Much like The 3 Stooges or Abbott & Costello in the famous Niagara Falls sketch, unravelling the ACA (Affordable Care Act also known as ObamaCare) is following this path: “Slowly I turn, step by step, inch by inch…” Although the Republicans voted no less than 60 times to simply repeal the ACA, the reality is that it’s just not that simple. Just like “Niagara Falls” triggers a visceral reaction in the sketch, the ACA is the bane of the Republican Party.
The Executive order signed by President Trump on 1/20/2017 was the first step toward repealing this law. But it is not that simple. In fact, there are many pieces to the legislation that are inter-related and have major impacts on millions of people. This means that the dismantling must be done slowly to make sure the entire house does not fall down.
On Feb. 15th regulations were proposed by HHS (Health & Human Services) to attempt to protect the individual health insurance markets and “reduce the economic burdens” of the Act as directed by the President.
It’s important to understand that we separate the group and individual insurance markets because they are different animals. The group market primarily refers to insurance that is sponsored by an employer. It is further divided by size: small and large. The individual market insures just that: individual consumers who have no employer-employee relationship and are simply purchasing insurance for themselves and perhaps their immediate family members.
Under the ACA there were many attractive features for consumers. The plans were “guaranteed issue” so one could not be turned down for coverage, regardless of their medical history. There was no pre-existing condition limitation that would reduce or deny benefits for a medical condition for which the person had been treated in the past.
The problem for insurance companies was that opening this floodgate allowed many people into the market who had a pent up demand for services. Once insured, this increased utilization cost insurance companies a lot of money and they passed that back to consumers in the form of rate increases.
Some argue that the ACA required the policies to be too comprehensive and this too drove up claim costs. The 90 day grace period allowed to Exchange policyholders further cost insurers because they had to pay claims, yet in many cases the insured had not paid the premiums-any maybe never would. Physicians and other providers have complained that those with high deductibles and coinsurance never make their copayments.
Insurers have complained that it was too easy to go in and out of the insurance market. Not enough documentation was required to prove eligibility for Special Enrollment periods. They say this increased costs.
As of this writing we expect no major changes in the individual market for 2017.
The proposed regulations attempt to address these issues by making the following changes for 2018.
- To be eligible for Special Enrollment complete and verifiable supporting documentation will be required before the individual is insured.
- Limits will be place on the ability to change coverage levels during the year. So rather than being able to have a bronze plan, get married and change to a gold plan in anticipation of childbirth or other large claims events, the options would be limited. Further in the event of marriage at least one spouse would have had to have been insured in the 60 days prior to the marriage date.
- The open enrollment period would be 11/1 to 12/15 rather than to 1/31. This would coincide with the group market and the Medicare Part D Rx period. This was set to begin for 2019, but will now be moved up a year. (If your spouse is an insurance agent, do not plan to see them at all during this time!)
- Allow insurers to collect back premium within the past year before re-enrolling individuals whose coverage had been terminated for nonpayment of premiums
- Allow insurers to provide more options with lesser coverage than currently required by the “metal” plans (Bronze- 60%, Silver-70%, Gold-80% & Platinum-90%). I expect to see plans that only pay 50%, have split deductibles and perhaps hospital only coverage again with higher out of pocket limits.
- Apply more aggressive enforcement of network adequacy so consumers would have access to high-quality care networks.
- Revise the timeline for insurers to submit 2018 plans. Typically these are due in spring of 2017.
Do you have ideas on who this could be improved? Now is your chance! Comments are due by 3/7/2017 at https://www.federalregister.gov/documents/2017/02/17/2017-03027/patient-protection-and-affordable-care-act-market-stabilization#open-comment.