President Donald Trump has frequently attacked the high deductibles and narrow doctor networks in the Affordable Care Act’s insurance options.
But, his administration just proposed regulations that would give insurers a green light to introduce plans with even higher deductibles and narrower networks.
The same regulations could also reduce the amount of financial assistance that lower- and middle-income people receive.
The changes would be incremental and some consumers would see lower premiums as a result. And if insurers are correct, the new rules could also help stabilize those insurance exchanges in which carriers have struggled to make their plans profitable.
But the proposal also offers a preview of how Republicans would actually change the health care system if they succeed in repealing Obamacare.
It turns out their plans diverge substantially from what they are promising.
Trump’s proposal would tighten rules for enrolling in plans
The regulations, which the Department of Health and Human Services released Wednesday morning and are now open for public comment, would change the rules for insurers that sell coverage through the Affordable Care Act’s exchanges or directly to individuals.
The stated purpose of the regulations is to stabilize the law’s exchanges, while Republicans work on a full-scale alternative to the 2010 health care law, which has brought the number of uninsured Americans to historic lows but alienated people who find its coverage to be inadequate or overpriced.
In the three years since the law first took effect, many insurers have lost money because they attracted customers who were relatively sicker than expected ― and failed to charge premiums high enough to cover the ensuing costs.
Those insurers have responded by raising premiums and in some cases leaving markets altogether, as Humana announced on Tuesday. In rural areas and, in a handful of states, some urban ones as well, consumers had very limited insurance choices this past year.
The newly proposed rules, some of which were first reported by The Huffington Post, would seek to help those insurers, partly by tightening enrollment rules, so that it would be harder for people to game the system by waiting until they get sick before seeking insurance.
Consumer advocates have warned that some of these changes could penalize people who really need coverage but would have problems complying with requirements for documentation, or might fall behind on their payments. But insurers have said they are necessary to keep the market functioning.
“The Trump Administration’s ACA rules strike me as making things less consumer friendly and more insurer friendly,” Larry Levitt, senior vice president at the Henry J. Kaiser Family Foundation, said on Twitter.
Trump’s proposal would loosen rules for what insurers cover
But the rules would go beyond changing enrollment parameters, and one of the most important would water down the standards for what coverage insurers provide. The Affordable Care Act divides coverage into metal tiers, from bronze (the least generous) to platinum (the most generous), and defines them using a number called “Actuarial Value” that tells consumers, very roughly, what proportion of medical expenses they should expect a policy to cover.
Bronze plans are supposed to cover 60 percent, silver plans are supposed to cover 70 percent and so on. Under regulations the Obama administration issued when it first implemented the law, insurers had a bit of leeway ― so that silver plans, for example, could have a value anywhere from 68 to 72 percent.
The new Trump rules would increase that range, making it 66 to 72 percent.
It might not sound like such a big deal. But, as David Anderson, an analyst at Duke University’s Margolis Center for Health Policy, has pointed out, that means an insurer could boost the deductible on a typical 2018 silver plan by a few hundred dollars. (Anderson has posted some more precise calculations, and the assumptions behind them, on the blog Balloon Juice.)
Anderson told The Huffington Post that, while effects would vary from county to county, “deductibles will increase incrementally and premiums will be lower than they otherwise would. This benefits non-subsidized individuals the most. Subsidized individuals are no better off and likely to be worse off.”
Another rule the Trump administration proposes to change is about “network adequacy.” Insurers frequently limit coverage to relatively small groups of doctors and hospitals as a way to hold down expenses, and many of the most successful insurers have been the ones with the tightest networks because they offer the lowest premiums.
But the law actually guarantees “network adequacy,” and the original, Obama-era regulations fleshed out that standard ― by, for example, requiring that all plans include at least 30 percent of “essential community providers.” The Trump administration would reduce that requirement to 20 percent.
The true effect of that change is unclear, since the Obama administration has not enforced its regulation all that strictly. Narrow networks have generated a lot of complaints, particularly from unsuspecting consumers who got huge bills when they received care from out-of-network doctors who happen to work at in-network hospitals. But the Trump proposal would, if anything, allow insurers to make do with fewer providers.
Timothy Jost, an emeritus law professor at Washington and Lee University, told The Huffington Post he found some irony in the result: “Two of the biggest complaints people have had are narrow networks and higher cost-sharing, and this regulation will increase cost-sharing and allow narrower networks with less oversight.”
The Trump rules could have one other important effect. The tax credits for buying coverage vary based on the price of the second-cheapest option within the silver category. Insofar as these regulations would cause the price of silver plans to fall, that would mean less financial assistance as well.
People who didn’t want or need generous coverage, and weren’t eligible for subsidies in the first place, might find some cheaper options. But consumers who qualify for assistance would “either have to settle for that less generous plan, or else make up the difference by paying a higher net premium to keep the same type of coverage they had before,” according to Aviva Aron-Dine, senior fellow and senior counselor at the Center on Budget and Policy Priorities.
The rules are a preview of GOP Obamacare replacements
Republicans have repeatedly cited both high deductibles and narrow networks as major problems with Obamacare and promised to rectify that if they succeed in repealing and replacing the law. But they’ve also promised lower premiums and better access to care for everybody ― all while having the federal government spend less money.
This is basically impossible, as health care policy always involves trade-offs. And the trade-offs Republicans have in mind look a lot like the new rules HHS just proposed.
In general, Republicans would scale back regulations on insurers or eliminate those regulations altogether. They’d also cut federal spending substantially.
The net results would depend to some extent on how Republicans designed their alternative ― and, inevitably, they would vary from person to person. Some people would definitely save money, particularly if they are relatively affluent. But in general the result would be that fewer people have coverage or the people with coverage have less financial protection and more restricted access to providers.
In other words, there would be some combination of more uninsured and higher out-of-pocket costs for the insured. This may not be what people have in mind when they hear Republicans promise “relief.”
CORRECTION: This article originally misstated the proposed new requirements for the actuarial value of plans. Under the new rules, insurers can reduce it by 4 percentage points below the standard, and just 2 points above ― so that a silver plan could be anywhere from 66 to 72 percent.
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