Administration Issues Final Rule on “Short-Term, Limited-Duration” Plans
On August 1, the Internal Revenue Service, Department of the Treasury, Department of Labor, and Department of Health and Human Services (HHS) issued a final rule on “short-term, limited-duration” insurance (STLDI) plans. See HHS press release. Under this rule, insurers will be able to offer insurance policies that do not offer the same “essential health benefits” or consumer protections that apply to plans meeting the standards of the Affordable Care Act (ACA). Such STLDI plans were permitted under the ACA, intended for people transitioning between jobs or needing temporary coverage for some other reason. Under regulations issued by the Obama administration, these plans were limited to a maximum period of less than three months. Under the new rule, STLDI plans can cover an initial period of less than 12 months, and, taking into account any extensions, a maximum duration of no longer than 36 months in total. Premiums for these plans will be less expensive than premiums for ACA-compliant plans because they can offer less robust benefits, can be denied to people with pre-existing conditions, and do not offer the other consumer protections of the ACA, such as the ban on annual and lifetime caps. Experts expect that these plans will attract younger, healthier consumers, meaning that consumers who need more robust coverage will end up paying higher premiums than they would if the insurance pool included everyone. In addition, consumer advocates are concerned that purchasers of STDLI plans may find that they do not have the coverage they need if they become sick or injured. See Coverage That (Doesn’t) Count: How the Short-Term, Limited Duration Rule Could Lead to Underinsurance (blog of the Georgetown Center on Health Insurance Reform, 7/26/18).
The recent rule expanding “Association Health Plans” is expected to have the same impact. See Buyer Beware of Association Health Plans (The Hill, 7/25/18); The New Association Health Plan Rule: What Are the Issues and Options for States (blog of the National Academy for State Health Policy, 6/26/18).
HHS Resumes ACA Risk-Adjustment Payments to Insurers
As reported earlier, the administration had decided several weeks ago that it would stop collecting and paying out the risk-adjustment payments established by the Affordable Care Act (ACA). These payments essentially transfer funds from insurance plans with low-risk consumers to plans with higher-risk ones. Cessation of the payments could have resulted in higher premiums. On July 24, CMS issued a final rule on the risk-adjustment methodology, and resumed the risk adjustment program. See New Regulation Justifies CMS Risk Adjustment Formula For 2017; Program Will Resume.
CMS Issues Waivers for State Reinsurance Programs
The Centers for Medicare & Medicaid Services (CMS) has approved waivers under Section 1332 of the ACA (“innovation waivers”) to permit Wisconsin and Maine to create reinsurance programs. Under such programs, the state helps insurance issuers cover very expensive claims in order to prevent premium increases. See The Health 202: Meet the Unicorn of Health-Care Policy, (PowerPost blog of the Washington Post, 7/31/18). New Jersey and Maryland have also proposed reinsurance waivers. The Kaiser Family Foundation is maintaining a Section 1332 Waiver Tracker.
More about Cuts in Navigator Funding
As reported earlier, the administration announced in July that it would drastically reduce funding for ACA Navigators before the upcoming enrollment period. The Kaiser Family Foundation has developed a state-by-state table of the cuts in Navigator funding. A July 12 post in the Health Affairs blog provides background information on the Navigator program and discusses the administration’s rationale for reducing its funding. See also Bracing for an Affordable Care Act Enrollment Season without Navigators: Risks for Consumers and the Market (Blog of the Georgetown Center on Health Insurance Reform, 7/24/18).
In Other ACA News:
Individual market enrollment dropping amid premium increases
Encourage confidence to act