In accordance with President Trump’s first Executive Order, “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal,” the Department of Health and Human Services (HHS) requested public feedback on rules affecting the individual and small group markets under the Affordable Care Act (ACA). In particular, the administration requested comments on how it could reduce regulatory burdens to achieve the following four goals:
- Empowering patients and promoting consumer choice;
- Stabilizing the individual, small group, and non-traditional health insurance markets;
- Enhancing affordability; and
- Affirming the traditional regulatory authority of the states in regulating the business of health insurance.
Earlier this week, we posted a blog on insurer responses to this request for information. In Part 2 of this three-part series, we turn to comments from state departments of insurance (DOIs) and the National Association of Insurance Commissioners (NAIC). State comments that we reviewed are as follows:
- California (Department of Insurance and Department of Managed Health Care)
- New York*
- West Virginia
- National Association of Insurance Commissioners
*These state departments of insurance submitted comments jointly with their state-based marketplaces.
Major themes from these comments are summarized below.
Goal 1: Empower patients and promoting consumer choice
Several states (Alaska, Kentucky, Wisconsin, and the NAIC) encouraged HHS to expand the availability of non-ACA compliant plans. For example, these states and the NAIC suggested rolling back Obama-era regulations limiting the sale of short-term limited duration (STLD) plans. Kentucky and Wisconsin also suggested lifting the Obama-era restrictions limiting the sale of fixed indemnity plans to consumers who attest to also having health insurance that qualifies as minimum essential coverage (MEC). Other suggestions from Kentucky and Wisconsin include allowing states to continue transitional policies past 2018, expanding the eligibility for catastrophic health plans, and allowing lower actuarial value plans be sold off the marketplace.
Other states, including California and Washington, had opposing recommendations. They urged HHS to continue limiting the sales of non-ACA compliant products. In particular, these states argued that loosening the definition of STLD plans would erode the individual risk pool by siphoning off younger, healthier consumers and drive up costs for those in comprehensive, ACA-compliant plans. Unlike ACA-compliant plans, STLD plans generally do not cover treatment for any pre-existing conditions, often do not cover prescription drugs or mental health services or preventive care without cost-sharing, and impose limits to coverage. Further, these states indicated that consumers purchasing non-ACA-compliant products often aren’t aware of these plans’ exclusions and limits until they need health care services. Allowing greater sales of non-compliant products, these states assert, would undermine the administration’s second stated goal of stabilizing the individual and small group markets.
Alaska, Kentucky and the NAIC recommended relaxing or repealing federal regulations that prevent states from restricting Navigators’ ability to assist consumers with marketplace enrollment. Prior to the launch of the ACA’s marketplaces, as many as 19 states moved to restrict the ability of Navigators to assist consumers with eligibility and enrollment questions. Obama-era regulations preempted some state restrictions, including licensing requirements, finding that they were overly burdensome and prevented Navigators from doing the job required of them by the ACA. In contrast, West Virginia maintained that continuing the Navigator program “is essential” because the “personal touch” of a Navigator is often the only way consumers learn about the availability of marketplace plans and receive help with enrollment.
Goal 2: Stabilize the individual, small group, and non-traditional health insurance markets
A majority of states called for permanent funding for cost-sharing reduction (CSR) subsidies. States asserted that the uncertainty over CSR payments would lead to higher premiums and insurer exits from the marketplace. Some states also brought up funding related to the ACA’s premium stabilization programs (often called the “3 Rs”). Kentucky, Minnesota, West Virginia, and the NAIC requested that the government make full payments under the risk corridor program; New York and Vermont suggested continued refinement of the risk adjustment methodology. States like Minnesota, Oregon, Washington, West Virginia, and Vermont also reiterated the importance of continued federal reinsurance funding either through federal legislative action or through 1332 waivers. In particular, Minnesota and Oregon requested that 1332 requirements be eased or have an expedited waiver process for states that propose programs similar to those previously approved for another state.
California, New York, and Washington called for clear, strong enforcement of the individual mandate, arguing that it would encourage broad participation in the markets, particularly among younger and healthier consumers. States also pointed out that enforcing the mandate would be the most effective means of “promoting continuous coverage” and stabilizing the marketplaces.
Alaska and Wisconsin also suggested modifications to the medical loss ratio (MLR) rules to allow insurers to exclude commissions paid to their agents and brokers from administrative expenses in their MLR calculations. They argue that this would encourage insurers to provide greater compensation to agents and brokers and increase enrollment.
Goal 3: Enhance affordability
Many states sought greater flexibility over plan benefit requirements and plan design as a mechanism to lower premiums. In particular, Kentucky and the NAIC suggested that states be provided total flexibility to define essential health benefits and assess whether plan benefits are discriminatory, while Oregon urged HHS to maintain minimum federal standards such as mental health parity, protections for people with pre-existing conditions, and the requirement that plans cover preventive services.
A few states attributed some of the marketplace’s current affordability problems to the third-party payment of premiums. In some cases, providers may be using third-party payments to steer high-cost patients into the marketplaces even when they may be eligible for public coverage like Medicare or Medicaid. While doing so boosts providers’ bottom lines because of the higher level of reimbursement from commercial plans, it makes the marketplace risk pool more expensive to cover, ultimately increasing premiums. Minnesota, Wisconsin and the NAIC recommended that HHS continue to monitor this practice.
Minnesota and the NAIC also called upon the administration to fix the “family glitch.” Current regulations measure the affordability of employer-sponsored coverage based solely on the cost of self-only coverage to determine whether families can receive premium assistance through the marketplace. This interpretation shuts out many families from receiving financial assistance and marketplace coverage. Fixing the family glitch would not only make coverage more affordable for many families, it would also help boost marketplace enrollment.
Goal 4: Affirm the traditional regulatory authority of the states in regulating the business of health insurance
The most common suggestion from states like California, Minnesota, New York, and Oregon was to allow them to set their own open enrollment periods. Kentucky had a narrower suggestion, seeking state flexibility to prescribe the open enrollment window for off-marketplace health plans. Kentucky, Wisconsin and the NAIC also recommended eliminating the marketplace’s automatic re-enrollment process.
Similarly, many states want to set their own timeframes for rate and form review. For example, California, Kentucky, West Virginia, and the NAIC argued that some federal requirements are burdensome and that states are in the best position to establish rate and form filing processes for insurers marketing to their residents.
Alaska, Kentucky, and the NAIC suggested repealing the federal rule prohibiting insurers from selling coverage for 181 days after they stop accepting enrollment under the financial capacity exception to the ACA’s guaranteed issue requirement. They argued that states are better able to determine when insurers in this situation can resume sales of their products than the federal government.
Take-away: The states’ top recommendation to HHS was to permanently fund cost-sharing reduction payments. Most states also reiterated the importance of states as the primary regulator of health insurers and health insurance products and sought greater flexibility to set and enforce consumer protection standards. Some, such as Kentucky and Wisconsin, went further and sought to be exempted from the ACA’s essential health benefits and non-discrimination provisions. In contrast, states like California and Washington emphasized that HHS should maintain a minimum federal floor of consumer protection, while allowing states to enact stronger protections in response to the needs of their consumers.