Congressional Republicans and President Trump continue their efforts to reduce the level of health insurance available to all Americans. Most recently, the Center for Medicare and Medicaid Services (CMS) issued a 365-page proposed rule that, if enacted, could reduce the most basic benefits offered under the Affordable Care Act. This is the latest among Republicans' so-called "premium stabilization efforts," which aim to reduce Obama-era insurance premium hikes at the expense of Americans' access to healthcare. CMS said the rule was intended to give states more flexibility and reduce the burden on insurers in order to stabilize the individual and small-group markets and drive down the cost of care.
While I haven't fully digested the entire proposed rule yet, here are 3 of my earliest concerns.
1. The minimum standard of insurance offered in your state may decrease.
The ACA requires all applicable individuals to maintain coverage under a health insurance plan -- something the law calls Minimum Essential Coverage (MEC). Health insurance plans are then built around a benefit structure that includes Essential Health Benefits (EHB), or those benefits whose inclusion in health plans is mandatory. Plans with benefits that far exceed the EHBs tend to have higher monthly premiums and lower deductibles, while plans offering little more than EHBs tend to have lower monthly premiums and higher deductibles.
The ACA left the Secretary of Health and Human Services to define the exact parameters of EHB, except that it mandated that EHB include at least the following categories:
- ambulatory patient services;
- emergency services;
- maternity and newborn care;
- mental health and substance use disorder services including behavioral health treatment;
- prescription drugs;
- rehabilitative and habilitative services and devices;
- laboratory services;
- preventive and wellness services and chronic disease management; and
- pediatric services, including oral and vision care. (PPACA § 1302(b)).
The scope of EHB available to individuals purchasing marketplace plans must be equal to the scope of EHB provided under a typical workplace plan. The Department of Health & Human Services further defines each state's EHB based upon state-specific EHB-benchmark plans. (45 CFR 156.100). Currently, states choose their EHB-benchmark plan from among the following: the 3 largest small group plans, the 3 largest state employee health plans, the 3 largest federal employee health plans, or the largest HMO available in the state's commercial market. (View each state's current EHB-benchmark plan on the Kaiser Family Foundation's website here.)
While states are currently able to choose their own EHB-benchmark plan from among those 10 choices listed above, CMS proposes a change. The proposed rule would allow states to choose a benchmark plan from any other state, or would allow states to choose a set of benefits that would become that state's EHB-benchmark plan. The rule also proposes redefining "a typical employer plan" as a plan covering at least 5,000 people. Health law professor Nicholas Bagley wrote on the Incidental Economist blog that "[t]his definitional change, combined with the choose-your-own-adventure option to devise a benchmark, means states will have wide authority to water down the essential health benefits requirement." While the 10 EHB categories would still require coverage, the exact treatments covered under those categories could vary widely. Potential changes might include different prescription drug formularies, less expensive treatment options for chronic illnesses, or fewer rehabilitative visits. States could also shift benefits among those categories, giving them wide latitude to reduce currently-available benefits.
2. The rule would raise the threshold for premium increases that need to be reviewed by regulators.
Now, the ACA requires insurers planning premium increases of 10% or more to submit those rates to regulators for review. The proposed rule wouldn't require insurers to submit their premium increases to regulators unless the proposed increase exceeded 15% or more. This would allow insurance companies more leeway to increase rates without oversight. Learn more about rate review programs here.
3. The rule would allow insurers to spend a smaller percentage of their members' premium dollars on medical expenses.
The medical-loss ratio (MLR) describes the ratio of premium dollars received by the insurance plan to monies expended on members' healthcare. Currently, at least 80% of dollars received from individual-market premiums must be spent on their members' healthcare. The remaining 20% can be spent on administrative costs and expenses.
The proposed rule would allow states to lower the 80% MLR if they can show that a lower MLR would help to stabilize their individual insurance market. This would increase the percentage of premium dollars that can be spent on administrative costs. CMS will consider whether granting the request might keep the insurer from exiting the insurance market.
about the author
Erin K. Jackson is Jackson LLP's Managing Partner. She is responsible for all aspects of firm management, is a sought-after speaker for healthcare conferences, and is a published author. She is specifically focused upon the intersection of the patient experience in healthcare with the legal and ethical responsibilities of providers.
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