The Future of the Affordable Care Act under President Trump: Stakeholders Respond to Proposed 2019 Marketplace Rule. Part II: Consumer Advocates

While 2018 has only just begun, it’s already time for health insurance stakeholders to look ahead to 2019. Last October, the Department of Health and Human Services (HHS) released annual proposed rules to make changes to the Affordable Care Act’s (ACA) marketplaces for the 2019 plan year. This is the first Notice of Benefit and Payment Parameters issued by the Trump administration, and after a 30-day comment period, over 400 individuals and organizations responded to the proposal.

The final rule has just been submitted to the White House for review, and is expected to drop at any moment. In an effort to evaluate the potential impact of HHS’ proposals, CHIR reviewed a sample of stakeholder comments, including those submitted by insurers, consumer advocates, and state exchanges and insurance departments. Last month, we summarized comments from a selection of insurers. For this next blog in the series, we will look at a sample of comments from consumer advocacy groups:

American Association of Retired Persons (AARP)

American Cancer Society Cancer Action Network (ACS-CAN)

Center on Budget and Policy Priorities (CBPP)

Community Catalyst

Families USA

National Health Law Program (NHeLP)

National Partnership for Women & Families

Young Invincibles

As expected, consumer advocates challenged a number of provisions in the proposed rule, but some of HHS’ proposals received their support. All in all, groups in our sample put up a largely united front: the parallels between comments, written from a variety of consumer advocacy perspectives, indicate the widespread impact that the proposals would have on consumers. A selection of the rule’s provisions, and consumer advocates’ responses, are summarized below.

Reducing Oversight of Qualified Health Plans

In the proposed rule, HHS relaxed a handful of requirements for Qualified Health Plan (QHP) certification, continuing a trend towards scaling back federal plan oversight. One proposal would expand on their 2017 rule giving greater authority to states to conduct network adequacy evaluations. Every consumer advocate in our sample voiced concerns that this state flexibility would come at the cost of inadequate consumer protections. ACS-CAN and AARP both noted that many states lack metrics to accurately evaluate network adequacy. While Young Invincibles supported the federal government deferring to state oversight, they maintained that a federal floor is crucial to protecting consumers.

Eligibility for Financial Assistance

The vast majority of marketplace enrollees receive federal financial assistance in the form of Advanced Premium Tax Credits (APTCs). In the new rule, HHS has proposed various changes to eligibility rules for consumers receiving these tax credits. A number of comments from consumer advocates focused on these changes.

Notice of Failure to Reconcile

In order to receive financial assistance, consumers must file a tax return for every year they receive APTCs to reconcile the tax credits, or risk losing them in future years. Currently, the administration is required to provide recipients direct notice of this risk if they fail file a return. Rather than sending a separate notice, HHS has proposed including this warning with a general notification about open enrollment.

Several consumer advocates spoke out against this provision. Many organizations, including NHeLP and Young Invincibles, noted that such a change would violate due process protections by failing to provide adequate notice to recipients. Community Catalyst voiced concern that including the warning in the general open enrollment notification, sent to the “household contact” for the HealthCare.gov application, fails to take into account complex household dynamics that could prevent the recipient from receiving adequate notice. The CBPP questioned why HHS, which seeks to encourage consumers to take “appropriate action” to reconcile their APTCs, would propose this “more confusing practice.”

Verification Process

APTC recipients are required to disclose their projected income for the year, and that amount is verified by electronic data sources. The current system requires recipients to provide documentation if their attested income is lower than these sources indicate, but not if their attested income is higher. In the new rule, HHS has proposed adding a documentation requirement for individuals who attest that their income is above the Federal Poverty Level (FPL) if electronic data sources report their income as below the FPL.

This provision drew fire from consumer advocates for placing undue burden on both consumers and exchanges. Community Catalyst described the “immense administrative burden” the proposed rule would have on both individuals and exchanges, while Young Invincibles argued that the proposal unfairly targets low-income consumers. NHeLP and Families USA also noted that many low-income individuals are self-employed or paid on an hourly basis, making it difficult for them to both predict their annual income and procure documentation.

Additional Opportunities for Special Enrollment Periods

Despite unanimous objections to many of HHS’ proposals, consumer advocates in our sample voiced support for some of the proposed changes to Special Enrollment Periods (SEPs). SEPs allow consumers to sign up for coverage outside of the annual open enrollment period if they experience a qualifying life event. While previous rules from this administration created barriers to consumers seeking a SEP, some of the HHS proposals expand access to these enrollment opportunities. A number of organizations applauded the provision that would waive the prior coverage requirement for certain SEPs if the individual lived in a services area without any QHPs. While no states had “bare counties” in 2018, organizations such as AARP and NHeLP endorsed this proposal as a necessary consumer protection. Many of the organizations also favored HHS’ proposal to create a loss of coverage SEP for women losing pregnancy-related coverage through the Children’s Health Insurance Program (CHIP).

Essential Health Benefits

Many of the comments in our sample spent ample time discussing proposed changes to the Essential Health Benefits (EHB); NHeLP dedicated more than 11 pages of their 28-page comment to the EHB provisions alone. All of the organizations unanimously opposed the changes; some also challenged the legality of some of the proposals.

