funding could dramatically affect accessibility of care.”

“Does that mean we move to move single-payer, some major repositioning?” he said. “I don’t know, but in 35 years in this field, I’ve never experienced a time quite like this … Be vigilant, be involved, be committed to serving these populations.”

What The Health? VA Secretary Out, Privatization In?

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https://khn.org/news/podcast-khns-what-the-health-va-secretary-out-privatization-in/

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David Shulkin, the secretary of Veterans Affairs, was fired Wednesday night by President Donald Trump. To replace him, Trump will nominate his White House physician, naval Rear Adm. Ronny Jackson. Shulkin, however, is not going quietly. He took to The New York Times op-ed page to claim he was pushed out by those who want to privatize VA health services for profit.

Meanwhile, two more states, Iowa and Utah, passed legislation that would sidestep some of the requirements of the Affordable Care Act. Iowa wants to allow the sale of health plans that cover fewer benefits — or restrict coverage for people with preexisting health conditions. Utah wants to expand Medicaid to those higher up the income scale — but not as high as prescribed by the ACA.

This week’s panelists for KHN’s “What the Health?” are Julie Rovner of Kaiser Health News, Anna Edney of Bloomberg News, Sarah Kliff of Vox.com and Alice Ollstein of Talking Points Memo.

Among the takeaways from this week’s podcast:

  • If Shulkin is right that the administration is keen on privatizing the VA, would it move to something akin to the Medicaid managed-care systems that many states have set up?
  • Veterans groups haven’t yet shown their cards on whether they think Jackson is a suitable choice to replace Shulkin.
  • Iowa is poised to allow farmers groups to offer health plans that could sidestep some of the consumer protections in the federal Affordable Care Act, such as requiring that preexisting conditions be covered. Tennessee has a program similar to what Iowa is implementing, and some consumer groups have complained it pulls healthy individuals out of the ACA marketplace and drives up premiums for those who remain.
  • Utah’s request for a federal waiver so that it can offer a Medicaid expansion program to people earning up to 100 percent of the federal poverty level — and not the 138 percent included in the ACA — will show whether the Trump administration has a different standard than the Obama administration. Obama officials rejected partial Medicaid expansion requests.
  • Sen. Elizabeth Warren (D-Mass.) introduced a bill that offers provisions to help middle-income customers buying insurance on the ACA marketplace. But it suggests Democrats are still not sure what is the best health care strategy heading into the midterm elections.

 

State Regulation of Coverage Options Outside of the Affordable Care Act: Limiting the Risk to the Individual Market

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http://www.commonwealthfund.org/publications/fund-reports/2018/mar/state-regulation-coverage-options-outside-aca?omnicid=EALERT1377329&mid=henrykotula@yahoo.com

Abstract

  • Issue: Certain forms of individual health coverage are not required to comply with the consumer protections of the Affordable Care Act (ACA). These “alternative coverage arrangements” — including transitional policies, short-term plans, health care sharing ministries, and association health plans — tend to have lower upfront costs and offer far fewer benefits than ACA-compliant insurance. While appealing to some healthy individuals, they are often unattractive, or unavailable, to people in less-than-perfect health. By leveraging their regulatory advantages to enroll healthy individuals, these alternatives to marketplace coverage may contribute to a smaller, sicker, and less stable ACA-compliant market. The Trump administration recently has acted to reduce federal barriers to these arrangements.
  • Goal: To understand how states regulate coverage arrangements that do not comply with the ACA’s individual health insurance market reforms.
  • Methods: Analysis of the applicable laws, regulations, and guidance of the 50 states and the District of Columbia.
  • Findings and Conclusions: No state’s regulatory framework fully protects the individual market from adverse selection by the alternative coverage arrangements studied. However, states have the authority to ensure a level playing field among coverage options to promote market stability.

Background

Recent federal actions have created the potential for instability in the individual health insurance market, through which approximately 18 million Americans currently purchase their health insurance coverage.1 In October 2017, President Trump issued an executive order to encourage the sale of health insurance products that do not comply with the consumer protections of the Affordable Care Act (ACA).2 In December, Congress repealed, effective in 2019, the tax penalty for individuals who can afford to maintain health insurance coverage but decline to do so (the individual mandate penalty).3

Prior to health reform, insurers in the individual market had wide latitude to deny coverage, charge an unaffordable premium, or limit benefits based on a person’s medical history. As a consequence, individual market health insurance routinely proved inadequate for consumers’ health and financial needs and was often inaccessible to those with even minor health problems.4 The ACA established numerous consumer protections designed to make it easier for consumers in the individual market to access affordable, adequate health insurance. The law requires insurers that sell individual health insurance to offer coverage to all individuals regardless of health status, requires coverage of preexisting conditions, and prohibits insurers from charging higher premiums based on a person’s medical history or gender. It also includes limits on cost-sharing and requires insurers to cover a minimum set of essential health benefits, including coverage for mental and behavioral health care, prescription drugs, and maternity services.

