Enrollment is still open in some states and coverage continues across the nation.
Washington, DC – On the heels of the Texas federal district court ruling against the Affordable Care Act (ACA), the National Academy for State Health Policy (NASHP) convened state health marketplace directors for reaction. They stressed the ACA remains the law of the land, coverage continues without change, and enrollment remains open in 10 states and Washington, DC – which represent nearly 25 percent of the US population.
States that operate their own marketplaces face not just the implications of the recent court action, but also confront the headwinds of federal policy changes that weaken the individual market and have been predicted to affect enrollment. States have tailored their operations to respond, ensuring their consumers continue to have reliable and available coverage.
Kevin Patterson, chief executive officer of Connect for Health Colorado, said, “Consumers need to know we have their backs – coverage continues.”
In Maryland and other states, officials report higher than expected enrollment on Saturday, following the court’s Friday night announcement. “Consumers want affordable health coverage and states are working hard to cut through the confusion and help them find it,” said Michele Eberle, executive director of the Maryland Health Benefit Exchange, “and our early enrollment figures are encouraging.”
Covered California Executive Director Peter Lee said, “We’ve extended the deadline for Jan. 1, 2019, coverage until this Friday (Dec. 21, 2018) amid a surge in enrollment last week as well as confusion resulting from the Texas District Court ruling. Insurance has to be sold,” he said, “which is why we will continue promoting enrollment with robust marketing and outreach efforts well into the New Year.”
In Massachusetts, which has required its adult residents to carry comprehensive coverage for a decade, Massachusetts Health Connector Executive Director Louis Gutierrez observed, “Massachusetts is proud of its progress in health care to ensure nearly universal coverage, and our busy open enrollment so far is proof that our residents continue to seek out access to affordable coverage. The Massachusetts Health Connector remains open for business, with open enrollment running through Jan. 23, 2019, to ensure everyone who wants insurance has the opportunity to enroll in coverage.”
In Connecticut, James Michel, Access Health CT chief executive officer, added, “We want to let Connecticut residents know that the Texas ruling does not affect their ability to sign up for and use 2019 health insurance plans through Access Health CT. We are continuing to focus on helping people get the right plan for them and their families, and are extending the open enrollment period until Jan. 15, 2019.”
Final enrollment figures for 2019 are expected to be announced in February, after all states’ open enrollment deadlines have passed. States with extended enrollment deadlines include:
Washington State Dec. 20, 2018
Vermont Dec. 21, 2018
Rhode Island Dec. 31, 2018
Minnesota Jan. 13, 2019
California Jan. 15, 2019
Colorado Jan. 15, 2019
Connecticut Jan. 15, 2019
Massachusetts Jan. 23, 2019
Washington, DC Jan. 31, 2019
New York Jan. 31, 2019
For press inquiries please contact Jennifer Laudano, firstname.lastname@example.org or 703-728-0406
State officials are concerned that the proposed federal public charge rule could increase the uninsured rate, which would have a negative financial impact and increase health programs’ administrative burden.
The Department of Homeland Security (DHS) has proposed significant changes to public charge determination policies that would affect the immigration status of certain individuals. The concept of determining if an immigrant is a public charge — someone who would be unable to care for himself or herself — has been a provision in US immigration policies since the late 1800s.
Currently, individuals can be prevented from entering the United States or denied lawful permanent residence if they are determined to be a “public charge” based on their enrollment in cash assistance programs, such as Temporary Assistance for Needy Families or Supplemental Security Income, or if they need long-term institutional care funded by the government. However, as outlined in NASHP’s earlier blog, DHS proposes to substantially expand the list of public assistance programs that would be considered in public charge determinations, including use of non-emergency Medicaid health coverage.
The proposal calls for the consideration of the duration of time, or number of months, that certain immigrants use Medicaid, Supplemental Nutrition Assistance Program, housing assistance, etc. within a 36-month period beginning on the date the rule is finalized. There are other criteria used, including an immigrant’s age, financial status, and skill set, etc. to determine if he or she meets the public charge definition.
Although immigration policy is within the federal domain and the public charge determination is made by DHS, immigrants live and work in states. States must balance multiple factors related to immigration, including their workforce needs and stabilization of health insurance markets – both private and publicly subsidized. State officials have serious concerns about the chilling effect on enrollment, or the likelihood that individuals – whether they are at risk of being determined a public charge or not – will either dis-enroll or not re-enroll in coverage due to the potential implication it may have on their citizenship status. State officials fear what the effect of reducing coverage could have on their budgets and overall economies.
Within the proposed rule, DHS estimates Medicaid disenrollment and non-enrollment rates among individuals who would be directly subjected to the proposed rule at approximately 142,000 annually. However, state health officials and policy experts have expressed concern that the broader chilling effect on health coverage enrollment would be considerably greater. The Kaiser Family Foundation has estimated that between 2.1 and 4.9 million individuals currently enrolled in Medicaid/CHIP would dis-enroll due to the proposed rule. For example, even though the proposed rule does not take into account a family member’s enrollment in Medicaid, immigrant parents may not enroll or may dis-enroll their children who are eligible (even though they are not subject to this rule change) from fear that their children’s participation could affect their ability to obtain a green card in the future. Though the proposed rule does not include enrollment in the Children’s Health Insurance Program (CHIP) as a factor in public charge determinations, immigrant families concerned about the proposed rule changes may be wary of enrolling their children in either Medicaid or CHIP —even if the proposed rule changes are never finalized.
Officials from several states noted that as the rate of insured residents has grown, their uncompensated care costs have been trending downward, particularly in states that expanded Medicaid through the Affordable Care Act. But, if uninsured rates begin to rise due to the chilling effect on enrollment from this proposed public charge rule, states’ health care safety net systems will be significantly strained. State officials expressed concern that this likely rise in uncompensated health care costs due to the changes associated with the proposed rule could be considerable. Additionally, individuals without coverage may delay seeking care, which in turn could result in individuals addressing health issues only when they become urgent, which would also lead to increased health care system costs.
State officials are also weighing the operational challenges that will fall to states to implement the proposal. Although public charge determinations will continue to be conducted by federal officials, details for how DHS will access the data needed to affirm immigrants’ use of Medicaid and other public programs are vague or non-existent in the rule. State health officials have identified the following potential administrative issues:
- Challenges associated with identifying individuals’ participation in Medicaid: The proposed rule does not specify how information about individuals’ enrollment in public benefit programs will be collected or shared, and so the state role of providing data to DHS is unclear. Will DHS rely on immigrants’ self-attestation when completing their immigration applications? Or, will states be required to provide information about individuals’ enrollment in public benefit programs? If states are required to do so, would DHS routinely collect this information from state agencies, or contact state agencies on a case-by-case basis? Either of these data-sharing options requires significant state investments of staff time and other resources to develop and implement processes.
