Only one insurer is offering coverage in 32 percent of the counties in the United States, which together include 21 percent of the nation’s population. In five states—Alabama, Alaska, Oklahoma, South Carolina, and Wyoming—there is only one insurer participating in the state’s online marketplace. Given the current political, regulatory, and financial uncertainty, there is a very real possibility that some counties may have no marketplace insurers for 2018.
On March 29, 2017, Senators Lamar Alexander and Bob Corker (both Republicans from Tennessee) put forth a proposal to address this situation. The proposal is similar, but not identical, to legislation proposed by Senator Alexander and seven other Republican Senators in 2016. In addition to this bill, other recent ACA-related developments include a FAQ on permissible consumer information gathering by agents and brokers, an interim order in one of several risk corridor payment litigations, and OIG plans to investigate the effect of the administration’s curtailment of enrollment efforts at the end of the 2017 open enrollment period.
The Alexander-Corker bill would apparently allow individuals who live in a county in which the Department of Health and Human Services (HHS) certifies that no insurers are offering qualified health through an Affordable Care Act marketplace to use their premium tax credits to purchase any individual market plan approved for sale in the state. Individuals living in such counties would also be exempted from the individual responsibility requirement. The legislation would only apply through the end of the 2019 plan year.
Many of the ACA’s requirements apply to all individual market plans and not just marketplace qualified health plans. Individual market insurers cannot impose preexisting condition exclusions or lifetime or annual dollar caps and all must cover the essential health benefits, limit out-of-pocket costs, and comply with the ACA’s actuarial value metal level requirements. All individual market plans must also comply with state consumer protections, such as state network adequacy and marketing requirements.
It may be that the bill’s intention would be to allow coverage that does not currently qualify as minimum essential coverage—such as short-term, fixed indemnity, or specified disease coverage—to be paid for using premium tax credits. These products can be underwritten for health status, exclude preexisting conditions, omit essential health benefits, and impose annual and lifetime limits, and are lightly regulated by state law. They are not “individual health insurance coverage” under federal law. Allowing premium tax credits to pay for them would radically undermine the protections offered by the ACA. The same would be true if premium tax credits could be used to pay for grandfathered or “grandmothered” coverage that is also not subject to ACA protections — and not available to new enrollees.
“Qualified health plans” that can currently be paid for by tax credits plans must meet additional requirements beyond those that apply to individual market plans generally, such as federal network adequacy and essential community provider coverage requirements and various accreditation and quality requirements. These are important consumer protections which would be lost under the proposal for enrollees who would have to enroll in off-marketplace plans.
Marketplace insurers must also pay marketplace user fees, set at 3.5 percent of premiums for HealthCare.gov states. Some insurers have left the ACA marketplaces but continued to sell individual market coverage, perhaps to avoid these fees and the additional consumer protection requirements. But if insurers who sell off-marketplace plans were required to sell their plans to any premium tax credit eligible consumers (as they would be under guaranteed availability requirements) in the absence of an individual responsibility requirement, insurers may well decide to leave the individual market altogether.
There are also serious practical problems that would need to be solved. Off-marketplace plans would have to accept enrollments through the marketplace so that the marketplace could determine eligibility for premium tax credits. Marketplaces would have to determine which off-marketplace plan was the second-lowest cost silver plan available to each applicant to determine the amount of those tax credits Off-marketplace plans would have to agree to accept premium tax credits. They would also have to agree to reduce cost sharing for low-income enrollees and accept cost-sharing reduction payments. They would become subject to financial oversight for their management of federal funds. They would only be able to enroll citizens or lawful aliens in tax credit subsidized coverage.
In short, off-marketplace plans would end up looking a great deal like marketplace plans. Again, many of them might give up on the individual market altogether.
The Trump administration will have to decide soon how it is going to keep insurers from abandoning the marketplaces. Treating off-marketplace plans as marketplace plans does not seem to obviously solve the problems that will follow if it fails to do so.
FAQ Clarifies Permissible Solicitation Of Consumer Information By Agents And Brokers
On March 24, 2017, the Centers for Medicare and Medicaid Services released a frequently asked question (FAQ) at their REGTAP.info website regarding the permissibility of agents and brokers, including web-brokers, soliciting limited information from consumers prior to initiating an application through the federally facilitated marketplace (FFM). Secretary Price has suggested that his administration might pursue loosening of regulatory requirements regarding direct marketplace enrollment by insurers and agents and brokers. This might be a step in that direction.
The FAQ clarifies that agents and brokers in the FFM can request limited information from consumers as an initial step toward signing up consumers for FFM coverage as long as the agents and brokers inform consumers that the submission of the information does not constitute an application and that they will follow up with the consumers to collect and verify needed application information. Brokers and agents should also ensure that consumers are aware of deadlines for completing applications and in fact follow up to secure needed information.
It is not clear that the FAQ represents a change in policy. However, insofar as it seems to suggest that brokers and agents are allowed to engage in efforts aimed at identifying potential marketplace enrollees and collecting consumer information otherwise subject to security and confidentiality requirements, it might indicate some movement toward a greater emphasis on direct enrollment.
Risk Corridor Litigation Developments
On March, 24, 2017 another interim order was entered in another one of the now 23 active cases in the Federal Court of Claims challenging the federal government’s failure to pay insurers the full amount that they believe they are owed under the Affordable Care Act’s risk corridor program — $8.3 billion just for 2014 and 2015.
This case was brought by Molina Healthcare of California before Judge Thomas Wheeler, who recently ruled in favor of Moda Health Plans against the government in a case raising virtually identical issues. Molina had moved for the court to enter judgment against the government on the basis of the Moda decision, and Judge Wheeler had asked the government if it had anything new to say. The government in turn asked Judge Wheeler to put the case on hold until the Federal Court of Appeals rules on an appeal of an earlier decision. Molina said it wanted its own day in court, and asked that the court limit the government’s response to new issues not addressed in Molina. Judge Wheeler agreed that Molina deserved its day in court, but held that the government had the right to brief anything it considered relevant. He ordered the parties to move forward with their briefs.
Although the Obama administration suggested it might settle the risk corridor cases in September of 2016, it continued to defend them. The Trump administration has carried on with the defense, and it is hard to believe that it would be any more willing to settle than the Obama administration. A settlement, however, would be a dramatic showing of the commitment of the Trump administration to preserving the individual health insurance market in the United States, and could not come at a more opportune time.
OIG To Examine Administration Reduction Of Marketplace Enrollment Activities
On March, 23, 2017, the Department of Health and Human Services Inspector General wrote to Senators Elizabeth Warren (D-MA) and Patty Murray (D-WA), in response to their request that the Office of the Inspector General investigate the effect of the Trump administrations curtailing marketplace enrollment efforts in the final week of the 2017 open enrollment period. The letter states that the OIG will:
conduct a fact-finding review of HHS’s decisions related to halting (and resuming, as applicable) paid advertisements, email, social media, and other outreach efforts related to Marketplace enrollment in 2017. Our inquiry will include the timeline, decision-making process, and factors considered by HHS, including any HHS analyses of implications for enrollment and/or expected costs or savings.
The precipitous termination of marketplace advertising following President Trump’s inauguration has been seen as a potential cause of 2017 marketplace enrollment, which had been running ahead of 2016, flat-lining during the final week.
Throughout the Obama administration, the HHS OIG, Government Accountability Office, and Treasury Inspector General for Tax Administration issued reports that were often critical of administration’s Affordable Care Act implementation efforts. Presumably these agencies will continue to provide objective and independent review of the Trump administration’s efforts as well.