In the wake of the collapse of Republican efforts to repeal and replace Obamacare, the Trump administration is testing the legal limits of what it can do to reshape — or some would say gut — the Affordable Care Act using, ironically, the regulatory tools the ACA gave the executive branch. The president’s suspension of Cost Saving Reduction reimbursements for insurers is one example. The administration’s sabotage of the Obamacare enrollment effort (so important in attracting as broad a risk pool as possible) is another.
But now the administration’s Center for Medicare and Medicaid Services (CMS) has issued a new proposed rule that seeks to indirectly accomplish what nearly all the Obamacare repeal-and-replace bills addressed directly: the weakening of Obamacare’s “essential health benefits” requirements for insurance plans in the individual and small-group marketplaces.
The ACA defined ten “essential health benefits” all health plans it covered must supply. But in its interpretation of the law, the Obama administration gave the states the power to configure the minimum requirements in marginally different ways by selecting a “benchmark plan” from the employer-supplied insurance market to serve as a model. What CMS now proposes to let states do is patch together a model from different plans from anywhere in the country that have at least 5,000 enrollees.
These new “benchmark plans” may differ from those existing today in significant ways, as Paige Winfield Cunningham notes:
The rule would also allow insurers to shift benefits across the 10 categories — not just within them. So if an insurer wanted to scale back, say, prescription drug coverage, it could do so, as long as it ramped up coverage in another category at an comparable level. In doing so, insurers could potentially make plans less appealing to someone they don’t want to cover — like someone with long-term conditions like diabetes or arthritis, for example.
The impact of these changes would obviously vary by state. And while relaxing essential health benefits requirements endangers coverage for some people, it might also attract younger and healthier consumers who could improve the balance in the risk pool and stabilize premiums, which is presumably the main idea. Given this administration’s bad intent toward Obamacare, however, it would be unwise to assume the rule would be implemented in a way that makes the system work more smoothly and fairly.
A separate part of the proposed rule would let states waive what is known as the Medical-Loss Ratio limitation imposed by Obamacare: the requirement that 80 percent of premiums be spent on actual medical care rather than, say, advertising. It’s hard to see how that will operate to help consumers rather than insurers.
The bigger question is whether the proposed rule is legal. Health economist Nicholas Bagley, doubts it:
Wise or not, however, I’m skeptical that the Trump administration’s effort to hollow out the rule governing essential health benefits is legal. If HHS presses ahead with the rule, it could face tough sledding in the courts.
It sure looks like a regulatory change that could use some close scrutiny in the courts and elsewhere, lest it help make true the president’s view that Obamacare is “dead” or “imploding.”