The Trump Administration’s New Marketplace Rules: Regulatory Simplification or More Complexity for Consumers?
On Monday, the U.S. Department of Health and Human Services (HHS) released its final rule for the 2019 plan year. This annual rule, called the Notice of Benefit and Payment Parameters, typically includes a broad range of changes that HHS intends to make for the next plan year for the Affordable Care Act’s (ACA) marketplaces and insurance market reforms. This is the first such rule of the Trump administration; the current 2018 plan year is governed by rules issued at the end of the Obama administration.
The rule makes a number of changes to the marketplaces that reflect President Trump’s Inauguration Day executive order that instructed federal agencies to relieve fiscal and regulatory burdens on states, individuals, and industry. HHS also notes the changes in the rule are intended to significantly expand the role of the states in the administration of the ACA, including providing states more flexibility in several areas such as benefits covered by plans, certification of plans, and the operation of “navigator” programs that help people enroll.
Although the stated goal is simplification, in at least one key way, the rule is likely to add more complexity to consumer’s health plan choices in 2019. At the same time, it leaves people with less help to sort through that complexity. Not only does the rule eliminate “simple choice” plans offered on the marketplaces, it reduces the number of navigators available to help people select plans.
What Are “Simple Choice” Plans?
Health insurers selling plans in the individual market are required to sell plans at four distinct levels that signal the amount of costs on average that are covered by a plan, or its actuarial value — bronze, silver, gold, and platinum. Along with the requirement that all plans in a given state must offer the same package of essential health benefits, this stratification greatly improved the ability of consumers to make apples-to-apples comparisons among plans. By contrast, on the pre-ACA individual market, it was often difficult for consumers to even know what a plan covered before they purchased it.
Still, competing insurance companies use a wide variety of combinations of deductibles, out-of-pocket limits, copayments and coinsurance, and deductible exclusions (services that the plan covers before the deductible is met) to arrive at the same average actuarial value for all enrollees in a plan. In a study of marketplace health plans, the Commonwealth Fund found that these different combinations can ultimately add up to very different costs for people enrolled in the plans, depending on how much and the types of health care services they end up needing in a given year.
Consumers understandably are often confused. While the federal marketplace website HealthCare.gov and state-run marketplaces feature a cost comparison tool that allows consumers to compare plans based on their potential out-of-pocket costs, having to compare a large number of plans can be overwhelming. Commonwealth Fund survey data have shown that many consumers continue to experience difficulty comparing plans on the basis of out-of-pocket costs.
In order to make choosing a plan less daunting, HHS created a set of “simple choice” plans for plan years 2017 and 2018. These are standardized health plans that insurers may elect to sell and which HHS differentially displays on HealthCare.gov to make them clear to consumers. The plans, which are offered at the bronze, silver, and gold level, have fixed deductibles, out-of-pocket limits, and copayments or coinsurance for health care services. In addition, they provide pre-deductible coverage for seven services and prescription drugs in most states and as many as 10 in states with state-specific cost-sharing limits.
The rationale behind the plans was twofold. The first was to simplify the shopping experience for consumers. Comparing two plans offered by two different insurance companies is far simpler if the cost-sharing is the same. Consumers can focus on differences between the plans on premium and the providers included in the network, for example. Second, the standardized plans also include beneficial features (such as pre-deductible services) that might not otherwise be available in some markets. A broader goal of standardizing is to encourage insurers to compete for enrollees on the basis of the value of the health care provided by their plans.
In its rule, HHS claims that dropping simple choice plans is consistent with promoting free market principles in the individual market and that the standardized plans stifle innovation. But insurers always had the option to decide whether to offer the plans, and could therefore offer plans with innovative designs.
Changes for Consumers in 2019 But Less Help
HHS’s decision not to feature simple choice plans in 2019 may be confusing to consumers who had enrolled in the plans in the past two years. In addition, the rule eliminates the requirement that insurers offer plans that are meaningfully different from one other, which will likely lead to more plans and choices in some markets. Moreover, consumers in some states may have fewer people to help them sort through their plan choices. In the rule, HHS reduces the number of navigators states are required to make available to consumers from two to one. In addition, the rule no longer requires that navigators maintain a physical presence in the state in order to provide face-to-face assistance to consumers. These changes come on the heels of a deep cut in federal funding for advertising and the navigator program during last year’s open enrollment period.
State-Based Marketplaces Are Simplifying Plan Choices
Several state-based marketplaces offer standardized health plans and won’t be affected by the new rule. California’s marketplace, Covered California, in particular has been a leader in simplifying plan options for consumers and driving its individual market toward higher-value health plans. It only allows the sale of plans that meet standardized designs set by the marketplace, which it refers to as patient-centered benefit designs.
Simple choice plans were an innovative attempt to improve the ability of consumers to make decisions about health plans that have consequences for their ability to maintain their health. While HHS has retreated from its experiment with standard plans, states that run their own marketplaces can continue to innovate.