For these consumer protections to work as intended and to keep premiums affordable, they need to be paired with policies that encourage a broad and balanced risk pool. To promote continuous enrollment by the sick and healthy alike, the ACA imposes an individual mandate and provides financial assistance to make coverage more affordable for those with lower and moderate incomes. Importantly, the ACA also defines what types of coverage were sufficiently protective for purposes of satisfying the individual mandate. To prevent cherry-picking of individuals who are low health risks, it also requires all individual market insurers to play by the same rules.

In many ways, the ACA’s regulatory approach to the individual market has proven successful. During the most recent open enrollment period, approximately 11.7 million Americans signed up for coverage through the ACA marketplaces (also called exchanges), most of whom are eligible for subsidies to help with the cost of coverage.5 In turn, improved access to comprehensive individual health insurance under the ACA, along with the expansion of Medicaid, has helped to reduce the uninsured rate by a third, as of 2018, and lower consumers’ average out-of-pocket costs.6 And, despite insurers’ continued uncertainty over the possible repeal of the health law and the Trump administration’s approach to implementing the ACA, analysis showed that, on average, states’ individual markets were stabilizing, with some insurers reaching profitability.7

However, challenges remain. In the past two years, the individual market in most states has seen significant increases in premiums, coupled with decreases in the number of participating insurers.8 While the ACA’s premium subsidies insulate many consumers from these price hikes, many millions of consumers are not eligible for subsidies, and those individuals identify the cost of coverage as a significant barrier to care.9 And though marketplace sign-ups remain stable despite federal policy uncertainty and Trump administration actions seen as undermining the ACA, enrollment remains well below early expectations.10

These challenges are interrelated and can be attributed to many factors. Still, the availability of coverage options that are not compliant with the ACA’s rules, as well as confusion over them, likely has played an important contributing role.

Policy Implications

Although states’ approaches to implementing the ACA can sharply differ, the law’s consumer protections operate nationwide, and nearly all states have taken responsibility for enforcing these reforms in their jurisdictions. The insurance exchanges in most states have proven resilient in the face of significant change and uncertainty, with millions of Americans now able to depend on individual health insurance to protect them both medically and financially.

However, maintaining a stable individual market will become more challenging, thanks to an environment in which healthy consumers are not required to maintain insurance and federal regulations are loosened to promote coverage arrangements likely to weaken insurance risk pools and raise premiums. These developments may incline healthy individuals to look increasingly outside the compliant market for coverage, leaving those who remain to face higher costs and fewer plan choices.68

Based on our review of state laws and standards, it appears that no state maintains a regulatory environment that fully protects its individual health insurance market from being undermined by the alternative coverage options we have identified. However, states continue to be the primary regulators of private health insurance. Although the ACA set a federal floor of consumer protections for insurers that operate in the individual market, it did not curtail states’ power to regulate above these minimum standards and to exercise full authority over coverage arrangements that fall outside the scope of federal insurance law.

How We Conducted This Study

This analysis is based on a review of applicable laws, regulations, and guidance enacted or promulgated prior to February 1, 2018, by each of the 50 states and the District of Columbia. This review was supplemented by correspondence with state regulators in 48 states and the District of Columbia.

A number of states have taken steps to limit the availability of non-ACA-compliant products and protect against adverse selection. Massachusetts and New York promptly discontinued transitional coverage and effectively prohibit underwritten short-term policies, while several other states tightly restrict the duration of such plans. Significantly, Massachusetts also has its own individual mandate, requiring state residents to maintain coverage that meets minimum standards.69 Other states have begun to explore enactment of similar policies in anticipation of the federal mandate’s 2019 repeal.

On many fronts, states face a federal regulatory approach to the individual market that is significantly different from what was originally envisioned under the Affordable Care Act. In light of these changed circumstances, there may be value for states in considering regulatory options for protecting their individual insurance markets and their insured beneficiaries from the detrimental effects of non-ACA-compliant policies. The decisions states make will likely have a significant impact on their residents’ access to adequate and affordable coverage and on the stability of their individual health insurance markets.