- Increased risk of churn: Many anticipate that the chilling effect of this proposed rule will result in churn, with individuals dis-enrolling and re-enrolling in coverage. Not only will periods of uninsurance result in unmet health care needs at a greater cost, but processing enrollments requires more state resources than do renewals. Most states seek to actively minimize churn as an administrative cost-saving measure, so states do not have the resources to meet an increase in the prevalence of it in the future.
- Handling increases in consumer inquiries: Due to the complexity of the proposed rule, if it is finalized, state health officials noted that both public health program enrollees and applicants will likely have a number of questions. This increase in the volume of consumer inquiries could place a substantial burden on call center staff and enrollment assisters. State health and human service agencies would also need to ensure that these frontline staff are appropriately informed about the rule changes.
- Possible changes to program documents, such as applications and outreach materials: The proposed rule is not retroactive, meaning that an individual’s use of the public benefit programs that are identified by DHS prior to the rule being finalized would not be a factor in future public charge determinations. However, if the rule does become final, although it likely won’t be a requirement for states to provide information about the potential immigration status implications of enrolling in public benefit programs, some state agencies may decide to do so to ensure that individuals are adequately informed. This could require states to expend resources to modify or develop new application or eligibility notices and outreach materials.
As state officials process the potential changes resulting from DHS considering participation in health coverage and other public benefit programs in determining whether an immigrant may qualify as a public charge, there are concerns about the financial implications for states. Specific cost estimates aren’t possible because the extent of the chilling effect is unknown, as is the impact on uncompensated care, and it is unclear the process (and possible system) changes states will need to make to share information with DHS. However, it is highly likely that the inclusion of health coverage in the federal determination of an immigrant as a public charge will have a potentially substantial impact on states. Comments on the proposed rule are due Dec. 10, 2018 and can be submitted here.
On Oct. 22, 2018, the U.S. Departments of Health and Human Services and Treasury issued new guidance governing Section 1332 State Innovation Waivers, now called State Relief and Empowerment Waivers. Through increased state flexibility, the guidance supports the diffusion of association health plans and short-term, limited-duration plans, continue to stymie state efforts to use a 1332 waiver to support Medicaid buy-ins or public coverage options, provide a pathway for states that have not adopted Medicaid expansion to instead provide private coverage for those earning less than 100 percent of the federal poverty level (FPL), and loosen requirements so that states can apply for waivers without new legislative authority.
These changes are accomplished by loosening the standards by which states can meet the legal parameters established for waivers, otherwise known as the statutory guardrails (see below). The changes are intended to allow states to offer more “flexible and affordable coverage” while also reducing some of the administrative burdens of applying for waivers. Comments on the guidance are due Dec. 24, 2018.
Background on 1332 Waivers
Initially enacted under the Affordable Care Act (ACA), 1332 waivers allow any state to waive any or all requirements related to the ACA’s regulation of health insurance plans, establishment of health insurance exchanges, tax credit and cost-sharing programs, and individual and employer requirements to purchase health insurance. The ACA also defines specific “guardrails” that all waiver proposals must meet to be approved. Any state proposal must:
1. Provide coverage that is at least as comprehensive as that offered through the health insurance exchanges under the ACA, defined as coverage that meets all essential health benefit (EHB) requirements under the ACA;
2. Provide coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable as coverage that would have been offered under the ACA;
3. Provide coverage to a comparable number of the state’s residents as would have been covered under the ACA; and
4. Not increase the federal deficit.
Prior federal regulation applied a strict standard to enforce these guardrails — requiring that any changes proposed under a state’s 1332 waiver ensured that all coverage would meet the comprehensive and affordability standards set by the ACA. While guaranteeing that consumers would have access to minimum benefit and cost-sharing protections established by the ACA, this standard limited the ability of states to significantly alter any regulation of their health insurance programs. To date, states have primarily used 1332 waivers to institute reinsurance programs rather than alter the design of products sold in their markets.
New Guardrail Definitions Reduce Minimum Requirements for Markets
The guidance applies a new standard in interpreting the ACA’s guardrails — requiring that states make available coverage that meets the affordability and comprehensiveness standards of the guardrails, while not requiring that all coverage under a state’s 1332 waiver meet these requirements. The guidance also significantly loosens how the federal government will define comprehensiveness and affordability, and how it will evaluate the number of covered lives under a waiver, opening states to a much broader interpretation of what will be required for coverage to meet these standards. Specifically, the changes:
- Apply less rigid definitions of how strictly coverage must meet EHB requirements and cost-sharing requirements;
- Broaden definitions of coverage to include coverage that meets minimum essential coverage requirements, as well as less comprehensive alternatives, such as short-term plans and (potentially) health sharing ministries;
- Revamp the method by which waivers must balance trade-offs between increases in coverage against reductions in affordability, especially for vulnerable populations (allowing for cost increases to the latter, in favor of the former); and
- Allow for evaluation of waivers for their aggregate effects over time, versus requiring that each guardrail, including deficit neutrality, is met in each year that the waiver is implemented. (See the table for a detailed comparison of changes.)
As described under the guidance, these changes should ensure that consumers can purchase coverage that is as comprehensive AND affordable as the coverage they were able to purchase under the ACA, while also allowing states to use waivers to provide access to other options “better suited to consumer needs.” For example, a state could use the waivers to finance tax credits to purchase short-term plans that do not meet EHB requirements so long as a product is still available on the market that does cover EHBs.
Notably, while the guidance maintains that states may factor changes in Medicaid enrollment as part of their waivers, it reinforces restrictions that limit the ability of states to leverage predicted savings in Medicaid (such as those proposed under an 1115 waiver) to finance the state’s proposed 1332 reforms. The inability of states to balance savings across programs and waivers has been a challenge for states wishing to pursue joint waivers (otherwise known as mega-waivers) that cut across their coverage programs, such as a Medicaid buy-in program.
The guidance also specifies limits to how states may pursue any desired changes to the administration of tax credits under a proposed waiver. While the federal government has some capacity to use its current infrastructure to enable states to revise how tax credits can flow to individuals under 100 percent of FPL, the Internal Revenue Service is not currently able to change how tax credits are administered to individuals above 100 percent FPL. The guidance suggests that states wishing to change the tax credit structure could eliminate the federal tax credit and instead implement a fully state-administered tax credit program with the funds that would have otherwise been paid through the federal government. While this opens up some opportunity for states to reconsider how tax credits are structured, such changes could incur significant administrative expenses for states wishing to operate and maintain such a program.
