WASHINGTON — The Trump administration has shifted more control over the Affordable Care Act marketplaces to the states and given consumers more leeway to avoid participation this year. A new final rule issued recently by the Centers for Medicare and Medicaid Services (CMS) relaxes certain regulations regarding ACA health plans in order to drive competition and affordability within state health insurance marketplaces.
“This rule gives states new tools to stabilize their health insurance markets and empower citizens to find coverage that fits their families’ needs and budgets,” said CMS administrator Seema Verma in a statement.
The rule will take effect for ACA health plans that will be sold this fall for coverage in 2019.
One of the most important changes gives states greater flexibility in selecting an Essential Health Benefits (EHB) plan. Instead of being limited to the existing 10 benefit options, states can choose from 50 EHB-benchmark plans used in other states for the 2017 plan year, or they can select specific categories such as drug coverage or hospitalization. In effect, states will be allowed to cover fewer prescription drugs, for example, or fewer doctor visits.
In addition, the new final rule hands over to the 39 states that use the federal insurance exchange, HealthCare.gov, responsibility for reviewing and ensuring that ACA health plans in their markets have sufficient doctors and other care providers. It also eliminates the meaningful difference requirement for Qualified Health Plans, which was originally intended to help consumers choose between plans, in order to give insurers more flexibility in plan design.
States will also have greater flexibility in reviewing insurance companies’ premium rates, while oversight of the insurers is being eased. For instance, student health insurance plans will be exempt from reviews and health plans will only be subject to rate review if they increase premiums by 15%, rather than the previous 10% threshold.
In addition, CMS has eliminated standardized options from the federal marketplace in an effort to encourage innovation, the agency said. Standardized options were originally proposed as a way to simplify shopping for plans for consumers, but it was opposed by the insurance industry. The ACA did not require insurers to offer standardized plans, but CMS had previously encouraged them to do so.
The rule also loosens the Medical Loss Ratio (MLR) reporting requirements for insurers in an effort to stabilize insurance markets, encourage insurer participation and expand consumer choice. Insurers who cover individuals and small businesses currently must spend at least 80% of their premiums on health care and quality improvement. In the 2019 plan year, states will be allowed to request “reasonable adjustments” to the MLR standard for an individual market if the state can demonstrate that a lower MLR standard could help stabilize its individual insurance market.
The rule also provides consumers with greater freedom from the individual mandate penalty in 2018. The penalty had already been eliminated for 2019 and following plan years, but the new final rule allows insurance exchanges to extend hardship exemptions — retroactive to 2016 — to individuals who live in counties with no health insurer or just one insurer.