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 individuals 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 anyones 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.