Increased Flexibility in Federal Infrastructure Could Support New State Programs
To support states’ abilities to implement new policies and programs under a 1332 waiver, the administration’s guidance indicates that states will have access to significant new functionality and flexibility within the federal health insurance exchange that will allow for customized state approaches and more robust sharing of federal data on enrollees. Specifically, the guidance suggests that states could use enhanced direct enrollment to build custom displays of plan data or could request that the Department of Health and Human Services build in new eligibility requirements consistent with any revamped coverage strategy proposed under the 1332. The guidance also suggests that states may explore eliminating use of the exchange altogether in an effort to implement a completely new coverage program designed under a 1332 waiver. The guidance makes clear that states will be responsible for financing all customizations requested of the federal exchange.
Flexibility over Enabling Legislation
Federal law requires that states enact enabling legislation to pursue a 1332 waiver, however timing of state legislative sessions and prioritization of policy issues have led to some delays or challenges in states’ ability to pass timely legislation. Recognizing that “administrative regulations and executive orders generally carry the force of the law,” states will be able to submit executive orders or regulation directing the state to pursue a 1332 in combination with any enacted general statutory authority for the state to implement or enforce the ACA. If an executive order is submitted, a governor must also submit a letter outlining the state’s authority to implement the proposed 1332 waiver.
The proposal raises some significant questions, notably about the impact of these changes on the individual market. The guidance also includes several clauses that raise questions about the long-term stability of any waiver programs. For example, the guidance asserts that the federal government may update its calculations of funding that states will receive under the waiver pending any future changes in federal or state law, including new regulations or sub-regulatory guidance. The guidance also mandates that states with approved waivers will have to ensure that waivers come into compliance with any new federal laws or regulations passed while the waiver is being implemented. These requirements could put states’ waiver programs at risk of significant alterations in the future, a potential vulnerability for states looking to pursue multi-year waivers.
States will need to examine the opportunities and challenges provided in this new proposal and provide comments to the federal government by Dec. 24, 2018. NASHP will continue to closely monitor as states evaluate the potential effect of the guidance on what they hope to achieve for their markets.
|Changes to Guardrail Regulation|
|Guardrail||Existing Regulations||Proposed Regulations|
|Comprehensiveness standard||The waiver must not decrease:
||Comprehensiveness will be evaluated by comparing access to coverage under the waiver to the state’s EHB benchmark. The state may select the EHB benchmark plan of another state|
|Affordability standard||Affordability is measured by net out-of-pocket (OOP) spending for health coverage and services relative to income. OOP spending includes premiums, and cost-sharing (e.g., deductibles, copays, co-insurance), and could include services not covered by a plan.||Changes definition from net to expected OOP spending. Adds direct payments as a form of out-of-pocket spending.|
|Disallows any increase in the number of state residents with large health care spending burden (especially vulnerable populations), even if the waiver maintained affordability in aggregate.||Will consider the total effect of changes in coverage and affordability. For example, a waiver that makes coverage only slightly more affordable for some, while incurring significant costs on others, is less likely to be approved than a waiver that makes coverage significantly more affordable for many, even if others will incur higher costs.
State applications should address how the waiver would address the priority of supporting and empowering consumers, including those with high expected health care costs and those with low incomes.
|Waivers must not reduce the number of individuals with coverage that meets a 60% or better actuarial value standard and other minimum cost-sharing limits specified in the Affordable Care Act (ACA).||Eliminated.|
|Coverage standard||Definition of coverage|
|Coverage is defined as minimum essential coverage, which includes employer-sponsored coverage and qualified health plans, but does not include limited benefit plans such as short-term insurance.||Coverage defined as benefits consisting of medical care (provided directly, through insurance or reimbursement, or otherwise), including group health insurance coverage, individual health insurance coverage, and short-term limited-duration insurance.|
|Number of covered lives|
|Number of covered lives must be no less than forecasted number of covered lives absent the waiver.||States must demonstrate that a comparable number of state residents will have coverage as would have had coverage absent the waiver.|
|Changes in Medicaid enrollment caused by the waiver will count toward number of covered lives.||Unchanged.|
|Consideration of magnitude of coverage changes|
|The waiver may not cause a reduction in coverage across any group of individuals, including vulnerable populations, such as low-income individuals, the elderly, and those with serious health issues.||Departments will consider the total effect of coverage patterns in assessing states’ waivers, balancing the growth of coverage for some populations against any potential reductions of coverage for others.|
|Consideration of changes over time|
|The waiver cannot cause a reduction in covered lives in any year in which the waiver is implemented.||Departments will consider long-term impacts of the waiver, and will accept reduction in coverage in early years if balanced out by eventual gains in coverage.|
|Federal deficit standard||Waivers must not increase the federal deficit over the period of the waiver, or in total over the 10-year budget plan submitted by the state. Waivers will not be approved if they increase the deficit in any given year that the waiver is implemented.||It eliminates prior language that limits approval for state waivers that would increase the federal deficit in any given year, focusing primarily on the impact on the federal deficit over the period of the waiver (though states must still submit projected changes in federal spending for each year of the waiver).
Eliminates consideration of changes in Medicaid spending as a factor that would affect federal spending under the waivers.
|The effect on federal spending includes all changes in exchange financial assistance, other direct spending, such as changes in Medicaid spending, and changes in federal administrative costs associated with the waiver.||Eliminates language specifying that changes in Medicaid spending are included as part of changes in federal spending.|
Last week, the Department of Labor released its final rule regulating association health plans (AHPs). The rule is part of the Trump Administration’s multi-pronged strategy to revise regulations governing AHPs, short-term insurance, and health reimbursement arrangements (HRAs) to promote health care competition and choice.
The rule is expected to reshape state insurance markets and impact enrollment in health insurance marketplaces. Below, the National Academy for State Health Policy (NASHP) highlights significant issues and options for state policymakers as they consider their response to the new rule. NASHP will continue to monitor states’ responses to the AHP rule. A more detailed summary of the rule is available in the journal Health Affairs.
The rule eases requirements on associations that can lead to an increase in AHP enrollment and a disruption in state insurance markets.
