The federal health law and Connecticut’s Obamacare exchange are at a “critical crossroads,” the head of the state’s health insurance marketplace said Thursday, citing a host of potential changes that could affect Access Health CT’s viability.
Among them: Plans by the Internal Revenue Service not to reject tax forms from filers who don’t report whether they had health insurance in the past year, Access Health CEO Jim Wadleigh told the exchange’s board, warning that it could “unwind” the Affordable Care Act’s individual mandate. The mandate is enforced through the tax process, and Wadleigh said the IRS change could lead states to consider their own coverage mandates to try to entice young and healthy people to buy coverage, he added.
There also are proposed federal changes, announced Wednesday as a way to stabilize insurance marketplaces, which Wadleigh said could help insurers, but hurt customers.
That’s on top of the ongoing efforts to repeal and replace the Affordable Care Act, which Wadleigh said leaves questions about the future of federal subsidies that discount insurance premiums for more than three-quarters of the exchange’s customers.
And beyond the federal uncertainties, the exchange has its own challenges. It needs to cut millions of dollars in expenses to match its current level of funding, which is falling. And Wadleigh said state legislative proposals could add to its expenses or limit Access Health’s ability to raise revenue.
To remain viable, the exchange needs to focus on three areas, Wadleigh said: Continuing customer service, lowering operating costs, and keeping insurance companies willing to sell plans through the marketplace.
“If we don’t have product to sell, we don’t have an exchange,” he said.
ConnectiCare Benefits Inc., and Anthem Blue Cross and Blue Shield, the two insurers that sell individual-market plans through the exchange this year, have said they plan to file rate proposals for 2018 plans, Wadleigh said. While that is a necessary step toward offering coverage next year, it does not require the companies to participate in the marketplace.
The proposed federal rule
In issuing the proposed rule Wednesday, the Center for Medicare & Medicaid Services – the federal agency that oversees the exchanges – characterized it as offering “new reforms that are critical to stabilizing the individual and small group health insurance markets to help protect patients.”
It would shorten the annual open-enrollment period from three months to six weeks, running from Nov. 1 through Dec. 15, rather than Jan. 31, as was the case this year. (In Connecticut, 83 percent of those who signed up for coverage through the exchange for 2017 picked plans by the Dec. 15 deadline for coverage that started Jan. 1.)
In addition, the proposal would allow insurance companies to require customers to pay premiums they owe from the past year before getting coverage the following year, which the agency said would remove incentives for people to only pay premiums when they need medical care and encourage people to stay covered throughout the year. The federal government currently prohibits insurance companies from applying any premium a customer pays to money he or she owes from previous coverage, and then declining to activate the new plan if the person doesn’t pay the rest of the premium. The proposed rule notes there have been concerns that people who haven’t paid in the past could game the system by failing to pay premiums at the end of one year, then signing up for new coverage the next year.
The proposal would also give insurance companies more leeway in designing plans. Currently, plans must meet certain “actuarial values” – the percentage of care costs the plan would cover – and the proposed rule would widen the allowed range.
Other aspects of the proposal are less likely to affect Connecticut, since the state runs its own exchange rather than using the federally run HealthCare.gov. The rule calls for tightening enforcement of the rules allowing people to sign up outside the open enrollment period for HealthCare.gov exchanges. (Access Health’s board voted last month to tighten the process.) It would also defer to states on determining whether plan networks are adequate – something Connecticut already does.
The proposal drew praise from America’s Health Insurance Plans, the industry trade group, which noted that Congress is considering “other critical actions necessary to help stabilize and improve the individual market for 2018.”
“Our commitment is to ensure short-term stability and long-term improvements,” President and CEO Marilyn Tavenner said in a statement. “While we are reviewing the details, we support solutions that address key challenges in the individual market, promote affordability for consumers, and give states and the private sector additional flexibility to meet the needs of consumers. We appreciate the Administration’s efforts in proposing policies intended to address stability, affordability, and choice, helping consumers get the coverage they need.”
But critics panned the proposal. The advocacy group Families USA, which supports the federal health law, said the changes could allow plans with significantly higher deductibles and make it harder for people to get coverage.
“Combined with the uncertainty caused by Republicans’ intention to repeal the ACA, the proposed changes would only undermine the stability of the individual insurance market and weaken coverage and financial assistance for millions of individuals that rely on the health insurance marketplaces created by the Affordable Care Act,” the group said in a blog post.
U.S. Rep. Rosa DeLauro, D-Conn., also blasted the proposal, saying it would limit coverage options, make insurance more costly, and allow plans to cover fewer doctors.
“By calling for repeal of the ACA without replacing it, President Trump and Congressional Republicans have created the instability in the market that this misguided rule seeks to address,” she said in a statement. “These attacks on Americans’ health insurance must end.”
Connecticut Insurance Commissioner Katharine L. Wade said the department is reviewing the proposed regulation and will determine how it will weigh in during the comment period.
Beyond marketplace stability issues, the exchange also has budgetary concerns to address.
Access Health is funded through an assessment on individual and small-group health insurance plans. But the amount of money the assessment brings in is projected to drop from $33.4 million in last year to $30.4 million this year. The exchange is projected to spend $35.9 million during the 2017 fiscal year.
Steven Sigal, the exchange’s chief financial officer, said officials are working to get the budget down to $30 million or less. Some of the spending reflects one-time costs, including start-up expenses incurred when Access Health changed call center vendors.
Board member Paul Philpott cautioned against “cutting down to the bone,” saying the exchange probably will need to be able to react quickly to changes that occur in the next year, and will need resources to do that.
Wadleigh said the exchange needs a comprehensive review of its model for raising money. But he suggested that raising the assessment would be unwise, and noted that a bill currently pending in the General Assembly would require legislative approval for any assessment increases. The assessment fees are generally passed on to insurance customers, and Wadleigh said the exchange must be mindful of the role those costs play in insurance affordability.