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 Americas 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.