Selecting a Benchmark Plan

The Obama administration gave states some flexibility to flesh out the ten EHB categories set forth by the ACA, allowing them to choose between a selection of active plans in the state as a “benchmark” for plan design. In this rule, HHS has proposed three new options for benchmark selection: (1) use another state’s benchmark plan; (2) replace one or more benefit categories with those of another state’s benchmark plan; (3) create an entirely new benchmark plan.

Consumer advocates expressed concern that these changes would significantly weaken the benchmark standard, ultimately harming individuals who rely on these essential health services. NHeLP argued that delegating so much power to states to define the EHB, such as allowing the creation of an entirely new benchmark plan, violates the statutory obligations of the HHS Secretary. The National Partnership for Women & Families noted the importance of the EHB for women, and lamented the proposal’s potential to chip away at maternity coverage. Some organizations, such as ACS-CAN and Families USA also mentioned that the ACA’s maximum out-of-pocket cap and the ban on annual and lifetime limits are tied to the EHB, and argued that diminishing the benchmark standard would significantly increase costs for consumers, including those on employer plans.

Substitution of Benefits

In addition to proposing changes to the EHB benchmark selection process, HHS has proposed relaxing EHB standards by allowing benefit substitutions both within and between categories. Current federal rules permit substitutions within categories, if they are actuarially equivalent. This proposal would also allow insurers to effectively counter-balance categories with weaker coverage by augmenting others.

Quite a few consumer advocates spoke out against this provision, pointing to dangers of cherry-picking healthy consumers by diminishing coverage in certain categories. For example, Community Catalyst and the CBPP explained that by expanding a category such as outpatient services, insurers could pare down categories like hospital care or habilitative and rehabilitative services. This practice, they argue, may lead to insurers designing plans that purposefully deter sick consumers by diminishing specific categories.

Redefining the “Typical” Employer Plan

Under the ACA, the scope of the EHB must be equal to coverage offered under a “typical” employer plan. HHS has proposed a new minimalist definition of this standard, stipulating that any large-group, small-group, or self-insured plan with at least 5,000 enrollees qualifies as “typical.”

NHeLP blasted the proposed definition, stating that it failed to account for the ACA-mandated report published by the Department of Labor in 2011, which acts as the basis for the current definition of a typical employer plan. Families USA pointed out that substantial enrollment does not necessarily indicate a typical plan, citing instances prior to the ACA when large franchises provided bare-bones health plans to low-wage employees.

Changes to the Navigator Program

Every consumer advocacy group in our sample objected to HHS’ proposed changes to the Navigator program. If enacted, the new rule would reduce the minimum number of Navigator entities in each state from two to one, and abolish the requirement for exchanges to fund a community and non-profit, consumer-focused group. The CBPP questioned how Navigators will be able to fulfill their legal obligation to “conduct public education activities” and “provide information in a manner that is culturally and linguistically appropriate” without community-oriented Navigators. AARP brought up the particular importance of Navigators’ presence in the individual market, which brokers have avoided due to dwindling commissions. HHS also proposed eliminating the requirement that Navigators have a physical presence in the state. Community Catalyst criticized this provision as exacerbating the already slim pickings for in-person assistance after massive cuts to the program in 2017.

Relaxing Rate Review

The new rule proposes several changes that relax the rate review process. HHS describes these modifications as an attempt to “provide States with greater flexibility in the rate filing process and reduce regulatory burden.” Many consumer advocates, however, objected to the relaxation of rate review standards, expressing concern over diminished transparency and the potential for gaming among carriers.

For example, one provision in the new rule raises the “unreasonable” rate increase threshold from 10 percent to 15 percent, allowing plans to impose higher premium hikes without triggering rate review. AARP warned that this change would weaken rate review and subject consumers to more premium inflation. The CBPP and Community Catalyst emphasized the importance of maintaining consistent regulations, rather than raising thresholds that protect consumers from rate hikes.

Rolling Back Standardized Plan Options

The ACA sought to simplify the health insurance shopping experience. Standardized plans are designed to reduce confusion by offering consumers uniform cost-sharing, allowing for apples-to-apples plan comparison. Research has also shown that standardized plans curb discriminatory benefit design meant to discourage sick consumers from enrolling. Starting in 2017, insurers participating in the federally facilitated marketplace (FFM) were encouraged to offer standardized plans with the incentive of a prominent display on HealthCare.gov. In 2019, HHS has proposed ending the administration’s specification of a standardized option as well as their differential display on HealthCare.gov.

Consumer advocates opposed the termination of standardized plans, citing concerns over confusion and higher cost-sharing. For example, Families USA argued that standardized options encourage insurers to cover more benefits pre-deductible, especially outpatient services. Some also noted that that the consistency in cost-sharing across plans allows consumers to focus on other aspects of coverage, such as provider networks, rather than making difficult trade-offs to save on out-of-pocket costs.

A Note on our Methodology

This blog is intended to provide an overview of comments from a sample of consumer advocacy organizations. Comments were selected to provide a range of perspectives, including disease-specific, age-specific, and gender-oriented organizations as well as groups examining the rule through a legal or policy lens. This is not intended to be a comprehensive catalog of all consumer advocate comments on every proposal in the 2019 NBPP. For more consumer advocacy group and other stakeholder comments, visit https://www.regulations.gov/.

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