How Will the Trump Administration’s Upcoming Rules Change the ACA Marketplaces in 2019, and What Will the Changes Mean for Consumers Who Rely on the Market for Insurance? Commonwealth Fund Briefing

Introduction Sara Collins, Ph.D. Vice President, Health Care Coverage and Access The Commonwealth Fund Commonwealth Fund Briefing

What to Look for in the Final 2019 Notice of Benefit and Payment Parameters Matthew Fiedler Fellow, USC-Brookings Schaeffer Initiative on Health Policy, Economic Studies, Brookings Institution Commonwealth Fund Teleconference April 6, 2018 3 |

Essential Health Benefits (EHB): Background ACA requires individual and small group plans to cover ten categories of services known as “essential health benefits” Current regulations define which services are included in each category by reference to a “benchmark” plan Each state selects its benchmark from an HHS-specified menu of high-enrollment employer plans Insurers must cover at least as much as the benchmark plan in each of the ten EHB categories 4 |

Essential Health Benefits: “Benchmark” Proposal States can define their own benchmarks starting in 2019 (or, alternatively, adopt all or part of another state’s benchmark) State-defined benchmarks must: Have an “appropriate balance” across the ten categories “Provide benefits for diverse segments of the population” Be “equal in scope to a typical employer plan,” but: Typical employer plan is any plan with > 5,000 enrollees Guidance portrays requirement as a ceiling not a floor Bottom line: Standards are relatively vague or weak, so proposal would give states broad latitude to define EHB 5 |

Implications of EHB Benchmark Proposal Likely Effects on the Breadth of Individual Market Coverage In states narrowing EHB, insurers drop coverage for services used by high-cost enrollees that are no longer EHB Implications: Premiums lower, but enrollees no longer protected against the cost of the dropped services Subsidized enrollees get less coverage with no premium savings since tax credit fall when premiums fall Likely Effects on Catastrophic Protections in All Private Plans ACA ban on annual/lifetime limits and requirement to cap out-of-pocket costs only apply to services included in EHB Large firms can choose any state’s EHB definition for these purposes, so one state’s change can have nationwide effect 6 |

Essential Health Benefits: Benefit Substitution Description of Proposed Rule Insurers permitted to make “actuarially equivalent” benefit substitutions across EHB categories After substitution, plan must: Remain “substantially equal” to the benchmark Not be “unduly weighted” toward one EHB category Provide “benefits for diverse segments of the population” Likely Effects if Finalized as Proposed Insurers drop services used by high-cost enrollees, add services used by low-cost enrollees Net effect is to shift costs toward sicker enrollees Scope of effects depends crucially on how “substantially equal” requirement is enforced in practice 7 |

Risk Adjustment: “Statewide Average Premium” Description of Proposed Rule States allowed to cut the “statewide average premium” in the risk adjustment formula by up to 50 percent Effectively allows states to implement an across-the-board cut to all payments into and out of risk adjustment Proposal limited to small group market, but HHS sought comment on expanding it to the individual market Likely Effects if Finalized as Proposed Insurers with sicker enrollees receive less, while insurers with healthier enrollees pay less Insurers respond by dropping or charging more for plan features that appeal to sicker enrollees If limited to small group market, effects likely modest; potentially large if extended to the individual market 8 |

Simple Choice and Meaningful Difference Description of Proposed Rule Eliminates policy of giving standardized “simple choice” plan designs preferential display on HC.gov Eliminates “meaningful difference” requirements that limit how similar an insurer’s various offerings can be Likely Effects if Finalized as Proposed Greater plan variety, although debatable how valuable plan variety is in this context Comparison shopping more difficult due to greater number of plans and reduced comparability across insurers Could make it harder to enroll and weaken price competition 9 |

Commonwealth Fund Teleconference What to Expect in the Trump Administration’s 2019 Affordable Care Act Benefit & Payment Rule April 6, 2018 Sabrina Corlette, J.D. 10 |

2019 Payment Rule: Key Provisions Rate Review & Medical Loss Ratio New “unreasonable” premium increase threshold 10 15% Rate filing, publication flexibility for states Relaxing medical loss ratio (MLR) standards 11 |

2019 Payment Rule: Key Provisions Navigator Program Reduces required number of Navigator groups in each state to one Eliminates requirement to fund community-based non-profit Eliminates requirement to have physical presence in state 12 |

2019 Payment Rule: Key Provisions Direct Enrollment Obama-era initiative to allow enrollment through web-brokers or insurers’ websites Allows consumers to bypass healthcare.gov Proposal would make it easier for brokers, insurers to participate Self-policing of privacy, security standards 13 |

2019 Payment Rule: What to Expect Unlikely to change much in final rule: Elimination of Simple Choice plans, meaningful difference standard Provisions giving states more flexibility Risk adjustment Rate review deadlines, MLR adjustments Deference to state reviews of plans Eligibility, enrollment changes Lack of direct notice if losing subsidy eligibility Increased documentation of income Navigator program Special enrollment period changes 14 |

2019 Payment Rule: What to Expect EHB Effective date could be delayed New benchmark selection options Possible constraints on adding benefits “Typical” employer plan Possible tightening of criteria A new federal standard? Direct enrollment? 15 |

Thank you! Sabrina Corlette, J.D. Research Professor Georgetown University Center on Health Insurance Reforms Sabrina.Corlette@georgetown.edu @SabrinaCorlette 202-687-3003 16|