- Obamacare’s exchanges are collapsing under the weight of the law’s flawed mandates, regulations, and rules.
- While Congress works on repealing and replacing the law, the Trump administration is taking action to stabilize the health insurance market.
- The changes the administration is making will help shore up the insurance market while the U.S. health system transitions to a better system.
Obamacare has wreaked havoc on the individual and small group health insurance markets. The Obamacare exchanges are in a death spiral, as declining competition and increasing costs have led insurers to exit the exchanges. Consumers in 70 percent of counties now have two or fewer insurers to choose from in the exchanges. The average premium for a benchmark silver plan increased by 25 percent this year in the 39 states using HealthCare.gov. Humana recently announced it will not sell on any exchange in 2018, and other insurers have expressed uncertainty about their future participation.
smoothing the way to better health care
President Trump has assured the American public that he is committed both to repealing Obamacare and ensuring a smooth transition to a better system. As Congress advances the repeal of Obamacare, the Trump administration is already taking action. On February 15, the Department of Health and Human Services released a new rule proposing changes to help stabilize the exchanges and the individual and small group markets:
- Stopping abuse of special enrollment periods. The rule expands the eligibility verification process for special enrollment periods in the states using HealthCare.gov. People who want to enroll outside the annual sign-up period will have to submit supporting documentation. This will curb some of the abuses occurring with SEPs and encourage people to get insurance for the full year. People who can prove they are eligible for a SEP will be able to get coverage.
- Allowing issuers to collect unpaid premiums. The rule would allow insurers to collect unpaid premiums from an enrollee for the prior year before enrolling that person in a plan the next year with the same issuer. This will block another way some people have been gaming the system and will encourage continuous coverage.
- Determining the level of coverage. The rule increases how much a plan’s “actuarial value” can vary from the coverage limits of its metal level. For example, bronze plans pay 60 percent of medical costs. Previous rules allowed plans to vary by plus or minus 2 percentage points: 58 to 62 percent for bronze plans. This rule allows variation of minus 4 to plus 2 percentage points for all metal levels except certain silver plans. The change will provide issuers more flexibility in designing plans and setting cost-sharing levels.
- Deferring to states on network adequacy. To make sure that services are available to enrollees without excessive delay, the law requires issuers to maintain a provider network that is sufficient in number and types of providers. Rather than having the federal government verify this, the rule proposes to once again rely on states to review the adequacy of plans’ networks.
- Shortening the exchange open enrollment period. The rule shortens the open enrollment period for 2018, from three months to a month and a half. This will help align the exchanges with the open enrollment periods generally used in employer-sponsored insurance and Medicare.
In addition to the new proposed rule, on February 23 HHS issued guidance allowing plans that don’t comply with Obamacare’s rules – called “grandmothered plans” – to continue for an extra year, through the end of 2018. This will prevent American families from losing their current plan.
These are the first of many steps by the administration to reverse some of Obamacare’s most damaging effects. They show that the administration is serious about making a smooth transition from repeal to replace, and the insurance industry has hailed the improvements. At a White House meeting on February 27, one executive told the president: “We were thrilled with the initial steps to stabilize the market. We look forward to working with you, Vice President Pence, [and] Secretary Price in making sure that we have a sustainable program for years to come.”