Last week, Medicare Rights explored some of the looming risks to health coverage and affordability created by recent administrative efforts to undercut the Affordable Care Act (ACA). As we noted then, the Trump administration has proposed several new rules that would allow insurers to offer coverage that does not meet the standards set by the ACA. In addition, Congress has taken steps to undermine the ACA’s coverage by repealing the individual mandate in last year’s tax bill, despite evidence that doing so would cause millions to lose coverage. Together, these changes threaten to undermine the design and achievements of the ACA. Now the Urban Institute, a nonpartisan research organization, and Avalere, a nonpartisan health consulting firm, have released studies that add concrete numbers to these risks.
The first risk is the proposal to expand the availability of Association Health Plans (AHPs), groups of businesses and self-employed individuals that pool together to buy health insurance. Under the new rule, AHPs would be exempt from many of the ACA’s insurance protections, including those that require all health policies to cover a comprehensive set of benefits. AHPs would be able to provide fewer benefits to those they cover. For example, policies might exclude cancer treatments so those with an AHP might find they have no real insurance to cover their chemotherapy.
While people might be tempted by AHPs because they have lower costs, those lower costs come at the expense of fewer benefits. These plans are also likely to lead to higher premiums in the individual and small-group markets as people who feel they do not need comprehensive coverage switch to plans that appear to be a better bargain. In their study, Avalere predicts the premium increase to be around 3.5% in the individual market, and a smaller 0.5% in the small group market.
In addition to the problem of AHP enrollees having too little coverage, Avalere predicts that the premium increases would likely lead to 130,000 additional people becoming uninsured by 2022.
Another source of significant risk is the administration’s proposal around Short-Term Limited Duration Insurance (STLDI) policies. These plans are allowed to ignore most ACA consumer protection requirements. They can, for example, apply annual and lifetime benefit limits, offer limited benefits, and deny coverage or greatly increase premiums because of an applicant’s pre-existing conditions. The benefit packages are often so skimpy that the nonpartisan Congressional Budget Office (CBO) doesn’t consider STLDI plans to be genuine health insurance.
The repeal of the individual mandate, which until next year requires people to have ACA-compliant insurance or pay a penalty, will allow STLDI plans to flourish, and the administration is extending their impact by allowing such plans to be sold for a whole year at a time rather than as stopgap plans, as under current law.
According to the Urban Institute’s study, the combination of the individual mandate repeal and bolstering STLDI policies will lead to major damage to the individual market, including more uninsured or underinsured people, higher premiums, and more federal spending.
If the proposed rule goes into effect, Urban Institute predicts that 36.9 million people will be without minimum health coverage in 2019. Of that number, 4.2 million will be enrolled in STLDI policies that do not offer necessary coverage.
In addition, Urban Institute expects premiums in the individual market to spike by 18.2% if year-long STLDI policies are available. Younger, healthier people might choose this coverage thinking it is a bargain, and this would increase the costs for those who need the better coverage that ACA-compliant plans offer. Because of this sharp increase in premiums, costs to the federal government will be an estimated 9.3% higher as well.
At Medicare Rights, we are concerned any time large numbers of future Medicare enrollees lose coverage. As people become eligible for Medicare, their costs are related to how much health care access they had before eligibility. It is in the interest of the Medicare program that everyone who becomes eligible already have good health care coverage.
Medicare Rights will be writing comments to the administration in opposition to these proposed rules, and we encourage all stakeholders to weigh in as well. Comments on the Short-Term Limited Duration proposed rule are due by April 23. Read and submit comments here. Comments on the Association Health Plan Proposed rule are due March 6, and you can weigh in here.