 

 

What to watch for in the individual health insurance market

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https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-policy/2018/03/08/what-to-watch-for-in-the-individual-health-insurance-market/?utm_campaign=Economic%20Studies&utm_source=hs_email&utm_medium=email&utm_content=61590808

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On Tuesday, March 6, the Brookings Institution’s Hutchins Center on Fiscal and Monetary Policy and the USC-Brookings Schaeffer Initiative for Health Policy co-hosted an event examining where the individual health insurance market is today and where it is heading. The event featured an opening presentation followed by a panel discussion featuring speakers from a variety of perspectives. The discussion examined how the individual market has evolved since the implementation of the main Affordable Care Act (ACA) reforms in 2014, the likely impact of recent policy changes implemented by the Trump Administration and Congress, and how federal policy toward the market might evolve in years to come.

Here are highlights from each of the participants.

Fiedler’s opening presentation: An overview of recent individual market trends and policy changes

The event opened with a presentation by Matthew Fiedler, a fellow at the Brookings Institution’s Center for Health Policy (slides available here). Fiedler started by showing that individual market enrollment grew significantly after implementation of the ACA’s reforms in 2014, but that individual market insurers also incurred significant losses. Those losses set the stage for a pricing correction in 2017, which he estimated returned premiums to a roughly sustainable position.

Fiedler then examined the implications of three significant policy changes under the Trump Administration: the end of cost-sharing reduction payments, the pending repeal of the individual mandate, and the proposed expansion of short-term, limited-duration plans. Fiedler argued that “the market will survive and will find a new equilibrium” because many enrollees in the ACA-compliant individual market are eligible for large subsidies that will make remaining in the market attractive.

Nevertheless, he concluded that repeal of the individual mandate and the expansion of short-term plans, will reduce the number of people covered, increase the number of people with lower-quality coverage, and reduce pooling of risk between healthier and sicker individuals. On the other hand, he argued that the Trump Administration’s decision to end cost-sharing reduction payments will have the unintended consequence of lowering premiums after subsidies for many enrollees and increasing federal spending.

Corlette: Short-term plans pose risks to consumers

A major topic for the panel discussion was the Trump Administration’s proposal to expand the definition of “short-term, limited duration” plans from a plan lasting less than 3 months (with no renewals permitted) to a plan lasting less than 12 months (with renewals permitted). Short-term plans are exempt from a broad range of federal regulatory requirements, including the ban on varying premiums based on health status and the ACA requirement to cover the so-called essential health benefits package.

Panelists noted that broader availability of short-term plans is likely to weaken the market for ACA-compliant plans since many healthier enrollees will migrate into the short-term market. Sabrina Corlette, a research professor at Georgetown University, argued that short-term plans pose significant risks not only to the market for ACA-compliant plans but also to consumers who buy them. These short-term plans are potentially harmful, she argued, because they “walk and talk a lot like traditional comprehensive health insurance” but many consumers will find themselves liable for “thousands of dollars of medical bills because these things simply don’t cover anything.”

Capretta: Recent policy changes are expanding state flexibility in beneficial ways

In discussing various policy changes implemented by the Trump Administration, James C. Capretta, a fellow at the American Enterprise Institute, noted that many of these policy changes have the effect of increasing state flexibility. He argued that state flexibility could help illuminate the path forward for federal policy. “Given the stalemate at the national level, maybe we need a two or three-year period where a lot of states try a couple of different things,” he said. “If some states want to re-impose the individual mandate they can do so. If they want to impose continuous coverage penalties they can do so. They can restrict which plans are sold on the insurance market,” he said.

Patterson: What is the next national goal for health policy?

Panelists discussed their views on next steps for federal policymakers. Kevin Patterson, CEO of Connect for Health Colorado, said that policymakers need “to think about what we are going to challenge ourselves to actually deal with.” Patterson noted that the Affordable Care Act had a national goal of improving access to care. “But what’s the next national goal? Is there one?,” Patterson asked. Patterson identified reducing the underlying cost of care as a potential priority. Patterson noted that the “big bad insurance company” often gets blamed for high premiums, “but a lot of what they have to do is just reflect the cost that they’re seeing in what the provider networks are charging.”

Geraghty: Increasing competition among providers can reduce the cost of care

Following on Patterson’s comment, Geraghty highlighted the importance of increasing competition among health care providers if the goal is to reduce costs. “We as a country have not looked at competition on the delivery side,” he said. Geraghty noted that there were particular challenges in many rural markets.  “If you’re in a rural area and you’ve got one hospital and they bought up the physician groups around them, they now set the market and they set the price,” he explained. Geraghty argued that improvements in communications technology might make it possible to deliver more care remotely, which could facilitate increased competition in many markets with a small number of providers.