It sure didn’t feel like spring last weekend as the National Association of Insurance Commissioners (NAIC) gathered in Milwaukee, Wisconsin for the 2018 spring meeting. Nevertheless, fueled by an endless supply of Wisconsin cheese, there was plenty of work to do. The NAIC’s health committees used their agendas to discuss issues ranging from 1332 waivers – with updates from the host state about the development of their reinsurance waiver – to state efforts to control and provide transparency on health care costs.
Throughout the meeting, insurance commissioners and industry stakeholders didn’t hide their disappointment in Congress’s inability to pass a marketplace stabilization package and the administration’s delay in finalizing a set of regulations that, among other things, set the rules of the road for insurers participating in the Affordable Care Act’s (ACA) marketplaces for the upcoming plan year.
A warning from consumer representatives
Consumer representatives to the NAIC had a different message to share. They spent the weekend warning state regulators the biggest current threat to market stability and affordability isn’t Congress’s failure to pass a marketplace stabilization bill, it’s the expansion of products like short-term plans that threaten to increase out-of-pocket costs and erode access to the comprehensive coverage consumers, especially those with preexisting conditions, rely on. Their message was bolstered by a new report written by Christina Goe, a widely respected expert on state and federal insurance regulation and the former General Counsel of the Montana Insurance Department at the Office of the Montana State Auditor.
Goe’s report takes a comprehensive look at the risks alternative coverage options that do not comply with the ACA’s consumer protections pose. While short-term plans and association health plans have garnered attention thanks to President Trump’s October executive order calling for their expansion, there are more fish in the non-compliant sea.
Products such as health care sharing ministries and transitional plans – including farm bureau plans, which made news this week as Iowa moves to expand these products – all pose the same risks. Because these plans don’t have to offer a comprehensive set of benefits, and because they can charge sick people more for their coverage, they will likely pull healthier enrollees out of the ACA marketplaces. This would leave behind a sicker risk pool, which will drive up premiums for ACA-compliant coverage. Consumers who do enroll in these alternative coverage products will likely find themselves paying high out-of-pocket costs for uncovered services in the event of an accident or sickness.
Short-term plans as long-term coverage – a health policy oxymoron
Stemming from President Trump’s executive order, the administration recently released a proposed rule that would roll back protections put in place by President Obama, and allow short-term plans to be sold for up to 364 days. With the federal comment period for this proposal still open, the consumer representatives talked to any commissioner who would listen about our concerns with this proposal, stressing how important it is to act now to protect consumers in their state, as well as the viability of their individual insurance markets. As Goe points out in her report, “The combined effect of eliminating the individual mandate penalty and the expansion of short-term coverage would, on average, increase premiums in the ACA-complaint individual market by 18.2 percent in the 43 states that do not currently prohibit or limit this type of coverage.”
Trump administration officials say that with this proposal they are simply giving states and consumers more coverage options. In reality, this means options for healthy consumers at the expense of those who manage chronic illnesses or have preexisting conditions and who simply must purchase comprehensive coverage.
State options for regulating non-ACA compliant plans
If state policymakers and regulators are willing, they have tools to regulate these alternative coverage options to protect consumers and their markets. For example, some states, like New Jersey and New York, have already eliminated short-term plans from their markets, and others, such as Arizona, Minnesota and Oregon, limit their duration. However, a newly released Commonwealth Fund report indicates that there’s still a lot of work to do. Researchers reviewed state laws and regulations of non-ACA complaint plans and found that no state fully protects its individual health insurance market or consumers from these alternative coverage options.
There’s no shortage of problems to address in our health care system. However, for states interested in maintaining a viable individual market for consumers who don’t qualify for public programs or employer sponsored coverage, creating an even playing field in the individual market by regulating non-ACA complaint plans seems like a good place to start this year.