Trump administration eyes help for ObamaCare insurers

Trump administration eyes help for ObamaCare insurers
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(This story originally appeared in The Hill Extra)

The Trump administration is considering a number of changes to steady the ObamaCare insurance markets, but officials will have to get creative without new legislation from Congress.

As the Senate prepares to vote to confirm Rep. Tom Price (R-Ga.), President Trump’s nominee to head the Department of Health and Human Services, the agency will soon propose a rule to help insurers facing massive uncertainty as Republicans prepare to gut the health law.

The uncertainty over ObamaCare itself is destabilizing for insurers making “eight- or nine-figure decisions,” said John Gorman, founder of the healthcare consultancy Gorman Health Group.

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“We now have a president who enjoys throwing bombs into crowded ballrooms,” Gorman said, “and that’s not the kind of party insurers like to go to.”

No text is out yet, but a leak of the details under consideration surfaced on Monday. Those details suggested the administration is mulling tightening rules around the 90-day grace period for consumers late on premiums and expanding the age rating for seniors from 3:1 to 3.49:1, among other things. 

The age rating refers to how much more insurers can charge older people for services.

But statutes limit the Department of Health and Human Services from upending those two regulations entirely. Instead, the administration could pursue loopholes to make incremental changes in the margins. 

Jeremy Earl, a partner at McDermott Will & Emery, said that most of the changes floated seem to be within the administration’s authority, but a couple could have unintended consequences. 

For example, the 90-day grace period is only applicable for enrollees receiving subsidies, Earl said. That means the administration could shorten the grace period for individuals not receiving subsidies, although many state laws mandate at least a 30-day grace period. 

Another option would be to allow insurance companies to withhold payment for medical claims until the member pays the premium, he said, a practice the Centers for Medicare and Medicaid Services already allows for the second and third month of the grace period. The Trump administration could theoretically extend that into the first month as well.

But such a move also penalizes doctors, and could spark backlash from heavy hitters like the American Medical Association.

Price, a doctor himself, might also oppose the change.

“That may not be a fight the agency wants to take on at this point,” Earl said. 

The administration is already reportedly exploring an innovative way to circumvent the rule that limits plans from charging older members more than three times what they charge younger enrollees. But some question whether the approach is legal.

Insurance companies and actuaries have lobbied for the ratio to be expanded from 3:1 to 5:1, which more closely mirrors actual costs.

In the leaked proposal, insurers would be able to charge seniors 3.49 times what they charge younger members, banking on the fact that because 3.49 can be rounded down to three, it meets statutory requirements.

Nicholas Bagley, a law professor with the University of Michigan, said that method is “not so legal.”

“[A]gencies have lots of room to interpret ambiguous statutes,” he wrote in a blog for the Incidental Economist. He added that he could be missing something considering the administration has not publicly argued its case for the change. “But there’s no ambiguity here. The statute says no more than 3, period.”

The AARP has already threatened to sue the administration if they attempt to expand the ratings. 

“And, if a lawsuit is brought, there’s a trivial chance — it rounds to zero — that HHS will win,” Bagley said.

Earl said he is not familiar with any other health policy example in which an administration has attempted to round numbers in this way, although he says they could exist. 

In any event, the leaked proposal seems to contain only include minor changes, which, even if they are legal, won’t be enough to make a significant difference in stabilizing the insurance markets, according to some analysts. 

Former Healthcare.gov CEO Kevin Counihan told The Hill Extra that the changes “make differences psychologically rather than substantively to the industry, but that’s just as important right now.”

“Whatever package they’re going to try and advance here needs to be much more robust to keep these guys in the game,” Gorman said. 

Whatever the changes are, they need to come soon. Insurers are currently preparing plans to submit to state regulators in April for the 2018 market.

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