The primary goal of the AHP rule is to increase access to AHPs. The rule increases flexibility over what constitutes an association, which allows for more associations to form. The burgeoning associations can then offer AHPs to their members. The rule:
- Allows associations to form for the primarily purpose of offering health insurance, which was previously prohibited;
- Revises the “commonality of interest standard” so that associations can be composed of members who are in the same trade, industry, line of business, or who have a principal place of business within the same state or metropolitan area; and
- Allows “working owners” — self-employed individuals or individuals who have ownership rights in a trade or business that earn income and work at least 80 hours a month — to participate in a group AHP. These sole proprietors previously purchased health insurance in the individual market, a market regulated by states.
In most cases, AHPs are exempt from many of the regulatory requirements imposed on other health plans. While regulation of AHPs varies from state to state, AHPs that qualify for large-group status are exempt from meeting many minimum federal requirements, including the requirement that plans cover all 10 essential health benefits (e.g., hospitalization, maternity care, mental health and substance use services, and prescription drugs). These AHPs would also be exempt from adhering to non-discrimination protections, such as some community rating restrictions that require individuals to pay the same premium rate for insurance regardless of factors such as age, gender, or geographic location.
|Non-discrimination protections for health status
To partially address concerns about related to discriminating based on health status, the rule prohibits associations from conditioning membership in that association based on any health factor. It also prohibits AHPs from adjusting eligibility, enrollment, benefits, or premiums for an individual based on a health factor.
The rule does allow an AHP to vary benefits, premiums, etc. between groups of individuals in the AHP. AHPs have broad discretion in defining these groups; for example, groups may be created based on geographic regions, professional categories (e.g., job types), or hourly status (e,g., part-time and full-time workers). An AHP is prohibited from making group distinctions based on a health factor, although the loose definitions used to define groups opens the AHP to de facto discrimination based on health status, even if that is not the stated intent of the grouping structure.
The rule allows that AHPs may continue to exist under the definitions and regulations in place prior to the effective date of this rule, meaning that any new or existing AHPs that meet prior AHP standards do not have to adopt new non-discrimination protections.
Because AHPs do not have to meet these requirements, they are able to offer cheaper products with skimpier coverage to consumers — products that may be especially attractive to younger and healthier individuals. Because AHPs can be sold across state lines, they can locate their headquarters in (and therefore leverage) states with less restrictive insurance rules and/or form in ways that “cherry pick” healthy populations from across states. (This practice may proliferate due to the rule’s allowance that associations can form based on common metro-areas, even when they cross state boundaries.) These features, collectively, are expected to siphon healthy consumers out of state markets. While estimates indicate that some of these individuals who purchase AHPs will have been uninsured, the majority will be drawn out of states’ individual and small group insurance markets, causing market segmentation and disruption, in turn leading to cost increases and instability. This rule makes it possible, for the first time, for self-employed individuals to leave the individual market and buy an AHP.
Lax rules diminish consumer protections and weaken long-term market stability.
The AHP changes do not consider long-term impacts on market risk, which requires a balance of consumers to ensure that premiums stay as low as possible over the lifetime of a population. These changes also add fragility to states’ individual markets, which have already been weakened by Congressional elimination of the individual mandate penalty.
Beyond the issues raised by market segmentation, experts have also raised concerns that lack of minimum benefit standards will leave consumers vulnerable to high out-of-pockets costs. Moreover, lax-rating rules promote discriminatory pricing practices based on factors such as age, gender, or other population characteristics. The rule does include a new provision designed to protect against discrimination based on health status (see Box), however these protections are loosely defined and are not extended to all AHPs. Without sufficient oversight, experts predict it could be easy for some associations to bypass these protections.
The new rule affirms a state’s role in regulating AHPs and conducting AHP oversight.
State authority to regulate AHPs is limited and varies depending on whether the AHP meets “large-group status” and whether the association is fully- or self- insured. (For example, whether the association contracts with an insurer to provide insurance policies to its members, or whether the association develops and offers its own policy direct to members). AHP regulation largely falls under the Employee Retirement Income Security Act (ERISA). The law defines specific ways that states can regulate multiple employer welfare arrangements (MEWAs) — benefit arrangements provided to multiple employers (including the self-employed) in an association — which includes AHPs. States have authority to regulate self-insured MEWAs, as long as state laws are “not inconsistent” with ERISA. States can regulate fully-insured MEWAs on issues related to financial accountability, state licensure, registration, certification, auditing, and maintenance of specific contribution and reserve standards. States also have the authority to regulate the insurers that sell policies to associations and the policies themselves.
The rule repeatedly affirms that it “does not modify or otherwise limit existing state authority” to regulate AHPs. The rule also claims that it “broaden[s] the flexibility of states to tailor their laws and regulations to their local market conditions and preferences,” suggesting that states can use their regulatory authority to “optimize” the role of AHPs in their markets. The rule underscores:
- States’ abilities to regulate self-insured MEWAs;
- States’ capacities to enact policies to prevent risk segmentation; and
- States’ abilities to mandate benefits and rating rules for policies procured by fully-insured AHPs and self-insured MEWAs, including requirements “similar to those applicable to the small group and individual” markets.
Contrary to these assertions, the rule notes an ERISA provision that allows the federal government to preempt state laws over fully-insured AHPs that “go too far… in ways that interfere with the important policy goals advanced by this final rule.” This gives the federal government wide latitude to intervene if a state tries to implement policies restricting fully-insured AHPs from operating in their markets.
In addition to emphasizing the role of states in regulating AHPs, the rule also stresses the role states will play in oversight and enforcement efforts to protect consumers against fraud, abuse, and mismanagement of AHPs. The rule offers vague language describing actions the federal government may perform to oversee AHPs, stating that the Department of Labor “anticipates close cooperation” with state regulators in areas of oversight. The rule also expresses intent by the Department of Labor to review AHP reporting requirements and to consider developing AHP audit requirements “if necessary.” Without additional specifics about the federal role, questions arise about what role states should play in oversight and how states can best target their limited resources to avoid duplicating possible federal action.
Staggered effective dates and next steps for states.
The rule sets staggered implementation dates for the rule, depending on the type of AHP that adopts the new standards. Any association may establish a fully-insured AHP as soon as Sept. 1, 2018. Associations in existence at the time of the release of this rule may establish a self-funded AHP on Jan. 1, 2019, and new associations may establish a self-funded AHP on April 1, 2019. These dates give little time for states to act before new AHPs enter their markets. The timing is also noteworthy as the rule was released in the middle of states’ 2019 rate-filing deadlines. Officials expect that negotiations will factor in the assumption that AHPs will enter states’ markets in 2019, leading to additional rate increases before premiums are finalized in September, 2018.
