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Trump Health Rule Would Raise Consumer Costs, Discourage Enrollment, Weaken Marketplaces

The Trump Administration proposed a sweeping rule for the individual health insurance market today that would raise consumers’ deductibles and other out-of-pocket costs, reduce premium tax credits that help millions of people buy insurance, and make it harder to enroll in coverage. While the Administration claims the changes are needed to stabilize the insurance market, many of them would weaken market stability by shrinking enrollment and making the pool of people with coverage sicker, on average.

What’s more, the changes would do nothing to address the biggest threat to the market: the instability and uncertainty for consumers and insurers due to the continued threat that the President and Congress will repeal the Affordable Care Act (ACA).

The proposed rule, which is open to public comment for an unusually brief 20 days rather than the typical 60, would:

  • Raise premiums, out-of-pocket costs, or both, for millions of people. The rule would allow insurers to raise cost-sharing charges, including deductibles, in their plans while still meeting the standards used to define the different coverage levels for marketplace plans (bronze, silver, gold, and platinum). The result: higher deductibles and other out-of-pocket costs for many people. These changes also would shrink premium tax credits for moderate-income people, as our new paper explains, forcing millions of families to choose between higher premiums and worse coverage.
  • Cut the time for open enrollment for 2018 coverage in half. The rule would slash the time people have to sign up for 2018 plans, ending it on December 15, 2017, instead of January 31, 2018. This would likely cause more people to miss the deadline — especially younger people, who tend to sign up later.
  • Delay coverage and limit plan choices for people using a special enrollment period (SEP). SEPs allow people to enroll in or change marketplace plans outside of open enrollment if they experience a major life change, such as losing job-based health coverage or having a baby. The rule proposes a number of new SEP restrictions. For example, it would delay coverage for hundreds of thousands of SEP enrollees while they provide documentation of their eligibility or otherwise have it verified. (The current process allows coverage to begin while verification is taking place.) That would make it harder for consumers to get coverage when they need it, and the additional hassle would most likely deter younger and healthier consumers. In addition, most marketplace enrollees could no longer change to a different coverage tier when they experience a SEP-triggering life change during the year.
  • Allow insurers to block consumers’ enrollment until they pay past premium debt. The rule would allow an insurer to avoid enrolling a person whose coverage was terminated in the past year unless they pay all of what they owe that insurer, rather than making sure the person has coverage while the insurer collects the money owed. To enroll in coverage, a person might have to come up with large sum of money — a tall order for consumers with limited incomes — or be shut out of coverage until the following year’s enrollment period. And healthy people would be likelier than sick ones to forgo enrolling due to the new rule, which would weaken the overall health of the coverage pool.

The proposed rule not only falsely assumes that we must choose between protecting consumers and protecting the market, but it also undermines both those goals.