In­sur­ers on the in­di­vid­ual mar­ket mum on the re­turn to med­i­cal un­der­writ­ing

Modern Healthcare - - NEWS - By Mara Lee

Among the many chal­lenges Se­nate lead­ers face as they draft a bill to re­peal and re­place the Af­ford­able Care Act is try­ing to keep premi­ums from spi­ral­ing out of con­trol.

Sen. Ted Cruz (R-Texas) thinks he has the an­swer. Cruz has been pitch­ing an amend­ment that would al­low in­sur­ers to sell plans in the in­di­vid­ual mar­ket that don’t meet ACA re­quire­ments so long as they sell at least one plan that does. The Con­sumer Free­dom plans could be de­signed how­ever com­pa­nies wish, as long as they meet state stan­dards.

But would in­sur­ers that have stayed on the ex­changes want to de­sign plans with fewer ben­e­fits cov­ered, or deny cov­er­age to peo­ple with ill­nesses or charge them more?

Five in­sur­ers on ex­changes in a dozen states in New Eng­land, the Mid­west, West and South that cover hun­dreds of thou­sands of lives wouldn’t spec­u­late, or said the pro­posal was too vague at this point.

The Blue Cross and Blue Shield As­so­ci­a­tion also de­clined to say whether its mem­bers would con­sider sell­ing non­com­pli­ant plans. The Blues trade group, which rep­re­sents the largest bloc of in­sur­ers in the ex­changes, did send Cruz a let­ter say­ing that the Con­sumer Free­dom op­tion is un­work­able. Blues CEO Scott Serota said it would force in­sur­ers off the ex­change mar­ket or price plans in a way that could be un­af­ford­able for con­sumers.

The Kaiser Fam­ily Foun­da­tion es­ti­mated that 1.5 mil­lion peo­ple with pre-ex­ist­ing con­di­tions would face higher premi­ums if the amend­ment be­came law.

Cruz has said that tax dol­lars will help con­sumers buy ex­change plans. Sub­si­dies would help those with mod­est in­comes, and ad­di­tional fund­ing for rein­sur­ance would mit­i­gate the rise in premi­ums for those who make too much to get a sub­sidy.

None­the­less, Amer­ica’s Health In­sur­ance Plans, the in­dus­try’s lob­by­ing group, also op­poses the amend­ment. It said states that al­lowed some in­sur­ers to med­i­cally un­der­write plans af­ter the ACA be­came law ex­pe­ri­enced 10% higher rates than other states.

“Pro­pos­als to re­open non­com­pli­ant plans would cre­ate even greater in­sta­bil­ity by driv­ing ad­verse se­lec­tion and ac­cel­er­a­tion of the down­ward spi­ral in the ex­change mar­kets of higher premi­ums and lower en­roll­ment,” AHIP said.

How states reg­u­late the mar­ket might pre­vent in­sur­ers from sell­ing plans that cost far less than what’s sold to­day.

Com­mu­nity Health Op­tions, Maine’s co-op in­surer, cov­ers 33,000 peo­ple through in­di­vid­ual plans. CEO Kevin Lewis said be­fore the ACA passed, Maine reg­u­la­tors re­quired plans to cover men­tal health, and didn’t al­low life­time lim­its or dis­crim­i­na­tion on the ba­sis of pre-ex­ist­ing con­di­tions.

Be­fore Maine in­tro­duced rein­sur­ance to slow the rise in premi­ums—two years be­fore ACA launched—a typ­i­cal de­ductible on a plan for a sin­gle per­son was $15,000, Lewis said. Un­der bronze plans in Maine to­day, the typ­i­cal de­ductible is $6,000 to $6,250, but the out-of-pocket ceil­ing is $7,150. Pre­ven­tive care is not sub­ject to the de­ductible.

Lewis said that only about 20% of Maine’s in­di­vid­ual mar­ket buy­ers earn too much to qual­ify for sub­si­dies, and only 10% of the ex­change pop­u­la­tion buys with­out sub­si­dies. So he’s not sure how much seg­re­gat­ing them would change the risk pool, though he thinks there would likely be at least some de­te­ri­o­ra­tion. It would de­pend, he said, on whether the premi­ums for non­com­pli­ant plans were cheaper than what peo­ple pay af­ter a sub­sidy. Would Com­mu­nity Health Op­tions sell a skimpier plan? “We’d have to look at the specifics,” Lewis said. “We’d cer­tainly take a look at what those pa­ram­e­ters were. I think we’d pro­vide plans that con­sumers would find mean­ing­ful. In some cases, who are we to judge, if there’s a mar­ket there?”

Cruz’s amend­ment may not sur­vive vet­ting un­der rules for rec­on­cil­i­a­tion, or may be stripped dur­ing the amend­ment process.

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