Proposed Rule To Stablize Individual and Family Plans - ACA

Shortly after Secretary Price received Senate approval as incoming secretary for HHS, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule in an effort to create stability in the health insurance market for individual and family plans (e.g. ObamaCare policies). It has been a rough few weeks for ObamaCare IFP's with the announcement by Humana to exit many/all IFP ACA markets, continued rapid escalations in premiums and the constant political banter about repeal and replace. [Link: CMS Proposed Rule in Full]. No matter your specific view, insurance markets deal with risk and when risk escalates so does the instability of the marketplace.

Quoting from the executive summary of the proposal, the goal is to "improve the risk pool and promote stability in the individual insurance market, we propose taking several steps to increase the incentives for individuals to maintain enrollment in health coverage and decrease the incentives for individuals to enroll only after they discover they require services."

The proposed rule is not official until the necessary comment period closes and adjustments are made thus creating the final rule, however, the proposal points to several likely directions -- the most important which is to increase near term market stability, specifics of the proposal include:

1. Shorten the open enrollment period -- this act represents a significant departure from the Obama Adminstration's almost un-ending open enrollment period(s).
2. For Federal Exchange states (all States without State-based programs) new pre-enrollment verification rules are being proposed to avoid risky moral hazard issues (e.g. Enrollment tied to individual knowledge of impending medical expenses in the near future).
3. Changes to guaranteed issue such that premium payments could be adjusted (upward) to cover past medical debt owed from the same insurer.
4. Changes to the actuarial value calculations for determination of metal tiers.

What is the big picture here?

Whether you favor keeping PPACA "as is" or modifying the law or outright repeal/replace, the reality is that many individuals and carriers are grappling with an ACA insurance market that is falling short on functionality. It is unlikely fundamental change will happen rapidly.

In the meantime, keeping carriers in the market and assuring some degree of stability to the individual is paramount.

John W Kelly Consulting to the Healthcare Market