The open enrollment period for 2018 is coming to an end in a few remaining states. While 2018 coverage is just starting for millions of people enrolled in the Affordable Care Act (ACA) marketplaces, the federal rules for 2019 plans are being finalized. The Department of Health and Human Services (HHS) issued proposed rules in October to govern the 2019 marketplaces. The Notice of Benefit and Payment Parameters is issued each year. The first of such rules issued by the Trump Administration is now under review by the White House and could be published at any moment.
Over 400 individuals and organizations submitted comments in response to the proposed regulation. As part of our research to understand the potential effects of policy changes, CHIR reviewed a sample of stakeholder comments. Our previous analyses summarized comments by insurers and consumer advocates. For this final blog in the series, we summarize a sample of comments from state departments of insurance (DOIs) and state-based marketplaces (SBMs):
Departments of Insurance:
State-Based Marketplaces:
Risk Adjustment – Ability of States to Limit Insurer Payments
The risk adjustment formula is designed to redistribute funds from plans that attract a lower risk profile to plans that attract a higher risk profile and therefore experience more expensive claims. The aim of the risk adjustment program is to reduce cherry picking by insurers through benefit design and other activities. The rule proposes changes that will give more flexibility to states to tailor the risk adjustment methodology for the small-group market.
States generally supported the flexibility proposed. Alaska commented that the state can use the flexibility to protect smaller, regional insurers and provide support if new insurers join the market. New Mexico also commented that states should be able to request flexibility to the risk adjustment formulas from CMS at future times.
Rate Review: New “Unreasonable” Increase Threshold
HHS automatically reviews premium rates that are above a 10 percent threshold in states that do not perform their own rate review. The proposed rule would increase the threshold to 15 percent.
The states in our sample were split on whether they support or oppose the higher proposed threshold, with many states silent on the issue. Alaska and Idaho both support the proposed change to 15 percent, as well as a proposal to allow states to have a different rate review timeline for plans only offered off-exchange. However, the New York and California DOIs noted that large rate increases create a burden to consumers, while the Washington SBM noted that it could adversely impact consumers in states with DOIs not as active as Washington’s on rate review.
Navigator Program Standards
The Navigator program provides in-person assistance to consumers enrolling in coverage through the health insurance marketplaces. The rule proposed removing two requirements of the program: that a navigator have a physical presence in the state and that each state have at least two navigators, one of which must be a community- or consumer-oriented non-profit.
None of the states in our sample supported the removal of the requirement that navigators have an in-state presence. Three SBMs, the District of Columbia, Vermont, and Washington, oppose the change noting the importance of maintaining a connection to the community and performing in-person assistance. D.C.’s marketplace wrote that their navigators have good relationships with brokers that further encourages enrollment. Alaska’s DOI observed that the unique circumstances of geography and cultural diversity in their state requires an in-person presence for navigator entities.
The Vermont SBM was the only state in our sample that supported reducing the requirement to only one navigator, due to limited funding available for the state’s navigator program. New Mexico expressed concern that the proposal is based on an assumption that there will be continued cuts to outreach and enrollment activities, “further complicat[ing] efforts to diversify risk.”
Income Verification
The proposed rule requires marketplaces to verify income if an applicant attests to income within the premium tax credit eligibility range, but data sources show income under 100 percent of the federal poverty level. Enrollees generally need to have income no lower than the poverty line to be eligible for premium tax credits.
The Colorado, District of Columbia, Rhode Island, and Vermont SBMs commented that the change will require significant and costly changes to their IT systems. Rhode Island also commented that the proposal undermines the intent of the ACA because it creates additional hurdles for consumers enrolling. Vermont commented that the proposal does not make sense in a state that has expanded Medicaid. Although Washington did not directly oppose the proposal, the SBM asked for flexibility in order to make the required changes to their IT system.
Special Enrollment
The proposed rule includes multiple changes to special enrollment periods (SEPs), including:
Dependents Losing Minimum Essential Coverage
Among the proposed changes are one that limits enrollment options for dependents that lose minimum essential coverage (MEC). Such dependents would only be eligible to be added to the existing enrollee’s qualified health plan (QHP) or, if the plan does not allow the dependent be added, then to a plan in the same metal tier.
