- CMS Administrator Seema Verma recommended HHS not adopt several key Trump administration changes to the Affordable Care Act, according to a now-released internal memo, citing estimates they would result in substantial losses in health insurance coverage and higher costs for consumers.
- In the August 2018 memo to HHS Secretary Alex Azar, Verma recommended against numerous policy proposals the administration has already adopted or is actively considering for the 2020 plan year. These include ending the practice of "silver loading," terminating automatic ACA exchange re-enrollment and changes to how the premium adjustment percentage is calculated that would reduce advance premium tax credits for consumers.
- Taken together, these three actions could result in 1.1 million Americans losing coverage, premium increases and market disruption, according to a CMS internal analysis. In light of evidence they called "damning," House Committee on Energy and Commerce Democratic leaders sent a letter to Azar Friday inquiring into the harmful effects of Trump administration policies.
Though the Trump administration has pushed back against claims of sabotaging the ACA, this internal memo shows top officials knew of potentially harmful effects its policies would have on the law and the insurance market it created.
Multiple congressional committees received a copy of the August 2018 CMS memo as part of their investigation into HHS' role in the Texas v. Azar lawsuit, in which the government is seeking to strike down the ACA. The case is currently under appeal in the Fifth Circuit, where arguments resume July 9.
Democrats wrote to Azar asking why the Trump administration finalized a proposal for the 2020 plan year similar to one that CMS, in the redacted August memo, said would "increase taxes on issuers and consumers" and "cause coverage losses, further premium increases, and market disruption."
"The fact that the Trump Administration would finalize policies despite these serious warnings from CMS is deeply troubling," the Democratic committee chairmen wrote to Azar Friday. "It appears to be part of the Administration’s continuing efforts to sabotage the individual market, undermine the ACA, hinder consumers’ access to comprehensive health care coverage, and weaken protections for people with preexisting conditions."
The memo includes an analysis by the CMS Office of the Actuary finding that ending automatic re-enrollment — a standard practice in employer coverage and Medicare Advantage — would cause 200,000 enrollees to lose coverage in 2020 and 100,000 additional consumers each subsequent year.
Verma also recommended against ending silver loading: a term to describe when payers load premium increases into the popular silver plans in the ACA marketplace to make up for the loss of cost-sharing reduction payments. This boosts the size of the premium tax credits available to people with incomes below 400% of the federal poverty line.
CMS issued a proposed rule in January laying the groundwork to eliminate the practice of silver loading. However, in the finalized regulation released April 25, the agency did not take action, noting all public commenters supported silver loading as an option to keep the exchanges affordable for consumers.
In April's final rule, the Trump administration finalized changes to the premium indexing methodology, despite CMS' own objections to the proposed changes. The August memo, sent to Azar eight months before the regulation was finalized, found these changes would result in consumers receiving less in advance payments of the premium tax credits by $980 million in 2020 and over $1 billion for each of the following three years.
Taken in sum, the memo found these three actions could potentially result in "bare counties or states with no subsidized coverage available in 2019 and future plan years."
Since the GOP's failed attempts to repeal the ACA two years ago in Congress, Republican lawmakers and the White House have done their best to chip away at the edges of the law.
HHS cut the open enrollment period for ACA plans, slashed the advertising budget and the number of groups helping consumers navigate the exchanges, halted cost-sharing reduction payments to insurers and expanded access to short-term and association health plans, which experts fear will draw healthy people away from the exchanges and jeopardize the stability of the risk pool.
According to the Urban Institute, a full repeal of the ACA would strip coverage from roughly 20 million people and lead to an 82% increase in uncompensated care, further stressing providers' razor-thin margins and leading to more rural hospital closures.
Democrats on Energy and Commerce are asking Azar to send them an unredacted version of the memo; any Trump administration actuarial, fiscal or economic analyses on the effect of the policies; an explanation as to why HHS finalized changes to the premium index methodology in light of the evidence it could harm consumers; and a list of which policies discussed in the memo are still being considered for implementation.
An HHS spokesperson told Healthcare Dive that the agency had received the letter and that "all congressional inquiries are taken seriously by the department." HHS has until June 27 to respond.