Bumps, Fixes and Improvements Needed to Make Affordable Care Act Work

Bumps, Fixes and Improvements Needed to Make Affordable Care Act Work

PPACAWhile the President’s signature achievement, his healthcare reform effort “PPACA,” now known as both Obamacare and the Affordable Care Act, hasn’t been a big hit amongst health insurers and some politicians, others still cite it as a “triumph” – a triumph that brought coverage to 20 million people that lacked it previously.

As the last few months of President Obama’s term conclude, he has proposed some policy changes to fix the problems with his signature law.

On Monday, August 29, 2016, the Obama Administration released a 300-page policy brief to prove to its critics and champions that exchanges are still a desirable place to do business. These policy changes aim to better balance the risk pool, make it easier and more profitable for insurers to participate in the exchange, all while seeking to increase enrollment.

Kevin Counihan, the insurance marketplace CEO at CMS wrote that the proposed rule would rebalance the risk pool in several ways. These include:

  • Strengthen proof of eligibility for Special Enrollment Period enrollees.
  • Encourage consumers turning 65 to shift from ACA products to Medicare products, thus reducing the risk profile of a demographic with higher-than-average utilization rates.
  • Stoke the efforts of a recent task force dedicated to ousting healthcare providers who direct patients toward ACA plans instead of Medicare and Medicaid in order to receive greater reimbursements.
  • Create space for insurers to creatively design their insurance products, particularly for “benchmark” federally subsidized health plans.
  • Restructure the way Medical Loss Ratios (MLRs) are calculated.
  • Eliminate the current rule which bans insurers from entering exchange marketplaces for up to five (5) years if they exit a marketplace.
  • Determine, from stakeholders, if user fees should be allocated toward outreach efforts.
  • Use new technologies (that CMS is working to deploy) to create new channels for an integrated user experience (sounds like code for developing iPhone and Droid apps).

Although these changes may be pointed in the right direction, some critics argue that this may not be an adequate proposal. (See Mr. Counihan’s comments here)

Critics believe that HHS and CMS (the departments most likely to implement these changes) won’t be able to implement them in time for 2016 or even 2017. As carriers leave the marketplace, more areas are left with fewer plans to choose from, and their experiences, so far, haven’t been good ones. These Marketplaces need healthier and younger Americans to leave their parent’s plans and join the exchange. But, with 2016’s individual mandate penalty at 2.5% of income or $695 (whichever is greater) that has yet to be enough of an incentive to either enter the marketplace or leave their parent’s employer’s plan. These same critics (see links to articles below) do not believe that throwing more money at the problem or adjusting the timing of enrollment won’t cure the law’s fundamental problem of having enough healthy people enrolled to compensate for the sick people.

Links: 
– Administration’s 300 page policy brief: Patient Protection and Affordable Care Act – HHS Notice of Benefit and Payment
– CMS-Blog, 8/29/16: Taking Action Now for a Stable Marketplace for the Long-Term
– NY Times, 8/29/16: Obamacare Marketplaces are in Trouble. What Can Be Done?
– CNN-Money, 8/29/16: Drawing more uninsured into Obamacare is critical to its survival
– Reason.com, Hit & Run Blog, 8/29/16: Obamacare is Stuck in a Feedback Loop of Bad Policy and Bad Politics 

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