Taking a Closer Look at Implementation of the ACA’s Insurance Reforms

Late last month, HHS published proposed rules for the market reforms and essential health benefits (EHB) and cost-sharing provisions of the Affordable Care Act. As stakeholders scramble to submit their comments by the deadline on December 26, there are a few areas in each rule worth highlighting.

The market reform rule lays out a framework for the ACA provisions governing allowable rating factors, guaranteed issue and renewal, and the single risk pool. The proposed rule would require greater standardization for rating, proposing a uniform age band for all issuers, across markets; a limit on the number of geographic areas upon which to base rates; and a uniform approach to rating based on family size (although they seek comment on how best to do this). Standardizing these rules means premiums won’t vary based on how an issuer may apply the allowable rating factors, and consumers will benefit from clearer rules and fairer competition between plans.

Regarding guaranteed issue and renewal, the rule, again, proposes uniformity in a way that will benefit consumers.  Plans outside an exchange would be prohibited from using marketing or benefit design to discriminate against higher cost individuals, setting the bar level with that for Qualified Health Plans in an exchange. It also proposes to align open enrollment periods with those of exchanges, which will reduce confusion for consumers. The rule could go further, though, in also aligning special enrollment periods for QHPs and plans outside an exchange, so consumers wouldn’t need to sort through which event triggers a special enrollment opportunity in an exchange versus the outside market. Finally, the single risk pool provisions would be applied uniformly across issuers, with only specified adjustments to the index rate allowed.

The consistency and standardization proposed for the market reforms will benefit consumers, but consumers won’t get the same assurances of standardization, certainty and consistency under the proposed EHB rule.

My colleague Sabrina Corlette has already done a great overview of the EHB rule. Consumers were pleased to see the proposed rule addresses some of the concerns raised regarding the Bulletin released a year ago. But the proposed rule still largely leaves to states and insurers considerable flexibility that may undermine the promise of comprehensive coverage and clarity around what services must be covered by all insurers selling in the individual and small group markets.

For example, the proposed rule did not define the services that must be included in each of the 10 categories. Without further definition of those categories, plans may vary considerably in how they fill those categories and consumers will find it difficult to make “apples to apples” comparisons. In addition, the lack of detail on the 10 categories raises another area of concern. States must supplement categories that are not covered, but a category may be minimally covered and would not trigger the need for additional benefits. A clearer definition of each category would help ensure they are all covered adequately. Finally, while the proposed rule would allow a state to choose how to define habilitative services, it could still be left up to insurers to define.

The flexibility allowed for states and insurers throughout the proposed rule may help minimize market disruption, but at the cost of undermining key protections for consumers– unless the final rule incorporates proposed changes many consumers are putting forth.  Consumers will also be better armed if greater detail on the benchmark plans was publicly available. In most states, the full plan contract that details services and benefits, including limits and exclusions, is not publicly available.

We’ll continue to track the rules as they move from proposed to final, so stay tuned to CHIRblog for updates.


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