By DAN DIAMOND, JENNIFER HABERKORN and PAUL DEMKO
The Trump administration is considering major changes to Obamacare that may help convince insurers to remain in the law’s marketplaces while Congress drafts a replacement plan — but the proposals may also limit enrollment and increase costs for older Americans, according to documents obtained by POLITICO.
The administration is looking to alter rules around insurers charging older customers more, how much cost they can shift onto customers, and who’s allowed to sign up outside the standard enrollment window. They represent changes that the industry had previously asked the Obama administration to make.
POLITICO obtained two draft documents that were not identical but shared similar concepts. The administration is expected to soon release a proposed regulation — which may differ from these drafts — that it says will be an effort to stabilize Obamacare’s insurance marketplaces.
The documents underscore the difficulty of quickly dismantling the health law. Despite running on a campaign to immediately repeal and replace Obamacare, one of the Trump administration’s first major moves is to instead make insurers’ long-requested changes that could shore up the law’s marketplaces.
The timeline is tight for convincing insurers that they can continue competing in the struggling markets without suffering major losses. By April, they will have to start submitting 2018 health plans to state regulators.
“The success of the Exchanges depends heavily upon the existence of a dynamic, competitive market, making issuer participation critical,” reads one draft of the proposal obtained by POLITICO. “Without such a market, consumers face high premiums and few choices, potentially resulting in disruptions to care as consumers must change providers because they must select plans with more restrictive networks, or must forego coverage.
The new proposal is surfacing after Trump’s administration took two significant steps toward unwinding the law. The president’s executive order instructing federal agencies to pare back Obamacare worried insurers that his administration might dismantle the law before an alternative plan was ready. Then HHS canceled about $5 million in advertising to promote Obamacare during the final days of the open-enrollment season, sparking Democratic cries of sabotage.
Several national insurers told investors last week that they might withdraw from the marketplaces next year if Washington didn’t immediately take steps to fix them. Some of the changes were already being considered by the Obama administration before leaving office.
“We still need certainty about short-term fixes in order to determine the extent of our participation in the individual market in 2018,” said Anthem CEO Joseph Swedish on a call with investors last week.
Notably, the administration does not appear to be considering major changes to Obamacare’s individual mandate in this proposal. Insurers have been especially concerned that weakening the requirement would quickly destabilize the marketplaces.
“They all seem to be sensible proposals that [would] jump-start the individual market,” said analyst Ana Gupte of Leerink Partners. “I think it’ll give a lot of comfort to insurers when they submit their bids in 2018.”
The draft documents show the Trump administration may loosen an Obamacare provision barring insurers from charging older customers more than three times as much as their younger enrollees. It may allow health plans to expand this ratio to 3.49:1, which would let insurers boost prices for older customers, who tend to be more expensive to cover.
The administration is also looking to slash the 2018 enrollment period in half. It would run from Nov. 1 to Dec. 15, rather than through the end of January 2018 as the Obama administration had proposed.
HHS is also considering tough new rules around special enrollment periods, which insurers complain have allowed some Obamacare customers to wait until they get sick before signing up for coverage. All individuals who sign up outside the standard enrollment window will be required to provide documentation proving they’re eligible before coverage takes effect.
The Trump administration is also proposing more flexibility on out-of-pocket costs. In a “silver” plan, for example, insurers must cover between 68 percent and 72 percent of medical expenses. HHS is proposing to expand that range by another 2 percentage points. So for that same silver plan, insurers could cover as little as 66 percent of medical costs.
The proposal also tightens the rules around Obamacare’s 90-day-grace period for enrollees who stop paying premiums. That provision has allowed some exchange customers to continue accessing coverage even after they’ve stopped paying their bills.
Consumer advocates supporting the health care law suggested the proposals would make it harder to attract new customers who could help stabilize the insurance marketplaces.
“If the goal was to bring in more younger, healthier enrollees, this is not the list that does it,” said JoAnn Volk, a research professor at Georgetown University’s Center on Health Insurance Reforms.
“I think they’ve basically said to the insurers, tell us everything you want and we’ll give you everything we want except for more money and come back for next year,” said Tim Jost, a legal expert who supports the health care law.
The Obamacare markets have been beset by dwindling competition and skyrocketing premiums this year. Republicans argue that the law’s marketplaces are in a “death spiral” and that they shouldn’t be blamed for inheriting a mess created by Democrats.
But most insurance experts were hopeful the 2018 plans submitted by insurers would show signs of increasing stability in the marketplaces. Republicans, who’ve promised no one covered through Obamacare would be hurt by the repeal effort, could face backlash if insurers desert the marketplaces before a replacement plan is ready.