December 7 Update

Twelve Million Unknowingly Eligible For Premium Tax Credits

On December 5, the HHS Assistance Secretary for Planning and Evaluation (ASPE) released a blog post stating that almost 12 million Americans may be eligible for financial assistance purchasing health insurance in the marketplaces but not be aware of this fact.

The blog post reports that 8.8 million persons currently receive advance premium tax credits (APTC) in the 38 states served by HealthCare.gov in 2016. An additional 286,000 consumers who received coverage through Healthcare.gov in 2016 without APTC may be eligible for assistance for 2017. Eligibility for APTC turns on whether or not the premium of the relevant benchmark plan exceeds a certain percentage of a consumer’s household income, and with 2017 premium increases more consumers will have to pay premiums exceeding these thresholds and will become eligible for APTC.

ASPE further estimates that 2.5 million individuals who currently purchase coverage in the individual market outside of the marketplaces would be eligible for APTC if they instead purchased coverage through the marketplaces. Finally, ASPE believes that 9 million uninsured Americans, 84 percent of the marketplace-eligible uninsured, earn incomes indicating that they may be eligible for financial assistance. (Although an undetermined number of these would be ineligible because they have affordable employer coverage). The blog post includes state-by-state data on potential APTC eligibility for HealthCare.gov enrollees for 2017.

Agent And Broker Marketplace Questions

On December 2, 2016, CMS released at its REGTAP.info website (registration required) a series of FAQs regarding agents and brokers in HeathCare.gov. The FAQs clarify that if consumers who were enrolled in marketplace coverage through agents or brokers update their marketplace application information or renew coverage through the marketplace, the National Producer Number of the agent or broker will remain with the application unless the consumer affirmatively changes or removes it. If a consumer who was enrolled in a plan that is no longer offered through the marketplace is auto-reenrolled into a different plan, however, the reenrollment will be assigned according to the marketplace auto-reenrollment crosswalk hierarchy and will not take into account whether the new insurer works with or compensates agents and brokers.

The FAQs emphasize again that the marketplace does not require insurers to compensate agents and brokers and that compensation arrangements depend strictly on agreements between the insurers and the brokers and agents. The FAQs reiterate, however, that insurers must pay agents and brokers the same compensation for selling a qualified health plan inside or outside the marketplace.

A number of insurers have ceased paying commissions to agents and brokers for marketplace enrollments and agents and brokers are understandably unhappy. LifeHealthPro reports that 61,263 agents and brokers had registered for marketplace participation as of November 8, 10 percent fewer than last year, but that registration between November 8 and November 28 was down 60 percent from 2015. It reports further that 47 web brokers remain with Healthcare.gov as of November 14, down from a peak of 82 in March of this year. CMS maintains lists of marketplace-registered agents and brokers and web-brokers.

Original Post

On December 5, 2016, the Circuit Court of Appeals for the District of Columbia acceded to the request of the House of Representatives and stayed further proceedings in House v. Burwell pending further motions by the parties, due by February 21, 2017. In this case, the House of Representatives claims that government payments to insurers to reimburse them for reducing cost sharing for silver plan marketplace enrollees with incomes not exceeding 250 percent of the poverty level are illegal because Congress has not appropriated the funds for those payments.

The ACA requires insurers to reduce cost-sharing for these enrollees and the government to reimburse them. However, the House and the Obama administration have taken different positions as to whether money has in fact been appropriated for the reimbursement payments. The lower court sided with the House.

This appellate court’s order means that this lawsuit and its consequences are effectively no longer in the hands of the Obama administration and are now the full responsibility of the Trump administration and of Congress. Over six million marketplace enrollees receive assistance through the cost sharing reductions. The cost-sharing reductions dramatically reduce the cost of health care services and many marketplace enrollees would be unable to afford coverage without them. Were the cost-sharing reduction reimbursement payments to insurers to terminate precipitously, the financial consequences for insurers would be disastrous. Insurers would likely seek to terminate marketplace participation, raise their premiums, or cease reducing cost sharing, although some or all of these options may not be available legally.

The Trump administration may be reluctant to simply dismiss the appeal, as it would leave in place a strong legal precedent that a single house of congress can sue an administration any time it disagrees with the president on the interpretation of an appropriations measure. The district court decision likely would have been reversed on this point, and that would have caused the appeals court to dismiss the lawsuit for lack of jurisdiction. The administration cannot assume that both houses of Congress will always be controlled by a friendly party and no president should want to be vulnerable to congressional lawsuits challenging its interpretation of appropriations.

Both the Trump administration and Congress, moreover, should worry about the consequences of the lower court’s order enjoining further payments of premium tax credits in the absence of new appropriation becoming effective immediately. The effect could be to launch the marketplaces into chaos before Congress has even had time to consider an orderly repeal and replace process, much less actually propose a replacement plan.

The reasonable course for Congress at this time is to appropriate funds to cover the cost-sharing reduction payments for 2017 (and 2018 to avoid a collapse of the marketplaces at the end of 2017), and then to negotiate with the Trump administration the withdrawal of the appeal and the vacating of the district court’s order with the administration. Until Congress appropriates these funds, the Trump administration should delay the resolution of the appeal and leave the district court’s stay of its order in place. These actions will undoubtedly be difficult for some Republicans to accept, but the alternative should be far more distasteful.