Last week, the Centers for Medicare & Medicaid Services finalized the proposed market stabilization rule it introduced with
urgency merely two months ago, as discussed here. The rule
is designed to address the difficulty of attracting and retaining
healthy consumers necessary to provide a stable risk pool to
support affordable rates. To improve the risk pool and promote
premium stability, the rule delineates several initiatives to
increase the incentives for individuals to maintain enrollment in
health coverage and decrease the incentives to enroll only after
they discover they require health services. Given the urgency to
act quickly, the final rule virtually mirrors the proposed
rule.
The final rule provides incentives for healthcare insurers to stay
in the Affordable Care Act (ACA) marketplaces (e.g., permitting
insurers to sell less-generous coverage priced at lower rates, and
providing greater leeway to insurers to design smaller provider
networks). Those measures are expected to enable insurers to
stabilize runaway premiums, thereby incentivizing younger and
healthier individuals to purchase affordable policies. While the
incentives will help insurers offer affordable coverage, the
healthcare industry views them as modest and not likely to
completely solve the market dislocations.
The elephant in the room continues to be the funding of
billions of dollars in ACA cost-sharing reductions, which have been
threatened by a successful Republican-led lawsuit challenging the
validity of the appropriations. That ruling has been stayed pending
an appeal to a higher court. To deal with this more significant
market stabilization threat, a letter was written to President Trump on April
12 by a number of major healthcare industry groups, including
America's Health Insurance Plans and the American Hospital
Association, and joined by the influential U.S. Chamber of
Commerce, imploring the President and Congress to take action to
help stabilize the individual health insurance market by removing
the uncertainty around continued funding for cost sharing
reductions (CSRs). Nearly 60% of all individuals who purchase
coverage in the individual market receive assistance to reduce
deductibles and copayments through CSR payments.
If CSRs are not funded, the group argued that low- and
middle-income consumers will be affected in the following
ways:
1. Coverage options will be eliminated as insurers exit the market
en masse.
2. Premium payments for 2018 and beyond will be at least 15%
higher.
3. Providers will experience more uncompensated care due to fewer
insured people, raising costs for everyone.
Given that healthcare insurers will be making decisions soon on
whether to participate in the ACA marketplaces for 2018, only time
will tell whether the market stabilization initiatives will have
been effective to shore up the market.
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