Proposed rule would let states decide essential health benefits
The CMS released a proposed rule late Friday that would allow states to sidestep the Affordable Care Act’s (ACA) essential health benefits (EHBs) provision and let states decide their own EHBs. The ACA requires payers to cover at least 10 specific benefits, including maternity care and prescription drugs.
The proposed rule would also allow states to strip away regulations that require payers in the ACA exchanges to pay a certain amount of premium dollars on claims. The ACA’s medical loss ratio provision requires payers spend at least 80% of premium income on healthcare and quality improvement.
States would also have more influence over deciding what are considered qualified health plans. The CMS said in its proposed rule that loosening the requirement would give states more flexibility and potentially reduce healthcare costs for members.
The EHBs are considered a key part of the ACA. They make sure everyone with qualified health plans has at least a base level of benefits like maternity and preventive care. ACA critics, however, say requiring EHBs raises healthcare costs.
By removing that ACA requirement, health insurance plans would return to the days before the ACA when states decided mandated coverage requirements.
The proposed rule takes inspiration from President Donald Trump’s executive order in January that suggested the HHS “exercise all authority and discretion” to delay ACA provisions that impact members and states financially.
The CMS said in the proposed rule that giving states more influence over plan design could lead to states offering less comprehensive plans that cost less. The CMS and HHS view the proposed rule as a way to stabilize the ACA exchanges, which will in some cases feature huge premium increases next year. Avalere recently released an analysis that found premiums for silver level plans, which are the most popular plans in the exchanges, will increase by an average of 34% next year. Much of the reason for the instability in the exchange markets, however, is the Trump administration's decision to end cost-sharing reduction payments.
The CMS is accepting comments on the 365-page proposed rule until Nov. 27. The changes would take effect in 2019. It could face legal challenges, though. Nicholas Bagley, assistant professor at the University of Michigan Law School, wrote in a blog post Monday the proposed rule's definition of a "typical" plan actually allows atypical plans, "which the agency emphatically cannot do."
The proposed rule is the administration’s latest attempt to chip away at the ACA. The Republican-led Congress has tried multiple times to pass ACA repeal legislation this year, but after a series of failures the effort appeals stalled.
So, instead, the Trump Administration is doing what it can to change the law in other ways. In addition to the proposed rule and executive orders that target the ACA, the administration also cut the ACA’s open enrollment period in half this year and slashed its advertising and outreach budget by 90%. ACA advocates say the administration’s moves will reduce ACA exchange plan enrollment in 2018 and leave the market with unbalanced risk pools of largely unhealthy people. That will lead to higher premiums.
Even before that happens, the number of uninsured Americans is already on the rise. Gallup recently reported that 12.3% of Americans are uninsured, which is the largest percentage since 2014.