Congress may or may not repeal key provisions of the Affordable Care Act (ACA). But under the guidance of the Trump administration, the way the health law works, in practice, has already changed. High-profile actions—including threats to cut off federal payments for plans that offer reduced cost-sharing and an executive order casting doubt on enforcement of the law’s individual mandate—have jeopardized individual market risk pools and created uncertainty that is likely to lead to higher premiums and lower insurer participation.
Others moves have flown largely under the radar—but shouldn’t. A case in point: recent regulatory actions that reduce federal oversight of marketplace health plans, passing responsibility to the states for ensuring compliance with federal consumer protections.
To be sure, the Obama administration encouraged states to take the lead in enforcement of many of the ACA’s insurance reforms. But the additional actions of Trump officials suggest a broader deregulatory approach that could weaken oversight at a time when insurers face pressure—because of broad uncertainty regarding federal policy—to mitigate risk by designing plans attractive only to those in good health.
The ACA’s enforcement framework
The ACA envisions a partnership between federal and state governments, in which states serve as the primary regulator and enforcer of the law’s reforms in their own markets.1 There are exceptions to this rule. Where a state has lacked authority or capacity to enforce ACA standards or was unwilling to do so, federal regulators have directly enforced federal law. Additionally, legal responsibility for certification and oversight of the “qualified health plans” sold on the ACA marketplaces rests with the marketplaces themselves. Since only 16 states and the District of Columbia chose to run their own marketplaces, the federal government must oversee marketplace plans in most of the country.
In mid-April, the Trump administration announced it would stop monitoring marketplace plans for compliance with several important federal protections and instead defer to state oversight.
Stepping away from narrow networks
The biggest changes concern federal oversight of insurers’ provider networks. The ACA addressed wide variation in how states regulated networks by establishing a federal standard for network adequacy that is intended to ensure that marketplace enrollees nationwide have adequate access to health care providers. The Obama administration initially interpreted the standard quite flexibly; but concerns about narrow networks led regulators to increase oversight of plans sold on the federal marketplace and adopt specific quantitative standards for judging whether plans’ networks were sufficient.
The Trump administration’s first major ACA-related rulemaking erases these requirements and ends federal oversight of plan networks altogether in most states. Under the new rules, the U.S. Department of Health and Human Services (HHS) will not review networks at all in states with authority and means to conduct such oversight themselves. While we have found that most states have authority to review the networks of at least some of the plans sold in their marketplaces, states’ capacity to do so is less clear and HHS hasn’t said what factors it is considering in determining whether a state can do the work. (The rule promises to notify insurers, though not the public, of states that make the grade.)
In states without authority or means, federal officials will turn instead to third-party accreditation entities such as the National Committee for Quality Assurance (NCQA). Though such organizations don’t set specific network standards, don’t provide ongoing oversight, and can’t remediate network deficiencies—that isn’t, after all, their role—if an insurer is accredited, HHS will sign off on their plans’ networks.2
The administration’s hands-off approach isn’t limited to networks. Its April actions also:
- Relax oversight of federal rules prohibiting marketplace plans from picking and choosing the geographic locations they serve in ways that discriminate;
- Weaken federal requirements for plans to provide access to “essential community providers,” like safety-net hospitals and community health centers, which serve predominately low-income, medically underserved individuals;
- End federal review of marketplace plans’ prescription drug formularies in certain states, deferring instead to those states to determine whether a plan is using a discriminatory benefit design.
State regulators frequently have forged effective partnerships with their federal counterparts to address issues of health plan management and often may be in the best position to safeguard their own markets and consumers. But not all ACA oversight functions fall within every state’s traditional sphere of regulation, nor do all states have the resources necessary for their effective execution. Moreover, it is the federal government that is legally required to ensure that the “qualified” plans sold on the federally branded and operated marketplace meet federal standards. As the Trump administration begins to step back from these responsibilities, the effects should be watched closely.
1 This arrangement isn’t unique to the ACA. Certain other federal health insurance laws, including the Health Insurance Portability and Accountability Act (HIPAA), use a similar regulatory framework.
2 An insurer without such accreditation must submit to HHS a document demonstrating it has standards and procedures in place to maintain an adequate network.