Regulatory Changes to Health Care Marketplaces Roll Back Key Protections

By Lena O’Rourke

The fate of the Affordable Care Act (ACA) will be debated in Congress and across the country over the next weeks and months. The American people have made clear that they support the ACA, and more people now support the ACA than the House Republican plan.

But while the public is focused on the Congressional debate on health care, the Trump Administration is quietly moving to make administrative changes that will roll back protections for the more than 12.2 million people who use the Affordable Care Act’s “marketplaces” in their states to select a health care plan.

These marketplaces provide affordable, quality coverage in every state in the country. One of the first major regulatory actions from the Trump Administration was changes to the rules under which these marketplaces operate. While the U.S. Department of Health and Human Services (HHS) claims that its new rules will “stabilize” the market and encourage more insurers to participate, they actually roll back key protections for individuals and families and will do little to stabilize health insurance markets. In fact, one change shortens the open enrollment period for 2018, which may discourage “healthy procrastinators” from buying insurance and make the risk pool for insurers more costly.

The Center for Law and Social Policy (CLASP) submitted comments last month to HHS on the proposed rule. CLASP recommended that HHS:

  • Protect consumers from being terminated by requiring insurers to offer and honor a grace period on unpaid premiums;
  • Maintain an appropriately long open enrollment period similar to previous years and guarantee an extensive outreach and enrollment period;
  • Eliminate the significant paperwork burden of pre-verifying eligibility; and
  • Maintain comprehensive coverage and federal network adequacy standards.

Unfortunately, HHS failed to make any of these changes and finalized the rule largely as proposed—even making a few sections worse. 

Here are a few things the final rule will do: 

  • Shorten the open enrollment period (OEP). The rule cuts in half the OEP for coverage in calendar year 2018. A shortened OEP means that fewer people will enroll overall, and it may deter younger, healthier applicants from enrolling. Cutting the OEP in half may also have a dampening effect on Medicaid enrollment. Data suggest that states that opted through the Affordable Care Act to expand Medicaid will see a bump in enrollment during OEPs thanks to the “welcome mat” effect of open enrollment. This means that consumers, having heard that health insurance is available during the OEP, will seek out coverage and determine their eligibility for Medicaid, rather than go directly to the marketplace.
  • Increase unnecessary and burdensome paperwork requirements. The federally facilitated marketplaces will now require pre-verification of special enrollment period (SEP) eligibility beginning this June. Enrollment would be placed on hold until the consumer successfully verifies eligibility, and enrollment information would not be transferred to the provider until eligibility is verified. This unreasonable paperwork burden establishes a huge barrier to getting coverage and may result in wrongful rejections and/or delayed care. This provision will particularly affect coverage for people whose income fluctuates from month to month and who therefore may move back and forth between Medicaid and the marketplace.
  • Eliminate grace periods. The rule allows health plans to require that customers satisfy any unpaid premiums and allows plans to terminate customers who don’t. It permits providers to refuse to start coverage for consumers with past-due premiums until these debts are paid (including during special enrollment periods). This means that plan providers can terminate or refuse coverage to any consumer with a past debt, without offering a grace period or a minimum payment to continue their health insurance coverage.
  • Increase consumer costs while pushing down the value of care. The rule makes it easier for providers to offer less generous coverage in exchange for lower premiums. In practice, this provision translates to plans having significantly higher cost-sharing and out-of-pocket costs. Consumers who do not qualify for cost-sharing reductions will be forced to choose either paying significantly more for comprehensive coverage or paying more out-of-pocket expenses in a bare-bones plan.

In sum, this rule will make coverage more expensive and shift costs to consumers who will have to pay more to get comprehensive benefits. The rule takes a big step backward for consumers and does nothing to stabilize their access to care.

Through both the Medicaid expansion and the tax credits for marketplace plans, the Affordable Care Act has dramatically increased the share of people who have health insurance. This has improved people’s health, removed financial burdens, and allowed people to start businesses without fear of losing insurance. Contrary to Trump Administration claims, the ACA is not collapsing. Both Congress and the Administration should stop their current path of undermining protections and destabilizing the marketplace with uncertainty—and should be held accountable if they continue.