President-elect Biden has pledged to build on the Affordable Care Act (ACA) to provide more insurance choices, reduce costs, and make the health care system less complex and more accessible.
Immediate Actions to Address the COVID-19 Crisis
As COVID-19 surges across the country, Americans continue to reel from the impact of the pandemic, including income fluctuations, unemployment, and loss of once-secure benefits, including employer-sponsored insurance (ESI). At a time of continued financial uncertainty and when many individuals must navigate unfamiliar coverage options and eligibility processes, it is unreasonable to also impose roadblocks or penalties that hinder consumer’s ability to obtain or maintain needed coverage.
Flexibility from the Internal Revenue Services (IRS) to ensure that consumers are not unduly penalized during tax season because of inaccurate income reporting estimates could provide needed relief to families already experiencing financial hardship (read the NASHP blog, State-Based Marketplace Leaders Ask for Federal Reinforcement of Insurance Markets during COVID-19). Broadening special enrollment periods (SEP) to make it easier for individuals to enroll in coverage in the event of job or income loss could also ease the burden on individuals and families who lose ESI and need coverage. As evidenced by the hundreds of thousands of individuals who enrolled during SEPs in 2020, consumers are seeking open access to coverage and will need flexible enrollment channels as circumstances continue to fluctuate.
Simplifying and streamlining enrollment for qualified individuals:
While insurance subsidies, including advanced premium tax credits (APTC), are available to most individuals who earn between 100 to 400 percent of the federal poverty level (FPL), many are not able or are reluctant to access these benefits because of barriers that hinder access due to confusing eligibility and enrollment rules, often perpetuated by complex federal policies. These policies feature discrepancies between how eligibility is determined for various federal programs, including APTCs and Medicaid, as well as policies that deter qualified legal immigrants from enrolling in programs, such as the public charge rule. Additionally, complications in assessing the affordability of employer coverage — either for families that fall into the family glitch or those that are interested in exploring the use of health reimbursement arrangements (HRAs) — limit the ability of both employers and families to fully explore coverage options that can or should be available to them. Simplifying or rescinding policies that add to enrollment complexities will ensure that more individuals accurately receive the benefits that they qualify for.
Initiatives to prevent market segmentation:
Health insurance markets function most efficiently when they have a robust pool of enrollees across which to balance costs and risk. To generate this mix, the ACA consolidated the market, requiring all individual market plans to be sold in one risk pool (similarly, small group coverage must also operate using a single risk pool). However, recent actions taken by the Trump Administration have enabled the proliferation of alternative forms of coverage, including short-term, limited-duration, and association health plans, and health care sharing ministries. These alternatives are usually not required to meet the same rules as traditional insurance, including guaranteed coverage of certain benefits or protections for those with pre-existing conditions, nor are they required to participate in the single insurance risk pool. Yet, they do compete with insurance products, drawing individuals (often young and healthy) out of the insurance risk pool.
This latter competition may be exacerbated by the growth of direct enrollment entities – third-party enrollment entities that may opt to direct consumers to coverage alternatives. Issues may also arise from the federal government’s recent reinterpretation of the “guardrails” governing Section 1332 state innovation waivers, which opened the opportunities for waivers that allow for coverage alternatives.
Limiting the avenues by which these unregulated products can cut into or harm insurance markets will support the development of healthier, balanced markets and thereby lower costs to consumers.
Restoring and enhancing equal access to coverage and services:
Policies set in place under the ACA sought to ensure equal access to coverage and health services regardless of health status or other traits commonly used to discriminate against consumers, including race, sex, age, or national origin. Recent federal actions rolled back some of those protections, including actions that rescinded protections against discrimination based on gender identity and sexual orientation, as well as steps to improve language accessibility. Other actions reduced protections for consumers by providing an avenue for insurers to deny new enrollments in the case of enrollees who owe outstanding premium payments.
Individuals are given only limited windows in which to enroll in coverage, and barriers that prohibit them from enrolling during that time restrict their access to critical coverage. This is especially troublesome at a time when financial hardships from COVID-19 may have caused delays in timely premium payments. To enable access to coverage and better protections for consumers, it is important to reinstate or enhance consumer protections that improve access and safeguard against discriminatory practices.
Preserving market stability:
Above all, markets require consistency, otherwise insurers act to compensate for both real and perceived changes to their markets, especially ones that are expected to reduce enrollment or drive up costs. A drastic example of this was seen in 2017 when the federal government ceased payments to issuers to support to the cost-sharing reduction (CSR) program, followed closely by Congressional repeal of the individual mandate penalty. Premiums inflated, as insurers sought to offset predicted losses. Several states intervened, instituting policies to mitigate the effect of CSR losses, and in some cases passing their own individual mandates. To maintain market stability and avoid premium spikes, future policies (e.g., changes to the CSR program, premium adjustments, actuarial value calculators, or the poverty threshold) must be designed to minimize market impacts if they are enacted.
While many of these actions relate to reinforcement of federal requirements to ensure access to and stability of insurance markets, states will undoubtedly continue to lead as innovators and regulators of their markets. States will need the maximum flexibility available to them to continue to experiment and make changes to their markets to accommodate the evolving needs of their consumers and insurance markets. This includes continued flexibility over SBM operational functions, like open enrollment windows, as well as broader opportunities to innovate, like flexibility available through Section 1332 state innovation waivers (as conceived prior to the recent reinterpretation of the waiver guardrails). As new federal leadership emerges, NASHP will continue to monitor the actions of states and the federal government as both work to build better, stronger, health care systems.