The ultimate effect of the AHP rule will vary based on each state’s insurance markets and regulatory capacity. As states analyze the rule and its projected impact, future actions and considerations for policymakers and regulators include:
Review and development of state-level mandates. As noted earlier, states vary in how state-level mandates for insurance are applied to AHPs, or insurers that sell policies to associations. In order to promote fair market competition and guarantee that consumers are guaranteed similar protections across their markets, states may seek to revise or strengthen their regulation of AHPs. Moreover, rising health care costs, including prescription drugs, expose consumers to added financial risk, especially if drug coverage and other services are not covered by an insurance plan. States may look to develop solutions (such as benefit mandates or development of high-risk pools) that will help shield consumers who become underinsured by purchasing an AHP. During a recent NASHP webinar, experts discussed other state options to limit AHPs, including prohibiting new MEWAs and actions to assert jurisdiction over plans sold in their markets, even when the plans are based in another state.
Boosting state capacity for AHP oversight. While federal rules indicate that the Department of Labor and states have joint-responsibility over AHP oversight, historically, oversight of AHPs has been lax, allowing for fraud, abuse, and insolvency. To effectively protect consumers, states may need to bolster their insurance regulators’ capacity to review and audit AHPs. States may also consider increasing the ability of their state agencies to collect and respond to consumer complaints about unregulated or fraudulent products entering their markets. However, without additional funding, states may have limited capacity to devote the resources necessary to conduct robust oversight. Consumer education will also be critical to make sure consumers are aware that if they buy AHPs that do not provide full coverage of essential benefits that they cannot purchase an Affordable Care Act-compliant plan with full coverage until the annual open enrollment period.
While most state legislative sessions have ended for 2018, states may direct their agencies to implement regulatory changes that could be used to protect consumers and strengthen their markets. In the months ahead, NASHP will continue to track state actions to address the AHP rule, especially as legislators prepare for 2019 sessions following the November 2018 election.
Experts and state officials share what impact this rule will have on their insurance markets and what actions they are taking to protect consumers during two sessions at NASHP’s annual conference. Register today!
Making Waves in the Individual Market: How Did We Get Here?
The individual insurance market is experiencing seismic shifts due to the effective repeal of the individual insurance mandate and new federal policies that promote association health plans and short-term insurance policies. Kevin Lucia of the Georgetown University Center on Health Insurance Reforms reviews some of the major changes affecting insurance markets, including trends in rate filings and enrollment estimates. State officials reflect on what the changes have meant for their insurance markets, and what they expect to see during the 2019 open enrollment season.
Sailing the Seas: State Efforts to Stabilize the Individual Market
In the face of rising health insurance costs and unstable markets, states are exploring a wide assortment of strategies to stabilize markets, reduce costs, and improve coverage choices for consumers. Building on the earlier Making Waves in the Individual Market session, state panelists take a deep dive into the strategies they are advancing to bolster their markets, including passage of state-based individual mandates, reinsurance programs, and regulation of insurance products sold within or outside of the Affordable Care Act insurance marketplaces.
The Trump Administration is expanding the availability of alternatives to Affordable Care Act-compliant health insurance. Rules to expand association health plans and short-term limited duration health plans are imminent. So what’s a state to do to prepare consumers and insurance markets for these alternative plans?
The Administration asserts these alternatives will provide choice and lower-cost products in the market, but opponents argue:
- Consumers may be unaware that these products generally provide fewer benefits; and
- The alternatives could siphon young, healthy enrollees out of ACA-compliant plans, causing an increase in premiums in that market in order to cover a smaller, sicker risk pool.
|Listen to the webinar, Ministries, Association, and Short-Term Health Insurance Plans – What’s a State to Do? featuring experts from Georgetown University’s Center for Health Insurance Reform.|
On May 29, 2018, with support from the Robert Wood Johnson Foundation, the National Academy for State Health Policy (NASHP) held a well-attended webinar that explored what options states have to respond to these developments featuring experts from Georgetown University’s Center for Health Insurance Reform (CHIR).
Health sharing ministry plans currently exist across the nation. They allow certain religious communities to charge a monthly contribution to members who then share the responsibility for members’ health care costs — instead of providing traditional insurance. The Affordable Care Act (ACA) exempted these programs from the individual mandate and 30 states currently exempt them from any state insurance regulations. Although no independent data source tracks sign-ups, enrollment in ministry plans appears to have grown from fewer than 200,000 to over 1 million, and these programs are looking more and more like private insurance, for example some advertise during open enrollment and pay brokers.
What states can do: Consumer confusion may result as ministry plans grow and are marketed to consumers. CHIR experts recommend these tools for states to consider:
- Establish reporting requirements to collect data on ministries’ sales to assess their impact on insurance markets;
- Issue consumer alerts educating consumers about the limitations of these programs;
- In states that do not regulate them, begin monitoring them for violations, such as use of brokers, facilitating payments between members, and failure to apply religious tests for membership; and
- Take action against those that operate illegally as insurers.
Association health plans (AHPs): Historically, AHPs have had a long history of financial instability, insolvencies, and fraud. States generally have a better track record than the federal government in regulating them. Rules to expand the availability of AHPs are expected soon but the proposed rules would make it easier for employers to band together and be treated as a large group plan. The proposal would allow self-employed consumers, who are now covered in ACA’s individual market, to enroll in an AHP. The rules also allow AHPs to design different benefit plans and pricing strategies that do not comply with ACA plan requirements. Here again, the plans could provide a lower-cost, lower-benefit option that could attract more young and healthy to enroll and leave the individual market. Whether states will retain jurisdiction over these plans is a key concern of state policymakers who await the final rule. CHIR experts outlined a series of options states could pursue to address AHPS.
What states can do about AHPs:
- Level the playing field by requiring compliance with some or all individual or small group market rules;
- Restrict creation of new AHPs, a strategy employed by California, where only a handful of AHPs remain;
- Limit membership to small businesses, such as employers with at least one employee;
- Reduce the risk of market segmentation by assessing a fee on AHPs and invest the revenue in high-risk reinsurance pools; and
- Assert jurisdiction over out-of-state AHPs.
Short-term limited duration plans: Once the AHP rule is issued, the Administration is expected to follow up with rules related to short-term limited duration plans. Designed to fill temporary gaps in coverage, these plans are not considered individual health insurance and are currently exempt from ACA standards. They often exclude some essential health benefits like maternity or prescription drugs and generally exclude coverage for pre-existing conditions. Currently, plans are limited to a three-month coverage limit, but the proposed federal rule governing short-term plans would allow extensions.
