HHS finalizes industry-friendly rules to help stabilize insurance markets

President Donald Trump with Health and Human Services Secretary Tom Price in the White House Oval Office last month. On Thursday, HHS finalized new rules designed to stabilize Obamacare insurance marketplaces. Critics say the rules favor insurers and weaken consumer protections.
President Donald Trump with Health and Human Services Secretary Tom Price in the White House Oval Office last month. On Thursday, HHS finalized new rules designed to stabilize Obamacare insurance marketplaces. Critics say the rules favor insurers and weaken consumer protections. AP file

Moving in seemingly contradictory directions, the Trump administration on Thursday finalized new rules designed to bolster marketplace insurers and promote stability in the individual insurance market. At the same time, President Donald Trump is threatening to destabilize those insurers by withholding from them about $7 billion in federal reimbursements as a way to force Democrats to begin negotiating the repeal of the Affordable Care Act.

The unusual ploy has caused concern among insurers, hospitals and other groups, who say individual premiums could rise nearly 20 percent and insurers might exit the marketplace if they don’t get the money. The funds provide subsidies to help low-income plan members cut their out-of-pocket costs.

“Obamacare is dead next month if it doesn’t get that money,” Trump said in an interview with The Wall Street Journal. “I haven’t made my viewpoint clear yet. I don’t want people to get hurt. . . . What I think should happen and will happen is the Democrats will start calling me and negotiating.”

House Democratic Caucus Chairman Joe Crowley of New York on Thursday denounced Trump’s tactic as “political blackmail.”

“The health of the American people is far more important than the political games the president is playing,” Crowley said in a statement. “Withholding these payments is a blatant attempt to undermine the Affordable Care Act and manufacture a crisis. This is not leadership.”

House Democratic Whip Steny Hoyer of Maryland said in a statement that Trump “must stop trying to sabotage the Affordable Care Act and instead commit to continuing (the) subsidy payments, or else the American people will know who to blame when their health care is harmed.”

Republican-led efforts to repeal and replace Obamacare collapsed earlier this month. Congress is on a recess and does not return until April 24.

The new insurance rules, which critics claim favor insurers while weakening consumer protections in the ACA, are designed to help steady the nation’s troubled individual insurance marketplaces, where consumers can shop for coverage.

But “they are not a long-term cure for the problems that the Affordable Care Act has created in our health care system,” said a statement from Seema Verma, administrator of HHS’ Centers for Medicare & Medicaid Services.

Cara Kelly, a vice president at consulting firm Avalere Health, agreed. “While CMS has taken steps to correct some of the current challenges in the marketplace, these changes likely are not significant enough to sway health plan decisions for the upcoming plan year,” Kelly said in a statement. “Losing health plans from the exchanges is still a risk for 2018.”

The health insurance exchanges have struggled to attract enough young healthy consumers to offset the cost of sicker, older plan members.

This year, the number of insurers selling coverage on fell 28 percent, from 232 to 167. Only one company is offering marketplace health plans this year in Alaska, Alabama, Oklahoma, South Carolina and Wyoming.

In states that use the marketplace, premiums for some silver plans, which cover no less than 70 percent of medical costs, jumped an average of 25 percent this year, mainly because insurers had underpriced their coverage in 2015 and 2016.

Even with the higher rates this year, 72 percent of marketplace consumers can get coverage for $75 or less per month after applying tax credits, the federal government reports. And 77 percent can find plans for $100 a month or less.

While competition and choice are lacking in some markets across the country, on average marketplace consumers have 30 plans to choose from, the federal government reports.

Critics say the Trump administration’s policies and actions have also helped destabilize the markets.

Insurers fear Trump’s refusal to enforce the ACA’s individual mandate, which subjects most people to a fine if they don’t purchase health insurance, will ultimately cause millions to simply drop their coverage. Experts say that healthy people, whom the administration wants to buy more coverage, would be the first to abandon theirs if the penalties are not enforced.

Enrollment in the Obamacare insurance marketplaces fell by 500,000 this year to 12.2 million people, amid Republican efforts to repeal the Affordable Care Act and the Trump administration’s efforts to undermine the law.

The new marketplace rules, which a majority of consumers criticized in public comments, take effect in 2018.

They would cut the marketplace enrollment period in half, from three months to 45 days — Nov. 1, 2017, through Dec. 15, 2017 – for coverage beginning Jan. 1, 2018.

The rules would also allow lower minimum coverage requirements for marketplace policies. For example, bronze plans, which now must cover no less than 60 percent of medical costs, will be allowed next year to cover 56 percent to 62 percent. Silver plans, now covering at least 70 percent of costs, could cover 66 to 72 percent next year.

The rules also allow states to determine the adequacy of health plan physician networks, rather than the federal government.

To address insurers’ concerns about people using the special enrollment period – which extends sign-up opportunities for people who lose or must adjust their coverage due to job loss, relocation, childbirth or other qualifying events – to get coverage only after they require medical care, the rules implement a pilot program to widen pre-enrollment screening from half to all applicants in the special enrollment period, beginning in June in all states that use the marketplace.

The administration expects 650,000 people to be subject to the enhanced screening, which the administration estimates will take 12 minutes apiece and cost more than $5.3 million to execute.

The new rules also let insurers apply premium payments to a plan member’s “outstanding debt” from previously unpaid premiums owed to the same insurer. Insurers will be able to withhold new coverage for failure to pay past due premiums, assuming state laws don’t prohibit it.

An estimated 21 percent of individual market plan members stopped premium payments in 2015, and nearly 90 percent purchased new plans in 2016 – about half purchased the same plans they had stopped payments on, the proposal says.