Although the Affordable Care Act (ACA) is referred to as
Obamacare, it may not be long before the reference changes to
Trumpcare since the President has begun to put his fingerprints on
the ACA. The process began on the first day of the Trump
Administration when the President issued an executive order
directing implementing federal departments and agencies to ease ACA
mandates to the maximum extent permitted by law. The executive
order was issued in an environment where the individual insurance
market was already experiencing destabilization due to uncertainty
generated by intense ACA repeal rhetoric from the Republican
Congress and President. Indeed, since the release of the order,
Humana has exited the state health insurance exchanges.
In an attempt to stabilize the exchange market, the Centers for
Medicare & Medicaid Services (CMS) recently released a proposed rule to address health
insurers' market jitters. The primary concern of health
insurers is the difficulty of attracting and retaining healthy
consumers necessary to provide a stable risk pool to support stable
rates. To improve the risk pool and promote premium stability, the
proposed rule delineates several initiatives to increase the
incentives for individuals to maintain enrollment in health
coverage and decrease the incentives for them to enroll only after
they discover they require healthcare services.
The key proposals are: first, shortening the open enrollment period
for health insurance by one-half. The current enrollment period of
November 1 to January 31 would change to November 1 to December 15.
It is anticipated that this change would improve the risk pool
because it would reduce opportunities for adverse selection by
those who learn they will need health services in late December and
January. The shorter enrollment period would also encourage
healthier individuals who might have previously enrolled in
partial-year coverage after December 15 to instead enroll in
coverage for the full year.
Second, to address potential abuses of special enrollment periods
outside the standard enrollment season (designed for special
circumstances like the birth of a child, marriage, or loss of
employer-sponsored coverage) where individuals purchase coverage
after they realize they need services, the proposed rule would
increase requirements for pre-enrollment documentation and
verification of eligibility for all categories of special
enrollment periods.
Third, the proposed rule would allow health insurers to apply a
premium payment to an individual's past debt if the individual
enrolled in coverage from the same insurer within the prior 12
months. An individual terminated from a health plan due to
nonpayment of premium could not obtain new coverage without
settling the prior debt. This proposal is designed to remove the
economic incentives that individuals may have to pay premiums only
when they need healthcare services. In addition, it is hoped that
this proposal will encourage individuals to maintain continuous
coverage throughout the year and prevent gaming the system.
Fourth, with regard to levels of coverage (bronze, silver, gold,
and platinum), the proposed rule would allow insurers greater
flexibility in designing new health plans and provide additional
options to keep cost sharing the same from year to year.
Fifth, the proposed rule would give oversight responsibility to the
states to determine the adequacy of doctor and hospital networks.
This proposal is designed to reduce administrative costs for
insurers resulting from the current regulatory burden.
It is anyone's guess as to whether the proposed rule will
stabilize the current tentative health market. However, the
proposed rule goes about as far as it can in changing market
attributes without Congressional enactment of a holistic
replacement plan.
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