States Face Critical Decisions If Proposed Insurance Regulations Prevail

With open enrollment for 2018 health insurance marketplaces underway, states and insurance companies are already pondering how to set rates and parameters for their health insurance products in 2019, especially in the wake of proposed US Department of Health and Human Services’ insurance regulations. As written, the new rules would require states to make a series of difficult decisions that could significantly affect insurance products.

Below, the National Academy for State Health Policy (NASHP) outlines key questions that would be triggered if the current, proposed language is codified. (A full summary of the proposed regulations is available here). Comments on the rule are due Nov. 27, 2017.

Rate review and plan oversight

  • Should a state establish a new medical loss ratio (MLR) standard for its health plans? How could a MLR change lower premium rates or encourage competition without forfeiting protections that currently ensure adequate spending by issuers toward the direct costs of care?
  • Should a state default to the federal 15 percent “reasonableness threshold” that triggers automatic review of a requested rate increase (a change from 10 percent), or should states maintain a lower threshold to ensure a higher standard of review of rate increase?
  • Should a state set different deadlines for rate submissions for its Qualified Health Plan (QHP) and non-QHP products or for public posting of rate information? How might this affect competition between products offered in its markets?
  • Absent federal review, what additional resources will states need to conduct adequate oversight of plans, including compliance reviews, geographic area compliance, and quality strategy reporting, if they are not already performing these functions?
  • Should states set an actuarial value standard for stand-alone dental plans if the federal requirement is eliminated? What would be the best standard to encourage product choice while maintaining the value of the product for consumers?

Essential health benefits and plan design

  • Should a state change its essential health benefits (EHB) benchmark? Should the state adopt the benchmark of another state that could be better suited to its market?
  • What options are open to states if self-insured plans are included as a potential benchmark standard?
  • What might be the tradeoffs between setting a lower available benchmark standard with fewer guaranteed benefits and potentially lowering insurance premium rates?
  • Should a state prohibit benefit substitutions between benefit categories that the proposed rule would newly allow? What parameters should a state establish for what is considered an allowable substitution–if any?
  • How can a state ensure that benchmark products will meet new criteria to provide benefits to diverse population segments including women, children, and persons with disabilities? How will states define these parameters?
  • Will elimination of “meaningful difference” requirements for health plans offered on the exchange spur confusion for consumers by enabling the existence of an excessive number of similar products, or enable greater choice of products? How can a state mitigate or encourage standards most beneficial to consumers?
  • Should states that operate on the federal marketplace consider whether or how to encourage standard plan design? How might federal elimination of differential display of these plans effect consumer choice and decisions made through the marketplace?

Eligibility and enrollment

  • How would a state need to adjust its eligibility systems for the exchanges and/or Medicaid in order to meet stricter verification standards for individuals between 100 to 400 percent of the federal poverty level (e.g., technology changes, call center adjustments, changes to consumer assistance resources)? Will this change significantly mitigate issues that arise from consumers at risk of penalty for receiving advance premium tax credits (APTC) due to inaccurately overestimating their incomes? What costs may be associated with these changes?
  • Will shortening the five-year authorization period for tax return information enable states to conduct more accurate eligibility determinations, or inhibit identification of long-standing patterns for consumers likely to churn between coverage programs?
  • How could changes in verification standards impact the ease of “no wrong door” enrollment in coverage, especially for individuals on the cusp of qualifying for APTC on the exchange or for other coverage programs such as Medicaid or the basic health program (BHP)?
  • How might changes in federal requirements for Navigator programs change the availability or accessibility of enrollment assistance in states? Could the elimination of “physical presence” requirements encourage more efficient models of outreach in states, especially for those with more rural populations? What alternative strategies might a state consider to encourage improved and appropriate consumer assistance programs for those in need of in-person services?

Health insurance marketplace models

  • Considering changes to plan certification and consumer assistance programs, might a state consider transitioning to the state-based marketplace federal platform model (SBM-FP), in which it would receive a proportion of insurance assessments to operate some marketplace functions including consumer assistance and plan management? Is 0.5 percent a sufficient proportion of assessments to enable states to perform these functions under this model?
  • Should a state that has established its own Small Business Health Options Program (SHOP) continue to operate the SHOP in its current form, or transition to the new federal model, which does not require performance of employee eligibility, premium aggregation, or online enrollment?