Repeal and replace is on-again, off-again, but that doesn’t mean the rules affecting your insurance will stay the same in the meantime.
The Trump administration late Thursday issued a final rule aimed at stabilizing the existing health law’s insurance marketplace that could have rapid, dramatic effects — perhaps as soon as early summer — on people who do not get insurance through work, and buy it on the Affordable Care Act’s exchanges instead.
The final rule upholds much of what was proposed by the administration in February, including a shorter enrollment window, tighter vetting of people who sign up outside of those open periods and efforts to require some consumers to show proof of prior insurance coverage.
The controversial proposal by the Department of Health and Human Services drew letters from nearly 4,000 organizations and individuals during an unusually short, 20-day public comment period that ended in early March. In their comments, consumer advocacy groups decried the proposal, saying it would wreak havoc by making it harder to get coverage. Insurers were generally supportive.
But some specialists in the health law, including Christopher Condeluci of CC Law & Policy in Washington, D.C., saw the initial proposal released in February by HHS as helpful for insurers, though he also thought more adjustments were necessary.
“Does it meet all the carriers’ asks when it comes to what changes are needed? No, I don’t think it goes far enough,” said Condeluci, a former staffer to the Senate Finance Committee who specialized in insurance issues.
Sabrina Corlette, an attorney who studies the individual marketplace for the Center on Health Insurance Reforms at Georgetown University, said the directive could result in fewer healthy enrollees — which insurers also would not like — and doesn’t address some of the biggest concerns for the insurance industry, such as the fate of federal subsidies that help low-income consumers pay deductibles and other out-of-pocket costs.
The Trump administration’s proposal, Corlette said, is “nibbling away at the margins.”
She could not be reached late Thursday for comment on the final version.
Here are four ways the stabilization rule might change the individual health insurance market:
If you owe, you pay first
The final rule, to be published in the Federal Register next week, says consumers who want to sign up for an ACA plan with their same insurer for 2018 would have to repay past-due premiums from the previous 12 months before being granted new coverage. Because Obamacare has allowed a three-month grace period before people who haven’t paid premiums are kicked out of coverage, a consumer’s overdue premiums could tally hundreds of dollars — even more than $1,000.
The proposed change aims to discourage people from gaming the system. Insurers say a person with a bad knee, for example, might enroll and pay just long enough to get an expensive knee replacement, then stop paying premiums.
But wait, consumer groups and the National Association of Insurance Commissioners warned in their comment letters: There might be legitimate reasons people stop paying premiums — billing errors that are not the fault of the consumer, for example, or the loss of a job. By making such a change, the groups argue, the Trump administration violates a key part of the health law that requires insurers to offer coverage to just about everyone who applies.
“Only those who can rapidly come up with a possibly significant sum of money by a given deadline can be guaranteed access to coverage,” wrote Families USA.
Better act quickly
Open enrollment this fall (for 2018 health insurance coverage) would shorten to six weeks, down from three months. While opening day would remain the same — Nov. 1 — the final rule closes the marketplace on Dec. 15 instead of at the end of January. That period “provides sufficient time for consumers to enroll,” the administration has said, and would mean all who sign up would have a full year of coverage starting Jan. 1.
The shorter time period, the administration said, could also reduce the number of people who wait to enroll until after they find out they have a health problem. These late joiners are likely to use more health care than a healthy person their age, insurers and the Trump administration say, and can drive up the cost of insurance to everyone.
Consumer groups argue the Trump plan could backfire, because those who tend to wait until the last minute to sign up are actually often the youngest and healthiest — and they may miss the enrollment window if it is shorter. Additionally, the deadline falls around the holidays, when money and time are often tight, which could have a chilling effect on insurance sign-ups.
Prove you have a reason — and maybe prior coverage
The ACA allows people to sign up outside the open enrollment period for a variety of special reasons, such as moving, losing coverage, getting married or having a child. This provision has always been a sticking point with insurers, who have maintained that too many customers who made a change during the special enrollment period were sicker and costlier than average. In response, the Obama administration tightened some of these requirements last year and announced it would run a pilot program starting this summer to randomly select half of all special enrollment applicants for verification review, holding up the applicant’s insurance coverage until they provide the proper documentation.
Under the new rule, 100 percent of those applications would be required to undergo preapproval verification — beginning in June 2017. Consumers will have to provide documentation proving they qualify for special enrollment before getting coverage. The rule also says that for marriage, at least one member of the couple would have to prove they had health coverage for at least one day in the two months before their nuptials.
Consumer groups are unhappy with the pre-verification idea — and the extra requirement of prior coverage for people who have gotten married. Particularly hard-hit would be couples who were uninsured previously because they could not afford health insurance as singles or could not get it under their state’s Medicaid rules. Additionally, consumer advocates and some regulators say requiring newlyweds to prove prior coverage violates the health law.
Flexibility — or higher deductibles?
The health law uses a complex formula to divide plans into metallic tiers — bronze, silver, gold and platinum — based on an average percentage of a typical year’s health care bills that each level of plan covers. Bronze plans, for example, currently must cover an average of 60 percent of costs, while a silver one is 70 percent. Insurers are allowed wiggle room of plus or minus 2 percent around those averages.
The Trump rule tweaks the formula, allowing insurers to create plans with larger variations around the average. (It exempts certain silver plans for low-income consumers from the change.) So, for example, a bronze plan might cover only 56 percent of costs and silver 66 percent. Insurers say this would allow them to create plans that appeal to more customers, particularly those looking for lower premiums. But critics say the move would increase the size of deductibles.
One big problem in boosting enrollment has been that many potential consumers — particularly younger, healthier ones — say premiums are too high. But adjusting the law in this way could raise deductibles and other cost-sharing requirements, which consumers may dislike even more. While the health law sets a maximum cap per year on such payments, for many people those deductibles are already thousands of dollars annually. Under the proposal, deductibles could increase by more than $1,000 a year, according to an analysis by the consumer advocacy group Families USA.
Kaiser Health News, a nonprofit health newsroom whose stories appear in news outlets nationwide, is an editorially independent part of the Kaiser Family Foundation.
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