The National Association of Insurance Commissioners (NAIC) wrapped up its Spring National meeting recently, and the Affordable Care Ac (ACA) was on the agenda – but it was definitely a moving target. That’s because the meeting agenda was set before the House of Representatives pulled a bill (the “American Health Care Act” or AHCA) to repeal and replace the ACA. As a result, the planned discussion over the AHCA had to be adjusted to encompass a broader look at potential administrative, legislative, and market factors that could affect the ACA’s future.
The theme of presentations from actuaries and health insurers was that the uncertainty — of both legislative and administrative actions — would prompt many insurers to pull out of individual insurance markets, and cause those insurers that remain to increase premiums. Chief among the concerns was the fate of federal funding for cost-sharing reductions, but stakeholders also noted that weaker enforcement of the individual mandate would dampen enrollment, particularly among healthy people. None of these concerns are new. CHIR experts earlier this year documented potential insurer responses to these issues.
In multiple committees, state regulators discussed not just threats to ACA-regulated markets, but also opportunities for state action. Below are some of the highlights from the committees that met:
- A representative of the American Academy of Actuaries told members of the Health Actuarial Task Force (HATF) that the continuous coverage requirements and enrollment penalties proposed as substitutes for the individual mandate would be weaker than the current mandate in encouraging enrollment among healthy individuals. She went further to say that “even the perception” that the mandate won’t be enforced could affect enrollment.
- The Society of Actuaries (SOA) representative discussed proposals to provide federal funding for high-cost claimants through reinsurance or high risk pools. Reinsurance programs that provide funding for claims based on a list of diagnoses (as was proposed in an amendment to the AHCA and is the approach taken in Alaska) risk missing a rare, high-cost condition and would require revisions to capture new diagnoses. In an exchange with regulators, the SOA representative observed that the claims-based approach used in the ACA might be a “worthwhile” path to pursue.
- The NAIC’s Health Care Reform Regulatory Alternatives Working Group heard two state presentations on Section 1332 waivers. A representative from Alaska provided the history of the state’s reinsurance program, which she said has resulted in lower rates for the state’s one remaining insurer, from a projected 42% increase for 2017 plans to a 7% increase. Alaska has prepared a Section 1332 waiver to capture federal savings in premium tax credits to fund the reinsurance program. An Oklahoma regulator shared the work of that state to develop a waiver that will more broadly change individual market coverage options and subsidies. State officials hope to complete a draft waiver application and actuarial analysis by the end of May.
- Since the ACA was enacted in 2010, the NAIC has adopted or amended 18 model acts and regulations. At the Regulatory Framework Task Force meeting, NAIC staff listed the many model acts that may require revisions if the ACA is repealed or amended, including the high-risk pool model act. Also on the agenda was a discussion of health care sharing ministries (HCSMs), which allow individuals to ban together to help share members’ health care costs. The ACA exempts members of some recognized HCSMs from the individual mandate, but some state laws go further and exempt HCSMs from insurance regulation. Regulators have discussed the apparent growth of HCSMs, which can siphon good risk away from regulated, ACA plans, but regulators seemed inclined to consider only requiring disclosures of the risks of enrolling in a HCSM rather than regulating how they operate and who they enroll.
Since the meeting concluded, the NAIC has sent a letter to Congress urging full funding for the cost-sharing reduction payments in 2017 and beyond. This week may bring greater clarity on the fate of those subsidies, but there’s no clear path ahead for the ACA in legislative or administrative action. Who knows where we’ll be when the NAIC convenes again in August, but it’s likely the ACA will be back on the agenda then, too.