What states can do about short-term plans: In the webinar, CHIR experts detailed how some states are regulating these plans and outlined strategies for states to consider.
- Limit the duration of these plans to three or six months, and prevent renewals by imposing coverage limitations, such as restricting individual coverage to one short-term plan purchase per year;
- Prohibit waiving health status underwriting to people already enrolled;
- Level the playing field by requiring compliance with some or all individual ACA market rules, such as requiring coverage of pre-existing conditions;
- Impose a fee on short-term plan to be applied to reinsurance funds;
- Prohibit the sale of these short-term plans to people who are eligible for ACA marketplace coverage; or
- Ban short-term plans or use regulatory authority to define, limit duration, and improve consumer protections.
As federal rules make alternative plans more available and in the absence of the individual mandate compelling enrollment, state policymakers need to consider these plans’ impact on the individual market. Policymakers will weigh the promise of more affordable coverage with fewer benefits against the risk of market segmentation and rising costs in the individual ACA-compliant market. They will consider how to make sure that consumers have the transparency and information to understand new plan choices and protections should problems occur. NASHP looks forward to continuing its informative webinars with CHIR experts as federal rules are finalized and states, who hold responsibility for the individual market, consider their next steps.
Listen to the webinar, Ministries, Association, and Short-Term Health Insurance Plans Are Coming – What’s a State to Do?
Read a blog by NASHP Executive Director Trish Riley about this webinar. View the webinar | Download the slides
Will premiums in the individual market skyrocket next year? What effect will alternative forms of coverage, including expansion of association, ministry and short-term insurance health plans under the Administration’s proposals, as well as health ministry plans have on insurance markets, including price to consumers and breadth of coverage? Will people shift to coverage options with fewer protections, leaving them at financial risk?
While alternative coverage may offer consumers a lower-premium product, they are exempt from meeting many federal and state requirements for health insurance, including popular consumer protections such as coverage for pre-existing conditions and the prohibition on annual or lifetime limits. Increased availability of these alternatives will also cause splintering of health care markets, destabilizing the individual market and increasing costs. But states have options to regulate these products and protect consumers.
During this webinar, experts will review major trends expected for insurance markets, and state actions and tools to encourage stability and consumer protections in the midst of these changes.
- Trish Riley, Moderator, Executive Director, NASHP
- Kevin Lucia, Research Professor, Georgetown University Center on Health Insurance Reforms
- JoAnn Volk, Research Professor, Georgetown University Center on Health Insurance Reforms
- Dania Palanker, Assistant Research Professor, Georgetown University Center on Health Insurance Reforms
As states await final federal regulations that will loosen restrictions over the sale of short-term health insurance policies, the clock is ticking for state legislators and regulators to enact policies to protect and inform consumers about the limited and “thin” coverage that these plans offer.
|What Short-Term Insurance Plans Don’t Cover
Most short-term insurance plans offer limited benefits, while this results in cheaper policies, it limits consumer access to many critical health care services. A Kaiser Family Foundation analysis of 24 short-term plans sold in 45 states found:
The sale of these plans, which generally offer less coverage than Affordable Care Act (ACA) marketplace plans, can begin 60 days after the final rule is issued, which means states now have a short window to implement consumer protections. The sale of these short-term policies could begin later this year.
During this legislative session, eight states proposed bills to address these plans, ranging from bills to enable the short-term plan flexibilities allowed by the Administration’s rule (MN HF 4280, MO 1685, VA H 892) to bills that regulate (HI HB 1520, GA H 474) or prohibit (CA SB 910, VT H 892) short-term plan sales. Maryland recently passed a law that limits short-term plans to a three-month coverage period, restricts the ability to renew these plans, and limits the standards by which insurers can rate or deny coverage (medical underwriting) for plans.
As explored in How Will Short-Term Insurance Plans Impact State Insurance Markets?, the rule would extend the period during which plans can be sold from 3 to 12 months and allow for consecutive renewal of short-term policies, meaning consumers can re-enroll in the policies for an indefinite period of time. The intent of the rule is to grant consumers affordable coverage alternatives — studies show that short-term plans charge significantly lower premiums than plans sold through ACA state insurance marketplaces. However, the more “affordable” coverage comes with less coverage. Consumers who purchase these plans face:
- Limited benefit offerings;
- Significant out-of-pocket costs;
- Risk of plan cancellations due to pre-existing conditions; and
- Possible deceptive advertising practices.
Increased sale of these plans to younger, healthy people is expected to draw thousands of these healthy consumers out of state’s individual market’s risk pool, leading to an unhealthy risk mix and subsequent increases in marketplace health insurance premiums.
Below, the National Academy for State Health Policy details the impact these short-term plans are expected to have on states’ markets and the actions states may consider to regulate these plans.
The Impact of Short-Term Plans on Affordable Care Act Coverage
Short-term insurance plans are not new, these temporary coverage plans historically were used to bridge gaps in coverage, such as the loss of a job. The plans target healthy individuals seeking stop-gap coverage (until they find or start a new job) or in the case of an emergency. Rather than provide comprehensive benefits, most short-term plans provide limited coverage and have less costly premiums than other coverage options. Additionally, the plans are not subject to many of the requirements of other insurance plans, such as provisions that require insurers to offer coverage to individuals with pre-existing conditions and requirements that help protect consumers from excessive out-of-pocket costs including:
- Prohibiting issuers from placing annual or lifetime limits on insurance spending,
- Limiting consumer cost-sharing for essential health benefits, and
- Requiring that 80 percent of premium dollars are spent on enrollee care (Medical Loss Ratio, MLR).
These plans are not considered part of the individual market for the purposes of risk pooling, meaning that short-term plans siphon young and healthy individuals from the pool used to spread risk and therefore lower premiums for those who purchase insurance in the individual market. Under the Administration’s proposed short-term insurance rule, officials estimate that 100,000 to 200,000 individuals will switch from marketplace coverage to short-term plans, drawing these individuals out of the individual market risk pool. This is expected to lead to average premium increases of $2 to $4 per month (ranging from 0.7 to 1.7 percent, according to reports) for coverage purchased through state marketplaces An analysis by the Urban Institute estimates that 4.3 million individuals will enroll in short-term plans, resulting in marketplace premium price increases ranging from zero to 30.5 percent due to the combined effect of the sale of the short-term plans and the elimination of the individual mandate penalty approved by Congress in December.
