Implementing Health Reform. On January 11, 2016 Centers for Medicare and Medicaid Services (CMS) Acting Administrator Andy Slavitt gave a major policy address at the J.P. Morgan Healthcare Conference about the future of the Affordable Care Act (ACA) marketplaces. His speech was clearly intended to address concerns that insurers have been expressing about the viability of the health insurance marketplaces, including allegations that consumers have been gaming special enrollment periods (SEPs) to enroll in coverage once they become ill and then cancel coverage when they regain health.
Slavitt asserted that although the marketplaces are still young, they are maturing and moving onward from their startup phase. He noted that CMS already has experience with running highly successful Medicare Advantage and Medicare Part D marketplaces and has been rapidly gaining experience in the ACA marketplace.
He touted the fact that 41 percent of new enrollees so far in the 2016 open enrollment period are under age 35, a percentage that is expected to grow. He pointed to greater awareness of the individual responsibility requirement fine as a factor that is driving younger and healthier consumers to the marketplace. He observed that the marketplaces are competitive—with 90 percent of enrollees having a choice of at least three insurers—and dynamic — with 60 percent of active reenrollees switching plans for 2015.
Slavitt declared, however, that CMS is taking insurer concerns about the marketplace risk pool seriously. CMS intends to take significant steps over the next 45 days to enhance the stability and integrity of the risk pool. CMS is taking action to ensure that SEPs are not in fact abused to facilitate adverse selection against the marketplaces. Nearly 950,000 consumers signed up through SEPS last year, and insurers have alleged that they have been much more costly to cover than those who signed up during open enrollment.
First, CMS intends to clarify certain SEPs to ensure that they are used appropriately and as intended. Second, CMS is going to eliminate certain SEPs that were helpful in getting the marketplaces underway but are no longer needed. Specifically, CMS has made it very clear that it will not offer a tax-season SEP this year as it did last year for those who were not aware until they filed their taxes of the existence of a fine for not having minimum essential coverage. Third, CMS has established an enforcement unit to deal with fraudulent enrollment and has already terminated enrollees who were enrolled inappropriately.
CMS also intends to review its risk adjustment program to ensure it is operating as intended. CMS will give insurers risk adjustment estimates earlier to give them more timely information to facilitate informed rate setting. CMS will be holding a public conference on March 25 to reexamine its risk adjustment program to ensure that it serves its goal of protecting high-risk populations.
Slavitt noted that reinsurance program was a success, as it paid out $7.9 billion this year, 25 percent more than had been anticipated. He praised the Budget Act’s one year delay in the health insurer’s fee, which will save health insurers $13.9 billion, allowing them to moderate premium increases, as an attempt by Congress to assist the marketplaces as they move beyond the startup stage. This intent certainly never occurred to many of the members of Congress who voted for the fee moratorium.
It is important that the marketplace offer insurers a stable risk pool and that insurers have faith in the integrity of that risk pool. But it is also important to remember that a major goal of the ACA was to cover unhealthy as well as healthy people. Insurers are claiming that consumers who are enrolling during SEPs use more health services than those who enroll during open enrollment.
But SEPs exist to accommodate major life changes including the birth of the baby or the loss of job-based coverage. Newborns often need health care, and people often lose their jobs for health reasons. Indeed, the high cost of care for enrollees in the Consolidated Omnibus Budget Reconciliation Act (COBRA)–which was formerly the primary way to retain health coverage at the time of a job loss—is well recognized.
It must also be remembered that the individual market has always been a residual and transient market, indeed the market is probably more stable now than it has been in decades. CMS must balance the need of individuals undergoing life changes to access coverage without major barriers with the integrity of the risk pool. It must not in its zeal to ensure stability for insurers, deny health care to consumers who face often unexpected life changes that necessitate insurance coverage.
Missouri Judge Refuses To Dismiss Contraceptive Coverage Case
On January 8, 2016, Judge Jean Hamilton of the United States District Court for the Eastern District of Missouri refused to dismiss a case brought by Paul and Teresa Wieland against the Department of Health and Human Services (HHS) claiming that the federal regulation that requires group health plans to cover contraception violates their rights under the Religious Freedom Restoration Act (RFRA) by barring them (and their daughters) from group coverage that does not cover contraceptives. Mr. Wieland is a member of the Missouri House of Representatives and is covered by the Missouri Consolidated Health Care Plan.
The district court had earlier dismissed the case holding that the Wielands did not have standing to challenge the rule but the Eighth Circuit had held that the Wielands had alleged an injury caused by the federal rule that could be addressed by the court, and thus the court had jurisdiction to hear their claim.
