01 Aug Why Congress and the Administration Can’t Wait to Act to Stabilize Health Insurance Markets in Health
If one thing has been made clear over the first half of 2017, it’s that health care reform will take time, and likely bipartisan collaboration. In the meantime, Bipartisan Policy Center leaders have stressed the need for policymakers to take one single action that could bring down health insurance premiums and stabilize markets for 2018: continue paying cost-sharing reduction (CSR) payments through at least 2019. In a recent statement, BPC urged action by mid-August to avoid disruptive delay in the open-enrollment timetable for 2018. The Centers for Medicare and Medicaid Services (CMS) has already taken some actions, including extending several deadlines for plans wishing to participate in the marketplaces for 2018 and expediting state waiver proposals for reinsurance and other ideas to stabilize markets. However, without certainly on CSRs in the coming weeks, more plans are likely to exit the market, leaving more consumers without options, and – baring major changes to this year’s timeline – resulting in significant premium increases and increased federal spending due to the corresponding increase in ACA premium tax credits.
So, why this timeline? Why can’t Congress deal with this in September or later this year? What are the implications of waiting to act?
Here are some key timeline factors to bear in mind:
- August 2016 – April 2017: The normal timeline for health insurance issuers considering marketplace participation in 2018 would be about 18 months. Starting in about August of 2016 through April of 2017, plans made their internal decisions regarding networks, plan design, service areas, marketing strategies, and rates for the 2018 plan year.
- June 21, 2017: Revised deadline, per February CMS guidance, for plans to file their proposed rates and file qualified health plan (QHP) applications signaling their intent to participate in the federal exchange.
- Early August 2017: Revised deadlines for insurers to file corrections to their original rate filings (August 2nd) and petition to change their service areas (August 4th).
- August 16, 2017: Revised deadline for insurers to submit changes to their QHP applications.
- Mid-August 2017: Date by which BPC leaders urge a clear signal on CSRs to assure near-term market-stability and avoid major changes to the 2018 timeline.
- August 20, 2017: Date of the latest delay of court proceedings on CSR subsidy litigation
- August 21, 2017: Throughout this month, State insurance commissioners and other regulators will review and request or require modifications to 2018 premium rates requested by health insurers, with final rates locked in by August 21.
- September 27, 2017: Health insurers must sign final marketplace participation contracts. Plans are likely to have made their final decisions – and announced their intentions – of whether to stay in or exit the marketplace several weeks before this date.
- September-October 2017: As rates are finalized in August, plans will spend September and October busily preparing for the start of open enrollment on November 1, which includes preparing their computer systems and marketing materials. At the same time, CMS and the Department of Treasury will be using finalized county-level detail on plan participation in marketplaces and plans’ final premiums to calculate the cost of the second-lowest cost silver plan in each service area. Consumers’ premium tax credits are tied to the second-lowest cost silver plan in their service area, making this a critical component that would need to be determined during the period in advance of the start of 2018 open enrollment.
- November 1, 2017 – Beginning of the Open Enrollment Period for plan year 2018.
If current law or administration policy on cost-sharing subsidies changes, state regulators may allow insurers to adjust rates. However, the experts BPC has consulted have shared that, given everything that must occur to accommodate a policy change such as this, there would not be sufficient time to make the changes and be ready for the November 1, 2017 open enrollment start date. Establishing actuarially sound rates takes about two months under normal circumstances. This year, some states required or allowed plans to submit two sets of rates – one factoring in continued payment of CSRs and another without. Some plans in other states submitted two sets of rates on their own, and others simply assumed that CSRs would not continue to be paid, which was one justification for their premium rate hikes. Insurers’ computer systems have been described to us as “clunky,” requiring significant time to be updated to reflect changes. Marketing materials would need to be revised. All of these activities simply take time, and time is short.
So, where are we today?
The Trump administration indicated it will decide this week whether it will continue to pay cost-sharing subsidies. The House has adjourned for its District Work Period, and the Senate will soon follow.
The administration should send a clear signal this week that it will continue paying CSRs, and Congress should provide the necessary explicit authorization for the subsidies through legislation in September. Given this congressional action would already be late in the process, Congress or the administration would also need to adjust the open enrollment timeline to give plans and regulators time to implement the changes. This is not ideal, as any changes to the timeline could adversely affect 2018 enrollment, but it is a better option than inaction or letting the CSR funding lapse, which would be sure to exacerbate market instability, result in higher 2018 premiums, and increase costs for the federal government through higher premium tax credits.