State Options to Regulate Short-Term Insurance Plans
States have wide latitude to regulate short-term insurance sold in their markets. As detailed in a recent Commonwealth Fund Report, three states outright ban the sale of short-term plans, while many other states impose regulations that limit the sale of plans or impose some form of consumer protections, such as mandating specific benefits. Depending on their goals, policymakers have several options if they wish to regulate these plans, beyond imposing outright bans on their sale. States can:
|State Regulation of Short-Term Insurance Plans|
|Prohibits underwritten short-term plans||MA, NJ, NY|
|Limits short-term plan contracts to under 12 months (ranges from 3 months to 185 days)||AZ, CA, CO, CT, IN, MD*, MI, MN, ND, NH, NV, OR, SD|
|Limits total length of time consumers can be covered by a short-term plan (e.g., plan renewability)||CO, MD*, ME, MI, MN, NH, NV, OR, WI|
|Requires coverage of all state-mandated benefits||AR, CO, FL, KS, MD, MN, PA, RI, TX|
|Requires coverage of some state-mandated benefits||CA, DE, DC, GA, HI, IL, IA, ID, KY, ME, MI, MO, NV, NH, NM, NC, ND, OH, OR, SC, SD, TN, UT, VT, WV, WI|
|Source: State Regulation of Coverage Options Outside of the Affordable Care Act: Limiting the Risk to the Individual Market, The Commonwealth Fund, March 2018.||*Maryland’s law limiting short-term insurance plans became law after publication of the Commonwealth Fund report.|
- Impose term limits on plan contracts: By limiting contract terms, consumers seeking long-term coverage will be encouraged to purchase coverage through the individual market instead, strengthening the individual market risk pool and lowering premium costs. This also reinforces the use of short-term plans for limited, stop-gap coverage.
- Prohibit the sale of consecutive contracts or mix-and-match plans: Similar to the imposition of term limits, these policies encourage consumers who need long-term coverage to purchase coverage through the individual market. This also helps to lessen confusion among consumers who purchase a series of short -term policies, each with potentially different benefit and network offerings. This also mitigates potential profiteering by brokers and agents who “mix-and-match” plans and receive a commission for each plan sold.
- Require mandated benefits: While most states require short-term insurers to cover at least some state-mandated health care benefits, most plans do not offer comprehensive benefits, including the 10 essential health benefit categories mandated by ACA. Stricter benefit mandates ensure that short-term policies provide the health benefits that the state requires, such as prescription drug coverage.
- Impose protections for individuals with pre-existing conditions: One of the most significant limitations of short-term plans is they exclude or impose significant cost-sharing on individuals with pre-existing conditions, meaning that these plans are not viable options for most individuals, including the half of all adults with chronic conditions. More alarming, insurers often have wide latitude to rescind coverage if consumers have a pre-existing condition, leaving consumers vulnerable to losing even their short-term insurance protections if the condition is deemed to have originated prior to the purchase of the plan. Stricter policies or oversight to prohibit these practices can protect consumers from losses in the case of such situations. A bill in Georgia, for example, would prohibit short-term plans from defining pre-existing conditions any stricter than how state law describes them.
- Employ other regulatory tools: States have other regulatory tools they can use to fortify coverage offered by short-term plans, or to limit the risk of excessive out-of-pocket spending by consumers who purchase these plans. These include limiting premium rating ratios, requiring caps on consumer cost-sharing for certain or all services, and imposing a modified MLR requirement on short-term plans. States may also consider policies to counteract the effect of these plans on their risk pools, such as imposing an assessment on these plans as a means to raise revenue for a reinsurance program.
- Increase consumer awareness and education: If they permit the existence of these plans, states can fortify efforts to make sure consumers are educated about the risks and potential limitations of purchasing short-term plans. These proposed regulations can require that short-term plan contracts include language to notify consumers that the plans may not comply with federal health insurance coverage requirements. States may compel entities that sell short-term policies (including agents, brokers, and insurers) to use greater transparency or clearer language when assisting consumers with the purchase of a short-term plan. For example, a Missouri bill that grants greater flexibility for the sale of short-term plans, stipulates that short-term notices include information that the plan may not cover certain benefits nor cover pre-existing conditions, “including conditions you may currently have and are unaware of but are not diagnosed until the policy’s term.”
Last week, the US Department of Health and Human Services (HHS) released rules governing Affordable Care Act health plans in 2019 that give states the flexibility to revise what insurance plans are sold through their individual and small group marketplaces, and give consumers the option to buy “thinner” plans at lower prices.
The long-awaited final 2019 Notice of Benefit and Payment Parameters is significant for the immediate and longer-term changes it makes to state insurance markets. Initial filing deadlines for 2019 insurance rates are rapidly approaching in May and June, so states must act quickly if they want to implement any of the options granted to states under the rules, options that could affect rates for 2019. Generally, the new rules would:
- Grant states greater insurance plan management authority. States could adjust risk and rating rules and establish new essential health benefit (EHB) benchmarks that all plans sold through their marketplaces must comply with;
- Change the parameters for some products sold through the insurance marketplaces; and
- Allow states to make changes to enrollment, verification, and outreach requirements for the health insurance marketplaces.
Below are some of the significant changes that could impact states and consumers.
New Flexibility and Options for States as Regulators
In its release, the Administration touted the rules’ efforts to increase state oversight and flexibility. The rule allows states to significantly change the composition of plans sold in the individual and small group markets. States now have the ability to:
- Raise rate review thresholds. Current rules mandates an automatic review of any requested rate increases of more than 15 percent. The new rule reinforces that this is a minimum threshold and specifies that states must request permission from HHS if they wish to establish a higher review threshold. This would apply to states that expect justifiable increases above 15 percent and want to avoid the administrative burden of reviewing these increases.
- Change the standard 80-20 medical loss ratio (MLR). MLR changes could provide more flexibility to insurers to apply premium dollars toward administrative costs versus directly on coverage. While the changes may allow for better allocation of premium dollars based on actual cost of administering coverage, it also could promote system gaming for insurers who use MLR changes to finance larger profit margins.
- Set filing deadlines for non-qualified health plan-compliant products, separate from deadlines established for qualified health plans (QHPs).for QHPs , potentially giving non-QHPs a competitive advantage by allowing them to file rates for products after rates are filed for QHP.
- Adopt a new essential health benefit (EHB) benchmark plan in plan year 2020. The rule permits states to:
- Adopt the EHB of another state in its entirety or adopt the benchmark for any of the 10 specified EHB categories from another state;
- Maintain the state’s prior benchmark;
- Adopt a new benchmark that is no more generous than benchmarks used in 2017; and
- Allow insurers to substitute benefits between EHB categories.
