A pending regulation appears to be a plea to insurers: Please stick with Obamacare
Both Politico and the Huffington Post have reported on pending regulations that would tweak the rules for insurers that sell on the Obamacare marketplaces.
The changes they propose are, in short, a plea to insurers to not flee in the face of significant uncertainty. The regulations suggest that the Trump administration is interested in stabilizing the marketplace as legislators work through an Obamacare replacement plan, and are making some changes that you might have even seen a Clinton administration make if it had been at the helm.
The changes Politico and the Huffington Post have reported on include:
- Allowing insurers to charge their older consumers higher prices. This would also let them charge young adults cheaper rates, which is a change that my colleague Andrew Prokop explains is quite appealing to insurers.
- Tightening who can qualify for a special enrollment period. When people who have a big life change — they move states, for example, or lose a job — they are allowed to sign up outside of open enrollment. This regulation would require enrollees to submit documentation of their life change before coverage starts (right now, they can submit documentation after).
- Shortening the length of the open enrollment period. Under Obama, open enrollment ran from November 1 through January 31. The Trump administration would shorten that to 45 days, from November 1 through December 15.
- Terminating coverage for those who are more than 30 days late on their premium. Right now, customers get a 90-day grace period.
Before learning of this regulation, it seemed possible that the Trump administration was legitimately okay with letting the Obamacare marketplaces implode. The administration, for example, ratcheted down enrollment advertising when it took office — a sign it didn’t care much about getting lots of people in the door. And Republican legislators have argued, repeatedly, that the law is collapsing.
Trump and congressional Republicans could have concocted an easy, politically appealing explanation of a meltdown: Obamacare was simply collapsing under its own weight. Even under the Obama administration, fewer and fewer insurers wanted to participate. This is a mess left behind by the Obama administration that they must clean up.
If we do see these changes roll out, it will suggest that Republicans aren’t especially keen on going down that path. They do want to stabilize the insurance marketplaces, and convince carriers to stick around for 2018.
At the same time, there is a risk to this strategy: These changes that make insurers more likely to stay also make it possible that some consumers might leave. Shorter open enrollment seasons and more regulations around special enrollment periods all make it harder to sign up. So there is with this, as with nearly everything in health policy, a trade-off: Insurers might stick around — but consumers may decide not to buy what they’re selling.
Wait, is this even legal?
Right now the health care law bars insurers from charging their oldest customers more than three times the premiums of their youngest enrollees. The idea is to constrain costs for the oldest (and often sickest) patients, and ask young patients to shoulder a bit more of the burden.
This 3-to-1 ratio is written into the law, meaning that it can’t be changed without the approval of Congress. But with insurers clamoring to charge their older consumers more (and lower premiums for young adults), this regulation appears to have a creative fix: It would allow insurers to charge the oldest enrollees 3.49 times the price of the youngest — because 3.49 rounds down to 3, and that’s the letter of the law.
This, health law expert Nicholas Bagley argues, is a very tenuous (and potentially illegal) interpretation of the law:
The ACA says that “the rates” for health plans “shall not vary by more than 3 to 1 for adults.” The statute couldn’t be clearer. As I said to Jonathan [Cohn]: ”If I told you not to sell something for more than $3.00, and you went ahead and sold it for $3.49, then you’ve disregarded my instruction. It doesn’t matter if it rounds to $3.00. It’s more than $3.00.”
Under Chevron, agencies have lots of room to interpret ambiguous statutes. But there’s no ambiguity here. The statute says no more than 3, period. As Monty Python might say, 3.49 is right out. (Here’s where I insert the standard caveat that the administration hasn’t offered a legal argument — or any public comment, for that matter — and it’s possible I’m missing something. Also, the rule could easily be amended during OMB review.)
When will Obamacare repeal happen? Nobody really knows.
Compare Trump’s interview on Sunday:
Trump on replacing Obamacare: "maybe it’ll take till sometime into next year"— Zeke Miller (@ZekeJMiller) February 5, 2017
To what House Speaker Paul Ryan said today:
.@SpeakerRyan on Obamacare repeal timeline: "We are going to be done legislating with respect to health care this year."— Sahil Kapur (@sahilkapur) February 7, 2017
This is your daily reminder that, despite claims to the contrary, there is not a clear timeline right now for the repeal and replace effort.
Kliff’s Notes: Today’s top three health policy reads
“Repealing Obamacare could kill more people each year than gun homicides”: “If we trust these “quasi-experiments” more than the simple observational studies, we’re looking at somewhere between 24,000 and nearly 44,000 extra deaths per year if 20 million people lose health insurance with an Obamacare repeal.” —Julia Belluz, Vox
“Record number of Massachusetts Health Connector signups during 2017 open enrollment”: “More than 246,000 people registered for the Massachusetts Health Connector by Feb. 1 during open enrollment, the highest of the Affordable Care Act era, according to the Baker administration.” —Lauren Dezenski, Politico
“Campaign talk on health law meets reality”: “Soon after he was elected, Mr. Trump reacted to Republican suggestions of a delay in replacing the health act by insisting that repealing and replacing the law must happen at about the same time. Now, Mr. Trump and his Republican allies on Capitol Hill have recast their ambitions for a rapid-fire repeal, talking privately and publicly about a more deliberative process that could be phased in over weeks or months.” —Michael Shear and Robert Pear, New York Times