On remand, Judge Hamilton held that the plaintiffs had alleged a sufficient burden on their exercise of their religious beliefs to survive a motion to dismiss. She left to later proceedings the determination of whether the regulation is the least restrictive means of serving a compelling governmental interest, and thus could survive a RFRA challenge. The court dismissed all of the other claims brought by the plaintiffs, which were based on the First Amendment Free Exercise and Freedom of Speech Clauses, the Due Process Clause, and the Administrative Procedures Act.
In holding that an individual (as opposed to an employer) can challenge the contraceptive rule under RFRA, the Missouri decision is in line with an earlier decision from a District of Columbia district court but contrary to a recent Pennsylvania case.
The Missouri decision is not yet a final decision on the merits, and thus did not confront the difficult question of to what extent individuals should be allowed to force insurers to allow them to write their own insurance coverage based on their religious beliefs. Whatever the Supreme Court decides with respect to the scope of the accommodation that must be offered employers that object to contraceptives under the Zubik case this spring, the accommodation of religious belief on an individual-by-individual basis would seem to pose an even greater challenge to the uniformity of coverage the ACA sought to achieve.
HHS Releases 2015 Rate Review Annual Report
The Department of Health and Human Services has recently released its 2015 Rate Review Annual Report. The report covers rate increases for health plans in the individual and small group market for 2015. Since 2011, any insurer requesting a rate increase of 10 percent or more in a non-grandfathered product in the individual or small group market has had to submit a justification to HHS and to the relevant state insurance department if the state had an effective rate review program. Since 2014, insurers have had to submit the Unified Rate Review Template for any rate increase in the individual or small group market.
The 2015 report is in a sense old news — 2015 is over and done. But the report is instructive. Every spring when health plans first file their rates the media trumpet the size of the rate increases. As the “unreasonable” rate increase proposals are made public early, news reports often focus on the largest of the proposed increases. But rates are subject to review by state insurance departments, and final rates are often lower than those first proposed.
Insurers covered 15.1 million lives in the individual market in 2015. Five hundred and seventy-seven insurers filed rates on 1,933 insurance products in the individual market. The weighted average of rate increases was for renewing products was 8.7 percent, but the weighted average of increases actually implemented was 6.9 percent. Four hundred an forty-three rate filings requested rate increases of 10 percent or more, with an average increase of 17.7 percent, but only 337 rate filings of 10 percent or more were approved, averaging 14 percent. Rate increases were reduced or denied for products covering 30 percent of covered lives, with an overall reduction in premiums of $1.1 billion.
The small group market covered 10.1 million lives. Six hundred and eighteen insurers filed rates for 2,377 products. The average percentage increase for renewing products was 5.1 percent, but the average implemented increase was 4.3 percent. Two hundred and fifty-one rate filings requested rate increases of 10 percent or more but only 220 were approved. Rate increases were reduced or denied for rates covering 19.6 percent of covered lives, with an overall reduction of $418 in premiums.
The number of covered lives in the individual market increased by 11 percent in 2015 while the number of insures submitting a rate review template increased from 429 in 2014 to 577 in 2015. The number of insurers in the small group market increased by nearly 70 percent while the number of covered lives grew from 10 million to 10.1 million. These rate increases were high, but must again be put in historic context — from 2008 to 2010, the years immediately preceding the adoption of the ACA, the average premium increases in the individual market average 9.9 to 11.7 percent.
HHS Confirms Number Of Households Losing Premium Tax Credits For 2016
Finally, The Hill is reporting that HHS has confirmed that only about 43,000 taxpayers with coverage through the federal marketplace are currently likely to lose premium tax credits for 2016 because they failed to file their taxes for 2014. This is a number of households, not individuals, and only includes states served by HealthCare.gov, but is far lower than numbers previously reported. The IRS has apparently also confirmed that for 2016, tax credits will not be terminated for individuals who did file their taxes but failed to file the form 8962 to reconcile their taxes.
As I have said earlier, the ACA does not require taxpayers to file any particular form to retain tax credit eligibility, and if a taxpayer files a 1040 and the marketplace files a 1095-A for the taxpayer, the IRS has in most instances the information it needs for the tax credit reconciliation. It is thus appropriate that, at least until practices are more firmly established, taxpayers not be barred from receiving assistance because they did not file a particular form. Individuals who do lose tax credits for failure to file can always, of course, file their 2014 taxes late and resume tax credit eligibility.
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