CMS cuts ACA exchange fees, floats proposal to end silver-loading
- CMS proposed in its 2020 Payment Notice on Thursday a reduction to exchange user fees and is asking for feedback on a proposals to potentially eliminate auto-reenrollment and "silver-loading," a strategy used by payers where they pack the ACA's subsidy-rich silver tier plans in order to make up for losses incurred by the elimination of cost-sharing reduction (CSR) payments.
- The agency is proposing to drop the exchange fee to 3% from 3.5% of premiums for plans sold on the federal exchange and to 2.5% from 3% for plans sold on state exchanges. If finalized as-is, the rule would also increase the annual cost-sharing limit for self-only coverage to $8,200 from $7,900 and to $16,400 from $15,800 for family coverage.
- While rule's intentions are to lower premiums, critics have argued it would trigger the opposite. Former CMS Administrator Andy Slavitt warned through a series of tweets that the rule is an "act of sabotage" that would cut coverage for 2 million Americans, "significantly increase premiums, and raise out of pocket costs."
CMS has presented the rule as another step toward deregulating healthcare and lowering costs for consumers. Consumers, the agency argues, will ultimately save money on premiums, savings that will theoretically trickle down from insurers, who will pay less in exchange user fees once the proposal is finalized.
CMS Administrator Seema Verma said in a statement that the rule is aligned with the Trump administration's healthcare goals, which include lowered premiums, reduced regulations, market stability, consumerism and protection for taxpayers.
While no regulations limiting or banning auto-enrollment and silver-loading are contained in the rule, CMS has requested public comment on the two issues for consideration in future rules before 2021.
"The Administration supports a legislative solution that would appropriate CSR payments and end silver loading," the proposed rule states. "There is a concern that automatic re-enrollment eliminates an opportunity for consumers to update their coverage and premium tax credit eligibility as their personal circumstances change, potentially leading to eligibility errors, tax credit miscalculations, unrecoverable federal spending on the credits, and general consumer confusion."
Critics called it the latest act of "sabotage" on the ACA.
Ending auto-enrollment, a key feature of the ACA, would result in lost coverage for a number of Americans.
The end of silver-loading, a tactic many health plans resorted to in 2018 after the elimination of the law's cost sharing reductions, could wreak havoc for insurers in the exchanges.
Opponents of the rule believe cracking down on silver-loading would do little more than boost premiums for consumers, as insurers would have no other mechanism to mitigate subsidy losses.
The Trump administration is proposing a technical change to how premium subsidies are indexed, which will modestly decrease ACA marketplace subsidies and increase consumer premiums.— Larry Levitt (@larry_levitt) January 17, 2019"
President Trump, Senator Patty Murray, D-Wash., said in a statement. is "hurting families left and right." Murray is the top Democrat on the Senate Health, Education, Labor, and Pensions Committee.
"Even 27 days into the shutdown he caused, President Trump has somehow found time to further sabotage health care for patients, families, and women —this time by proposing what would amount to a health care tax on patients and families across the country," Murray said.
America's Health Insurance Plans praised the reduced user fee, adding the proposed rule focuses on "stability in the individual market." But it is unclear where the insurance lobby stands on the proposals to potentially end auto-reenrollment and the practice of silver-loading.
Public comments on the rule are due February 19.
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