States in our sample were mixed on their comments on this issue. For example, the Alaska DOI supports the proposal while the California DOI opposes it. SBMs had their own concerns. Washington’s urges HHS to study the impact of other recent limitations on enrollment before changing SEP policy further. Other SBMs, such as Vermont’s and New York’s, expressed concern about the IT changes the proposal would require.
Consumers Moving from an Area with no Qualified Health Plans (QHPs)
The rule proposes creating an exception that allows applicants moving from an area without any QHPs into a rating area with QHP options to have an SEP even though the applicant did not have MEC. States that commented on this proposal (Alaska, Oregon, and D.C.) generally supported it.
Essential Health Benefits (EHB)
Almost all states commented on one or more of the proposed changes to the process for determining the Essential Health Benefits (EHB) benchmark plan. Most states supported additional flexibility but had some concerns about the specifics of the proposal.
New Options for Selecting a State Benchmark
The proposed rule creates new ways for states to choose benchmark plans, purporting to give more flexibility to states than the current process. Under the current process, states could choose from one of ten existing plans in 2014 as the benchmark plan for plan years starting in 2017. The proposed changes would allow states to (1) adopt a benchmark plan from another state, (2) replace some EHB categories in the state benchmark with a plan from another state, or (3) create an entirely new benchmark plan.
States are mixed on the proposed changes to the benchmark selection process. Alaska, Arkansas, and Idaho DOIs, and the Rhode Island and Vermont SBMs, support the new proposed flexibility. However, Arkansas’ DOI opposes requiring states to offset the cost of additional benefits in a new EHB benchmark.
California, New York and Oregon DOIs opposed the proposed changes. California is concerned that the process effectively locks in the benefits provided in their 2014 EHB benchmark plan, limiting their ability to make future adjustments. The New York and Oregon DOIs and Washington SBM commented that no changes in the EHB benchmark should occur before the 2020 plan year.
Definition of a “Typical” Employer Plan
In addition to covering ten specific categories, the ACA requires that the scope of the EHB must be equal to the scope of benefits of a “typical employer plan.” The proposed regulation would allow states to create their own benchmark plans and them compare them to the scope of a typical employer plan, defined in the proposed rule as any group plan with at least 5,000 enrollees.
Oregon and California DOIs opposed this definition for differing reasons. California strongly opposes the proposed definition of a typical employer plan because there is no rationale provided by HHS for the plan to have 5,000 enrollees. Rather than relying on a plan with an arbitrary number of enrollees as typical, California commented that the existing benchmark plan options are known to be a standard for a typical employer plan. Oregon opposed the standard because it may be difficult for some states to find plans that have 5,000 enrollees. Conversely, Alaska supports allowing the inclusion of self-funded plans in the new typical employer plan definition because some states have limited options to choose from in their insurance markets.
Benefit Substitution
The proposed rule would allow insurers to substitute benefits among the 10 prescribed categories, so an insurer can reduce one EHB category and supplement another category.
Only a few states commented on this proposal with no state strongly supporting the new substitution flexibility. California opposes the proposal because it may lead to inadequate coverage or discriminatory benefit designs. California specifically mentioned the potential for a plan to reduce mental health and substance use services during the opioid epidemic. The New York DOI and Massachusetts’ SBM both commented that states should be able to continue to be allowed to limit substitution.
Federal Default Standard
The proposed rule also asked for comment about whether HHS should develop a national default EHB benchmark in the future.
States strongly oppose a federal EHB benchmark. Four DOIs (Alaska, Arkansas, New York, and California) and four SBMs (Massachusetts, New York, Rhode Island, and Vermont) commented that states should retain the flexibility to choose an EHB benchmark. Arkansas commented that a federal benchmark could either be lower than current state requirements or more generous and at that either situation is detrimental to the state’s residents. Alaska commented that if there is a federal default, states should not have to defray costs for state benefit mandates that exceed the federal standard. New York commented that a federal default is contrary to the flexibility the rule claims to encourage. California commented that such a federal default would invite lawsuits from states.
A Note on our Methodology
This blog is intended to provide an overview of comments from a sample of DOIs and SBMs. Comments were selected to provide a range of perspectives. This is not intended to be a comprehensive catalog of all states’ comments on every proposal in the 2019 NBPP. For more state and other stakeholder comments, visit https://www.regulations.gov/.