Less Coverage, More Money, Tighter Restrictions - Welcome to Trumpcare
Since I find myself with excessive free time right now, I’ve been following the Obamacare (nee Affordable Care Act) talk pretty closely. Today, the Centers for Medicare and Medicaid Services (CMS) under the Trump administration, have released their proposed rule changes for 2018. There are some concerning points to the proposed changes, and many of them are direct answers to wishes from the insurers. In short, it’s important to remain educated, so I hope to put these concerning points into layman’s terms.
I’ve spent the past 18 months of my life closely examining the act (going so far as to read every page of the legislation), so I have a more-than-sufficient grasp of what it does well and what it does poorly. That said, it’s worth noting my personal stance: I consider myself to be a small-government conservative (not a Republican, and I did not vote for Trump) and I believe that access to affordable health care is a fundamental right of an American citizen.
For clarity, we will call anything that goes into effect after January 20th, 2017 “Trumpcare”.
CMS Proposed Rule Changes - February 2017
Now that the housekeeping is out of the way, let’s look at the proposed rule changes. You can read them yourself, in PDF form, by clicking here. The first few pages cover what we can all agree are established facts, point out who should be contacted if you want to submit comments and lay out some definitions. Nothing terribly surprising. Page 5 is where things start to get interesting.
On page 5, CMS makes its case for the proposals -
This proposed rule would take steps to provide needed flexibility to issuers to help attract healthy consumers to enroll in health insurance coverage, improving the risk pool and bringing stability and certainty to the individual and small group markets.
This points to a fact that should be commonly understood, but often isn’t. The more healthy people who are insured, the less risk involved for everyone. Where insurers found themselves surprised with the ACA was in this “risk pool”. The Obama administration used a lowered risk pool as a selling point to both insurers and individuals, but insurers quickly found out that the percentage of sick people signing up for and using insurance was higher than they had assumed or been promised.
The end result was that insurers were making less money than they thought that they would, and in some cases they were not making money from people under the ACA at all. This is why you are seeing stories of insurance companies choosing not to have plans on the Healthcare Marketplace.
Shorter Open Enrollment Period
Page 5 and the start of page 6 lay out the first proposal - A shortened period for “open enrollment”. This is the time of year when people can enroll in or change their coverage. Presently it runs from November 1st to January 31st. The proposal would cut that 90 day period in half, to 45 days, ending on December 15th.
The logic behind this proposal is somewhat sound, but then it takes a kinda crappy turn. It does align the open enrollment period for Trumpcare to that of the private market. But the proposal specifically says that it would reduce the enrollment period for those people who “learn that they will need services in late December and January.” So if you’re feeling pretty good on December 1st and think you might skip enrollment, but then you get sick on December 16th, you’re out of luck unless you qualify for a special enrollment period (because of a loss of coverage from changing jobs, etc.)
More Requirements for Special Enrollment
We talked about special enrollment periods for a moment, but this requires that we dive in a bit deeper. Special enrollment periods happen when someone loses their coverage and wants to sign up for new coverage. As it stands under the ACA, only 50% of those people who apply for special enrollment will have to submit verification of their loss of coverage. Under Trumpcare, CMS is proposing that 100% of cases be verified starting in June of 2017. On the surface this seems like a good idea, but it must be understood that it is another hurdle toward obtaining coverage, and you can’t build a hurdle that only blocks the path for some people. If 100% of the cases need to be verified, it won’t only apply to sick people who need coverage. Healthy people will be left out as well.
The other part worth noting is pointed out on page 23. CMS specifically states that there will be circumstances under which coverage will have to be applied retroactively, after proof of eligibility is determined to exist. For anyone who’s dealt with retroactive or changing coverage as it relates to insurance, you already know the headaches that this will cause. Now expand this to a national level, for any person who falls into a special enrollment period and you’ve only compounded the potential issues.
There are quite a few pages that detail other areas where loopholes are being closed. Most of these are quite good at first blush. For example, there was a loophole people were using to change their coverage levels via special enrollment periods. This was leading to, in many cases, increased strain on the system. Since it’s not denying coverage, or making coverage harder to get, I can only see the closing of this loophole as a potential positive.
Less Coverage from Plans
OK, this is a big one, and we have to jump into the weeds a little bit to really figure out what’s going on. So buckle up and let’s talk about why de minimis ranges matter.
Plans available through the Healthcare.gov website are broken down into categories, depending on how much they cover versus how much the individual pays. You’re probably familiar with these as being 60/40, 70/30, 80/20 (and so on) plans. Under the ACA, Bronze plans have to cover 60%, Silver covers 70%, Gold covers 80% and Platinum covers 90%. There is also some variance allowed, +/- 2%, that is considered to be de minimis or “too trivial to merit consideration”.
To give an (oversimplified) example, let’s say that you break your arm. You go to the emergency room, get an x-ray, have the arm set and get a cast. Your total bill comes to $1,000 (it would be much more, but again, we’re oversimplifying for an example). If you’ve met your deductible, you should only pay $400 of that $1,000 bill because that equates to 40%. But the de minimis allowance says that you might actually pay $420 and that would be OK because it would fall within the +/- 2% range.
Under the proposed rule changes of Trumpcare, the new numbers would be +2/-6. So your $400 bill would suddenly be up to $460 and still fall into an acceptable range. While this isn’t earth-shattering in our oversimplified example, a 4% difference in a $25,000 bill for an extended hospital stay or large treatment would equate to an extra $1,500 out of your pocket.
Make no mistake – at every turn, insurers will attempt to use that 6% to their advantage. Though CMS says that their intention is to allow insurers to develop more and better plans, what will most assuredly happen is increased plan cost either through higher percentages paid by the customer, or by premium increases.
What Can You Do?
In short, you can submit comments, but you need to wait until February 17th. That is the date when the proposal will be published. The easiest way to submit a comment is through the Regulations.gov website, but there are many other ways as well. All of them are detailed in the first few pages of the PDF that I linked above.
Make phone calls. The easiest method I’ve found of doing so is by heading to 5calls. By allowing the site to use your location, or by entering your ZIP code, you will be given the phone numbers for your representatives. Phone calls work. Flood the phone lines and voice your concerns.
Stay informed. This is the most important part. Don’t let sweeping changes happen to your healthcare plans without you knowing what’s going on. I’ll do my best to keep this blog updated, but there are resources across the web that do a great job of tracking legislation. The Center for American Progress should be on your reading list.