Industry groups argue proposal for states to ‘opt out’ of ACA exchanges will leave vulnerable uninsured
Insurers, healthcare professionals and industry lobbying groups are all concerned about a Trump administration proposal that would allow states to essentially privatize their Affordable Care Act exchanges by 2023, according to comments on the proposed rule.
If finalized, the rule could force millions of people who buy insurance through a state-based exchange or HealthCare.gov to go through private brokers. Critics of the proposal argue that poses a conflict of interest regarding for brokers and the coverage they offer. Close to 11.5 million people bought an ACA plan in 2020, according to the Kaiser Family Foundation.
More than 170 comments have been filed since the proposal was released in late November. Comments are due Dec. 30, which could allow the Trump administration to issue a final rule before leaving office.
The proposed rule follows a recent exemption the state of Georgia received to opt out of the Obamacare marketplace, with a plan instead to create a decentralized system of web brokers and insurers through which consumers can buy insurance.
CMS said the move would encourage competition among insurers and decrease premium prices for consumers, thereby lowering healthcare spending. Critics claim the lack of public exchange will confuse consumers, particularly those most at-risk for being uninsured.
The American Medical Association in its comment letter questioned the legality of the proposal, wondering why CMS required that Georgia seek a waiver in October, but now aimed to make the process obsolete. Calling the proposal “a solution in search of a problem,” the AMA also suggested that the proposal violates the spirit of the ACA by allowing an exchange to be operated by for-profit companies instead of nonprofit or government organizations.
“The AMA is concerned that continuing on the path of privatizing the exchange with which millions of consumers are familiar and through which most consumers enroll could make it harder for people to find high-quality, ACA-compliant insurance with full benefits and could reduce overall enrollment,” the AMA wrote.
The Alliance of Community Health Plans said that privatizing the exchange would exacerbate health disparities.
The federal marketplace currently has a “no wrong door” policy, meaning that consumers who go to HealthCare.gov can fill out an application and be alerted if they qualify for Medicaid, a Children’s Health Insurance Policy plan or subsidized coverage. The industry group worried that brokers and insurers would steer low-income consumers toward private, substandard plans without explaining they were eligible for Medicaid.
In August, a Brookings Institute report explained that brokers could pocket commissions up to 10 times higher by selling short-term coverage plans, as opposed to those that are ACA-compliant. Insurers can also profit from short-term plans that are not required to meet the medical loss ratio standards for ACA-compliant plans. The ACA’s medical loss ratio limits how much of an insurer’s premium revenue could go to profits. Individual and small group plans need to put 80% of their premiums toward medical costs, while 85% of large group plans’ premiums have to pay for beneficiaries’ care. They can spend the rest on administration, marketing and profits.
“ACHP is concerned that the current proposal will create confusion and limit the available pathways into exchange plans, Medicaid and CHIP, potentially frustrating consumer access to the most affordable insurance product for them at precisely the time that it is most needed: during and in the aftermath of the COVID-19 pandemic and its associated economic contraction,” the ACHP wrote.
Molina Healthcare echoed those concerns. The Long Beach, Calif.-based insurer said that direct exchanges have existed since 2018 and that, until this year, they have not grown in enrollment. Analysts credited the growth in individuals enrolling in ACA plans for 2021 to consumers desperate for coverage during the COVID-19 pandemic.
“If these (direct exchange) options were truly attractive to consumers, they would have already voted with their feet and moved from HealthCare.gov and its companion state-based sites to them,” Molina wrote. “Yet, the exchanges continue to enroll most Marketplace enrollees—an indication of the central place they occupy in the exchange shopping and enrollment experience for consumers.”
Not all commenters were opposed to the change.
Jeff Fusile, who identified himself as a Georgia resident and “an executive with over thirty years’ experience in the healthcare industry,” said that, by eliminating the requirement that qualified health plans have a dedicated provider network, existing health insurance companies and new entrants can be competitive in the marketplace.
“This is both good for consumers—who may have greater access to care with such plans—but also for providers who can provide care to such consumers without the strictures of a network model,” Fusile wrote. “It may also incent payers to expand networks in markets to be more competitive with a broader network product.”
Thirty-two states rely on the federal HealthCare.gov exchange, plus a few others that run their own state marketplaces under the law but depend on the national online sign-up system.
The Trump administration has moved to expand the use of private direct enrollment pathways since taking office. It has cut marketplace outreach funding by 90% since 2016 and navigator funding by more than 80%. A 2019 report by the Center on Budget and Public Policy Priorities noted that HHS navigator funding awards now favor entities that are willing to recommend short-term plans and other non-ACA plans to consumers.