Governing August 14, 2018
Aug. 14--Since the
Trump administration signed off on rules to ease the regulation of short-term
and so-called association health plans, states have launched legislative and
legal fights against them.
Both types of
health plan were restricted under the Obama administration. They are
controversial because while they offer consumers a lower-cost option for health
care, they aren't required to fully comply with the Affordable Care Act (ACA).
They can reject people with preexisting conditions and refuse to cover benefits
like maternity care, mental health and hospitalization. Critics of short-term
plans refer to them as "junk insurance."
Twelve state
attorneys general have sued the Trump administration over association health
plans, citing concern over past abuses from their insurers.
"Health
insurance markets for individuals and small businesses were much more prone to
abuse, including discrimination in pricing and benefits ... prior to the ACA's
enactment," the AGs wrote in their suit, noting that the American Cancer
Association and the American Heart Association have raised concerns about the
rule.
Meanwhile, some
states are seeking to prevent or limit short-term plans.
The Connecticut
Department of Insurance determined last week that its state laws prohibit short-term
plans. Hawaii and Maryland recently passed laws that severely limit their use,
and Washington state's insurance commissioner is reportedly in the process of
rewriting rules to do the same. California's legislature is considering an
outright ban.
Association health
plans are sold through trade organizations or industry groups that aren't
subject to the same regulations as health insurance companies, while short-term
health plans are expected to be sold on the ACA marketplace this fall.
This all comes at a
time when ACA premiums have been on the rise, in part because of moves by the
Trump administration. But critics of short-term and association plans worry
that if too many people sign up for them, ACA premiums could rise further.
"The more
healthy people drop out and go to skimpier coverage, the more [other ACA] plans
become unaffordable," says Dania Palanker, assistant research professor
for the Center on Health Insurance Reforms at Georgetown University.
Health policy
experts seem to agree that both short-term plans and association health plans
will add a bit of instability to the ACA marketplace -- but the question is how
much.
"Will they
draw significant numbers of healthy people out of the [ACA] pool? We'll
see," says Trish Riley, executive director of the National Academy for
State Health Policy.
But while advocates
of these controversial plans tout their lower premiums, some reports indicate
that ACA premiums are already starting to stabilize in more than a dozen
states.
The Wall Street
Journal reported earlier this month that six states -- Arizona, North Carolina,
Texas, Illinois, Iowa and Wyoming -- will likely see a decline in premiums. And
the Kaiser Family Foundation found that insurers in eight other states --
Connecticut, Colorado, Georgia, Indiana, Minnesota, Pennsylvania, Tennessee and
Virginia -- are also planning on decreasing premiums in at least one of their
plans this fall. Premiums are expected to be finalized in the next couple of
months.
"The federal
government is a bit unpredictable, but for what we've seen with preliminary
filings, there looks like we'll see some stability for 2019," says Riley.
Blue Cross and Blue
Shield of North Carolina, for example, announced that rates throughout the
state would decrease by 4 percent this year. If the Trump administration had
made fewer changes to the marketplace last year, premiums would have likely
decreased by 15 percent or more, according to North Carolina Health News.
In addition to
introducing the idea of loosening short-term and association health plan
regulations, the Trump administration last year also briefly ended some
payments to insurers that were meant to help offset the costs of subsidies,
drastically cut outreach funding for the ACA and shortened the ACA enrollment
period. Congress, meanwhile, repealed the individual mandate, which required
every American to have health insurance.
Experts say the
marketplace may see more stabilization this year because insurance companies
already accounted for a lot of those changes in their 2018 rates.
"There were
probably a lot of inaccuracies with how they priced silver plans versus bronze
plans, and some may have raised rates more than they needed to because of the
uncertainty," says Palanker. "We also already saw the price effect of
the loss of the individual mandate, with insurers already expecting it to get
rolled back or just not enforced last year."
But even in states
where premiums could plateau or decrease, they will still be expensive for the
people who don't qualify for ACA subsidies, which is about 15 percent of
marketplace users. For example, in Pennsylvania, the cost of the most popular
silver plans are expected to drop 20 percent -- from $636 to $484 a month.
The Trump
administration is, however, helping a handful of states at least temporarily
lower ACA premiums through the use of reinsurance programs.
But Palanker warns
that the short-term and association health plans could have a domino effect in
the years to come: "Looking at 2020 and beyond," she says,
"there could be more instability."
Mattie Quinn --
Staff Writer -- mquinn@governing.com -- @mattiekquinn
(c)2018 Governing
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