The rule intends to allow for greater innovation in health insurance benefit design. Every state’s new benchmark must still include benefits across all 10 EHB categories and benefits must be balanced between categories. It prohibits states from increasing the scope of their EHB to be more generous than what existed in 2017.
- Modify risk adjustment payment transfers. The rule permits states to adjust payments made to insurers under the risk adjustment program. Currently, the federal government provides payments to insurers under a standard national formula, but states may seek to adjust how payments are distributed to its insurers in a way that is more reflective of the state’s unique market conditions. States may request that payments be adjusted by up to 50 percent. Adjustments would be applicable to payments beginning in 2020.
The rule also gives greater authority to states to conduct oversight for products sold in their marketplaces, including review of:
- Insurers who request rate increases that are outside of acceptable thresholds;
- Network adequacy standards; and
- Essential community provider requirements.
While many states already review their insurance marketplace products, some may need to adjust resources to ensure that their insurance agencies can conduct adequate plan oversight to ensure that they meet federally-designated standards for these requirements.
Changes to Products Sold by Health Insurance Exchanges
The rules make several changes to the markets and their products, which could have direct impact on consumers. For example, they:
- Eliminate meaningful difference standards. Prior regulation prohibited insurers from selling health plans that were not “meaningfully different” from other products sold on the exchange. The intent was to reduce consumer confusion by making it easy to compare plans without too many duplicative options. . The new regulations eliminate this requirement, potentially increasing the number of products sold. States with state-based exchanges may continue to prohibit the sale of “meaningfully different” plans through their exchanges.
- Eliminate standard plan designs. Standard plans were designed to provide consumers with a choice of insurance products with nearly identical benefit offerings, allowing consumers to comparison shop between plans based on other factors such as provider networks or estimated out-of-pocket costs. These plans received a prioritized display through the federally-facilitated exchange (FFE). The FFE will no longer encourage or prioritize the display of these plans. State-based exchanges may continue to offer standard plan designs and promote these plans through their exchanges.
- Eliminate actuarial value requirements for stand-alone dental plans. While the change could reduce the value of dental plans sold through exchanges, it could result in dental plans with lower benefits and higher out-of-pocket risk, though plans would be sold at lower cost. Dental plans are required, at minimum, to provide coverage in compliance with minimum EHB benchmarks for pediatric dental;
- Reduce the maximum annual cost-sharing limit for households earning between 100 to 250 percent of the federal poverty level (FPL). Current rules mandate a maximum limit on the amount of cost-sharing benefits provided under plans eligible for cost-sharing reductions (CSR). This maximum limit is intended to ensure that CSR-eligible plans will not exceed their designated actuarial value. Specifically, the rule would reduce the maximum limit by one-fifth for individuals earning between 200 to 250 percent of FPL, and by two-thirds for individuals earning between 100 to 200 percent of FPL. HHS acknowledged concerns that the changes could result in higher costs for enrollees.
Changes to Outreach, Enrollment and Verification Processes
The rules could alter enrollment and verification standards for consumers who enroll in coverage through the health insurance exchanges. The rules also make significant changes to outreach and enrollment tools such as the Navigator Program. Changes include:
- Elimination of enrollment functionality for Small Business Health Options Program exchanges (SHOP). They would institute significant changes to eliminate SHOP as an enrollment mechanism for small group health insurance. Businesses may instead enroll directly with insurers or through brokers. SHOPs must still perform certain functions, including plan certification, maintenance of shopping tools, and a call center, and conduct eligibility determinations for employers. States may opt to maintain their own state-based SHOPs than can perform enrollment functions.
- Requirements for stricter income verification for self-attesting individuals earning between 100 to 400 percent of FPL. The changes mandate that exchanges conduct stricter review when federal data sources indicate that an individual’s income may be below 100 percent of FPL even when the individual attests to having income above 100 percent of FPL. This change is intended as a program integrity measure to ensure that consumers do not overestimate income to reach the 100 percent of FPL threshold at which point they qualify for tax credits to purchase insurance. However, stricter guidelines may cause enrollment and verification challenges for individuals whose income is inconsistent and near the 100 percent of FPL threshold, at which the consumer qualifies for APTC. In this situation, it is difficult to apply strict verification standards in ways that do not inadvertently prohibit the individual from acquiring coverage.
- Reductions in requirements for Navigator entities. The rules no longer require exchanges to maintain at least two Navigator entities, including one that must be a community and consumer-focused nonprofit group. They also eliminate the requirement that Navigators have a physical presence in the region serve.
- Restrictions over the types of plans consumers may enroll in during special enrollment periods (SEPs). To promote consistency for insurers and markets, the rules require individuals to only enroll in plans in the same metal tier as the plan the individual was previously enrolled in, when the SEP is triggered by the addition of a dependent.
- Allowances for a SEP to be triggered by loss of unborn child Children’s Health Insurance Program (CHIP) coverage. States can opt to provide pregnancy-related coverage through the “unborn child” option that includes a limited benefit package that may not meet ACA’s minimum essential coverage (MEC) criteria. Because the coverage may not qualify as MEC, women seeking insurance after either the loss or birth of their child have experienced issues qualifying for a SEP and may have to go uninsured until the next open enrollment period. This change allows the once-pregnant woman to qualify for a loss of coverage SEP when CHIP’s unborn child coverage has expired.
- Flexibility in oversight over direct enrollment (DE) entities. Allows DE entities to choose their own auditors and outlines the process for conducting readiness-reviews for DE entities. States may consider additional regulation if they wish to impose stricter oversight requirements over DE entities.
Implications for States
States must carefully weigh potential tradeoffs in adopting any of the changes under the rule. While the flexibilities given to states are designed to equip states with more tools to promote affordability and choice in their markets, any change could also significantly alter market risk, or prompt perverse market outcomes. For example, states that seek to alter EHB benchmarks to limit benefits as a means of reducing plan costs, put consumers at risk of increased out-of-pocket spending if the consumer is in need of benefits that are no longer required under the new plans. Changes to the risk adjustment payments could undermine how insurers are currently protected from taking on risk, making them more adverse to offering products to populations who are most in need of services.
Where the new rules eliminate existing standards, state regulators may consider establishing their own requirements in lieu of what had previously been established. This option may especially apply in states that operate their own state-based exchange and have more authority over how plans are presented and sold through their exchanges. States may also consider developing new resources or changing their outreach strategies to ensure that consumers have resources to understand changes — like those made to enrollment processes — so they will enroll in appropriate plans. NASHP will closely monitor and report on how states’ are responding to these rules in the coming months.