Open enrollment period for ACA Exchanges begins under President Trump for first time amid ongoing debate over cost-sharing reduction subsidies, ACA waivers

The open enrollment period for coverage for 2018 through the health insurance Exchanges created under the Affordable Care Act (ACA) begins today, Wednesday, November 1, 2017. This is the fifth open enrollment period since the Exchanges opened in 2014 and the first open enrollment period of President Trump’s Administration. The open enrollment period for the 39 states using the HealthCare.gov platform for plan year 2018 will close December 15, 2017; the open enrollment period in previous years ran through January 31 of the plan year. A number of states running their own Exchanges for plan year 2018 will have longer open enrollment periods than states using the HealthCare.gov platform.

This year’s open enrollment period begins after nine months of debate in Congress over various proposals to repeal and replace select provisions of the ACA, President Trump’s October 12, 2017, decision to stop reimbursing health plans for cost-sharing reduction (CSR) subsidies without congressional authorization, and a number of other regulatory decisions reflecting the Trump Administration’s position on the ACA.

Highlights of the current status of select issues related to the ACA Exchanges are provided below.

Plan participation, premium changes

Overall, for the states using the HealthCare.gov Exchange platform for at least one year, 132 issuers will participate in Exchanges for plan year 2018, a net decrease of 35 participating issuers from 2017 to 2018.1 At least one issuer will offer plans in each county in the US, but the Department of Health and Human Services (HHS) notes that only one health issuer will participate in Exchanges in the following eight states:

  • Alaska
  • Delaware
  • Iowa
  • Mississippi
  • Nebraska
  • Oklahoma
  • South Carolina
  • Wyoming2

For the 39 states using Healthcare.gov for 2017, premiums for the second-lowest-cost silver plan for a 27-year-old increased by 37% on average. HHS cites the increase for the second-lowest-cost silver plan because this is the benchmark plan for premium assistance tax credits in Exchanges. By comparison, premiums for the lowest-cost plan available on ACA Exchanges to a 27-year-old increased by 17% on average, in some cases reflecting a decision by states to direct issuers to load an additional premium increase into silver plans to account for ongoing uncertainty over the payment of CSR subsidies to plans.3

Reflecting the increase in premiums for benchmark health plans and President Trump’s decision to stop reimbursing plans for CSR subsidies absent congressional authorization, the average advanced premium tax credit (APTC) for ACA Exchange coverage is projected to increase by 45%, rising from $382 on average for plan year 2017 to $555 on average for plan year 2018.4 The Congressional Budget Office in August projected that ending payment of CSR subsidies to plans would result in a 20% increase in premiums on ACA Exchanges in 2018 and a 25% increase in 2020. As a result of the corresponding increase in APTCs, CBO projected that the federal budget deficit would increase by $6 billion in 2018, by $21 billion in 2020, and by $26 billion in 2026.5

Background on CSR payments, Court challenge

CSRs are available to reduce out-of-pocket costs for individuals with incomes that do not exceed 250% of the federal poverty level who enroll in eligible Exchange plans.

The House of Representatives in 2014 sued the Obama Administration over payment of the CSRs, arguing that the Administration could not make payments to health plans for CSRs without a legislative authorization by Congress. The case has been on hold since President Trump took office. The House and the US Department of Justice on Monday, October 30, 2017, in a joint filing notified the Court of Appeals that they hope to reach an agreement on “the disposition of the case” in the coming weeks.

The Court has allowed a number of states to join the lawsuit; it remains unclear whether the states will push for a decision in the case by the Court of Appeals, rather than concur with an agreement between the Department of Justice and the House.

Legislation to restore CSR subsidy payments, make changes to the ACA

In the wake of President Trump’s announcement that his Administration would no longer reimburse plans for CSR subsidies, congressional activity related to the ACA Exchanges has increased.

Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA) – chairman and ranking Democrat, respectively, on the Senate Health, Education, Labor and Pensions (HELP) Committee – on October 19, 2017, released a bill that would fund payments to health plans for CSR subsidies for two years, restore funding for outreach for enrollment in Exchanges, amend rules for State Innovation Waivers under section 1332 of the ACA, and permit anyone to enroll in catastrophic health coverage through ACA Exchanges. Under current law, only individuals under age 30 and individuals who meet certain financial conditions are permitted to enroll in catastrophic coverage. The CBO projected that the Bipartisan Health Care Stabilization Act of 2017 by Alexander and Murray would reduce the federal budget deficit by $3.8 billion from 2018 through 2027 and would not substantially change the number of people with health insurance coverage.6

In addition, Senate Finance Committee Chairman Orrin Hatch (R-UT) and House Ways and Means Committee Chairman Kevin Brady (R-TX) have released a proposal that also would extend payments to plans for CSR subsidies for 2 years while also suspending the tax penalties for the ACA’s individual mandate for 2017 through 2021, suspending the tax penalties for the ACA’s employer mandate for 2015 through 2027, and increasing the contribution limit to health savings accounts (HSAs).7 Full legislative text has not been released, and the CBO has not produced a cost estimate of the proposal put forward by Chairmen Hatch and Brady.

Health care stakeholders continue to watch to see whether elements of the two bills are included in a legislative package widely expected to be put forward in December to fund the federal government, reauthorize federal funding for the Children’s Health Insurance Program (CHIP) and community health centers, and reauthorize Medicare special needs plans (SNPs), among other likely provisions.

State innovation waivers

Upon taking office, the Trump Administration looked to state innovation waivers under section 1332 of the ACA as a vehicle to provide greater flexibility for states to pursue alternatives for running their small group and nongroup insurance markets. Dr. Tom Price, then secretary of the HHS, and Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma earlier this year sent a letter to governors outlining some of the changes they could pursue under the 1332 waiver process, and a number of states have moved forward with waiver applications.

To date, CMS has approved waiver applications to create new reinsurance programs in Alaska, Minnesota and Oregon, but Oklahoma and Iowa have withdrawn their proposals for further reaching structural changes to the ACA’s Exchange structure. In addition, CMS on October 23, 2017, rejected Massachusetts’ waiver application which sought to restructure CSR subsidy payments, explaining that there was not enough time to operationalize the proposal ahead of the 2018 plan year.

Greater flexibility for 1332 waivers is a key goal for Republican negotiators in talks over appropriating funds for payments to plans for CSR subsidies.

Notice of Benefit and Payment Parameters for 2019

CMS on Friday, October 27, 2017, released the Notice of Benefit and Payment Parameters for 2019 proposed rule, laying out a series of policy proposals the Administration describes as giving states greater flexibility in the individual market, improving program integrity, and reducing regulatory burden in the individual and small group market. The proposed rule is scheduled for publication in the Federal Register on November 2, 2017, and comments will be accepted through November 27, 2017.

Among the other provisions, CMS is proposing to permit states to update their essential health benefits (EHB) benchmark plan on an annual basis and expand the options for what states can select as EHB benchmark plans, including the EHB benchmark plan chosen by one of the other 50 states.

In addition, CMS has proposed to update its approach to risk adjustment data validation (RADV) audits in an effort to simplify the approach to making payment adjustments focused on:

  • RADV error rates
  • How payment adjustments would apply to exiting issuers who participate in RADV
  • Minimum data elements required for validation of mental or behavioral health diagnoses (reflecting concerns about state privacy laws)
  • Applying the RADV materiality threshold beginning with the 2018 benefit year, instead of 2017

CMS also is seeking to explore policies that would make it more appealing for states to run their own Exchanges while using the HealthCare.gov platform.8

Contacts

Anne Phelps
Principal | Deloitte Risk and Financial Advisory
US Health Care Regulatory Leader
Deloitte & Touche LLP
Latest conversations from Anne Phelps on Twitter

Daniel Esquibel
Senior Manager | Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

1“Health Plan Choice and Premiums in the 2018 Federal Health Insurance Exchange,” Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation, October 30, 2017.
2Ib id.
3Ib id.
4Ib id.
5“The Effects of Terminating Payments for Cost-Sharing Reductions,” Congressional Budget Office, August 15, 2017.
6“Bipartisan Health Care Stabilization Act of 2017: Cost Estimate,” Congressional Budget Office, October 25, 2017.
7“Healthcare Leaders Propose Bicameral Agreement to Provide Certainty and Relief from Failures of Obamacare,” Hatch/Brady press release, October 24, 2017.
8Proposed HHS Notice of Benefit and Payment Parameters for 2019 Fact Sheet, Department of Health and Human Services, October 27, 2017.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

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