Tag Archive: Market Stabilization rulemaking

Fate of 2018 individual market could turn on plan issuer response to proposed Market Stabilization rulemaking

With efforts to enact a successor to the Patient Protection and Affordable Care Act bogging down in the legislative process as health plan issuers must soon make decisions on their participation in the individual market and state health benefit exchanges for plan year 2018, much could ride on the Trump administration’s pending Market Stabilization administrative rulemaking and whether it will instill sufficient market confidence among plan issuers worried about losses and adverse selection. Indeed, the outcome of the rulemaking could well determine whether an individual market exists at all in many states next year as Congress debates changes to the Affordable Care Act’s commercial medical insurance market reforms but also the scope and financing of the six-decade-old Medicaid program.

The Department of Health and Human Services is fast tracking the rulemaking and currently reviewing about 4,000 comments received by the March 7 comment deadline. The scope of the rulemaking would directly apply to plans offered on state health benefit exchanges in states where the federal government operates the exchange or provides the online enrollment platform. As for the dozen states that operate their own exchanges, HHS states in the proposed rulemaking it understands those exchanges may not be able to implement the rule in 2017. It asked for comment on an appropriate transitional period for state-based exchanges and whether the rule should be optional for them. HHS also sought comment on how the rulemaking should apply to plans sold outside the exchanges.

The proposed rule is aimed at reducing the likelihood of enrollee gaming and adverse selection by requiring verification of eligibility for special enrollment periods and supporting continuous enrollment. It would more closely conform individual coverage to employer-sponsored and Medicare coverage by establishing the plan year 2018 open enrollment period as November 1 to December 15, 2017. The rulemaking would require those seeking to enroll outside this period to provide documented evidence of life events such as a change in family status or loss of employer-sponsored coverage. It also would make it easier for health plan issuers to collect lapsed premium payments from the prior year upon renewal, liberalizes the actuarial value definitions of all but silver plans as affords states and plan issuers greater leeway for determining provider network adequacy.

“Continued uncertainty around the future of the markets and concerns regarding the risk pools are two of the primary reasons issuer participation in some areas around the country has been limited,” HHS stated in the preamble to the proposed rule. “The proposed changes in this rule are intended to promote issuer participation in these markets and to address concerns raised by issuers, states, and consumers. We believe such changes would result in broader choices and more affordable coverage.”

While the rulemaking is intended to provide a degree of certainty to plan issuers, it can’t provide a full remedy. The lack of quick legislative progress on an ACA successor has increased the likelihood a federal court ruling finding executive branch funding of out of pocket cost subsidies for silver plans sold on the exchanges unconstitutional will take effect. Implementation of the ruling is temporarily on hold pending legislative action. With both inter and intra party legislative gridlock on health care reform, the Trump administration is far less likely to appeal the decision, allowing it to stand.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

If commercial non-group market cannot achieve continuous, year round enrollment, it may not be able to continue in its current form

Central to the Trump administration’s approach to reforming the non-group commercial medical insurance sector is assuring its actuarial stability by incentivizing those who obtain individual coverage remain continuously enrolled. Continuous enrollment is critical to a viable insurance market because it enables health plan issuers to assume a predictable flow of premium dollars to cover the cost of medical care events and predict the likelihood and cost of those events over a given period. That policy goal is contained in the American Health Care Act, the budget reconciliation measure currently pending in Congress that would authorize health plan issuers to surcharge applicants who had a break in coverage, as well as the Department of Health and Human Service’s proposed Market Stabilization rulemaking.

The question however is whether a continuous enrollment incentive will achieve its goal and meaningfully contribute toward creating a more actuarially stable individual risk pool. Particularly given that the segment serves as a relatively small remainder market for people not covered by employer-sponsored group plans that continue to dominate among working age individuals and the government programs Medicare and Medicaid.

Enrollment in the non-group segment is inherently volatile. People shift out of the non-group market as they become eligible for one of these other forms of coverage. Many young invincibles – those age 30 and under – don’t see much need coverage in the first place. Simply paying a 30 percent premium surcharge for a year doesn’t really offer much incentive to enroll in coverage. If the young invincibles lack incentive to enroll, that also works against another critical component in the individual (or any) insurance market – risk spreading – because the pool could tilt toward older members.

If continuous enrollment ultimately proves to have little impact in terms of improving the individual risk pool – and there’s a good chance that will be the case – policymakers will need to consider the larger issue of whether the non-group market can continue to function as a voluntarily enrolled form of insurance (like life insurance, for example). Will involuntary, automatic enrollment be necessary in order for it to be a viable risk pool for those not under the big tents of employer-sponsored or government coverage? And how might that work? Might all adults age 18 to 65 be automatically enrolled and subject to payroll and self-employment taxes as the financing mechanism such as with Germany’s universal coverage system? How might automatic enrollment as a government program comport with the commercial model used for non-group medical coverage? Would commercial non-group market players be content to relinquish the enormous challenge of maintaining an actuarially viable risk pool and transfer their risk bearing function to the government and act solely as plan administrators? Or might it be structured like Medicare, where commercial plans can assume some degree of risk to offer more generous plans such as Medicare Advantage plans?


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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