The New Obamacare Rules Help Insurers But Not Consumers

The New Obamacare Rules Help Insurers But Not Consumers

© Mike Blake / Reuters

With the fate of the Republican drive to repeal and replace the Affordable Care Act uncertain at best, the Trump administration on Wednesday unveiled a new set of rules designed to “stabilize” the subsidized government insurance exchanges and stem the exodus of major insurers from the market.

The proposed new rules – among other things – would cut by half the three-month enrollment period currently scheduled for the 2018 insurance season, bringing it more in line with Medicare and private insurance enrollment periods. Insurance companies would be able to collect unpaid premium payments from consumers before issuing new policies.

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Perhaps most importantly, HHS will lower the “de minimis range” used for determining the level of policy coverage ranging from the lowly bronze plan to the top-shelf gold level. With the exception of the silver plan – the most popular category in the program – the new rules would permit insurance companies to offer a lower plan that covers slightly fewer areas of health care and still be certified.

“This proposal will take steps to stabilize the marketplace, provide more flexibility to states, and insurers, and give patients access to more coverage options,” Dr. Patrick Conway, Acting Administrator of the Centers for Medicare and Medicaid Services (CMS), said in a statement. “They will help protect Americans enrolled in the individual and small group health insurance markets while future reforms are being debated.”

The proposed regulations immediately touched off a protest from Democrats and health care advocates who denounced them as another Trump administration salvo against the beleaguered health care system.

“The proposed rule . . . is the latest attempt to sabotage the law and put insurance companies back in charge,” Rep. John Yarmuth of Kentucky, the ranking Democrat on the House Budget Committee, said in a statement. “Once implemented, the rule will reduce coverage, increase out-of-pocket costs, and make it harder for American families to get the health insurance they need.”

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The rules were unveiled by CMS just days after Rep. Tom Price (R-GA) was confirmed as the new secretary of health and human services. That suggests that Trump’s new health care chief will give Obamacare limited resources and attention while the Trump administration struggles to devise a replacement system they can sell to Congress.

The overarching theme of the proposed new CMS rules is to bolster insurers’ leverage in cutting financial losses while limiting consumer’s ability to game the system by exploiting extended enrollment periods and special sign-up exemptions. In some cases, consumers take advantage of those signup periods to drop in and out of health care coverage depending on their medical conditions.

Insurers are looking for ways to attract and keep younger, healthier people who help to create a more balanced “risk pool” of younger and older patients in order to collect more in premiums and hold down their coverage costs.  

The release of the proposed rule changes coincides with health care giant Humana’s announcement on Tuesday that it will drop out of the Obamacare system in 2018 after incurring major losses. Other companies including Aetna, UnitedHealthcare and Blue Cross Blue Shield previously pulled out of some Obamacare markets after losing hundreds of millions of dollars in operating costs.

Related: Are Republicans Losing Momentum on Obamacare Repeal? 

Aetna CEO Mark Bertolini said on Wednesday at a Wall Street Journal program that the Affordable Care Act exchanges had entered “a death spiral” in which soaring premiums have pushed out the healthiest customers, according to Reuters. Bertolini later issued a statement saying that Price and the Trump administration have "taken some good initial steps with the proposed regulation."

But the proposed rules drew sharp rejoinders from health care experts and other critics. Some warned that the new rules – which are subject to public review and comment – could discourage younger, healthier people from enrolling because of the truncated enrollment season. They also said the rules could reduce financial assistance for low and moderate-income families while forcing some people into plans with significantly higher deductibles.

Ron Pollack, executive director of Families USA, said in a statement, “Very significantly, the Administration has completely reneged on its promise to lower deductibles. Instead, they are increasing cost-sharing and cutting back financial assistance for coverage.”