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State Regulation of Coverage Options Outside of the Affordable Care Act: Limiting the Risk to the Individual Market

March 29, 2018

ABSTRACTIssue: Certain forms of individual health coverage are not required to comply with the consumer protections of the Affordable Care Act (ACA). These "alternative coverage arrangements" — including transitional policies, short-term plans, health care sharing ministries, and association health plans — tend to have lower upfront costs and offer far fewer benefits than ACA-compliant insurance. While appealing to some healthy individuals, they are often unattractive, or unavailable, to people in less-than-perfect health. By leveraging their regulatory advantages to enroll healthy individuals, these alternatives to marketplace coverage may contribute to a smaller, sicker, and less stable ACA-compliant market. The Trump administration recently has acted to reduce federal barriers to these arrangements.Goal: To understand how states regulate coverage arrangements that do not comply with the ACA's individual health insurance market reforms.Methods: Analysis of the applicable laws, regulations, and guidance of the 50 states and the District of Columbia.Findings and Conclusions: No state's regulatory framework fully protects the individual market from adverse selection by the alternative coverage arrangements studied. However, states have the authority to ensure a level playing field among coverage options to promote market stability.

Insurers Remaining in Affordable Care Act Markets Prepare for Continued Uncertainty in 2018, 2019

March 19, 2018

A new report, supported by the Robert Wood Johnson Foundation and authored by Georgetown CHIR and Urban Institute researchers, examines how uncertainty over the long-term future of the ACA have affected insurers' participation and premium setting decisions for the 2018 and 2019 plan years. We interviewed 10 insurance companies participating in the individual market in 28 states and D.C. and a few key takeaways include:The rollback of the ACA's individual mandate led insurers to implement higher premiums in 2018 and will likely drive premiums even higher in 2019. However, insurers' views differed on the impact of repealing the individual mandate. Some felt it would ultimately lead to a collapse of the market and are considering further retrenchment; others felt confident that a market for highly subsidized, low-income consumers would continue.The midyear loss of the ACA's cost-sharing reduction plan reimbursements drove 2018 premium increases ranging from 10 percent to 20 percent. However, several insurers noted that proposed federal legislation to restore cost-sharing reduction funding could result in significant disruption and sticker shock for consumers receiving premium tax credits.All insurers had concerns regarding an expansion of short-term and association health plans under the President's October 12, 2017 executive order. Insurers worry that an expansion of these plans could siphon healthy people away from the individual market, leaving a sicker, costlier population.Insurers with narrow provider networks reported concerns about the potential exit of competing insurers, noting that their network providers lacked capacity to take an influx of new, often sicker enrollees. They further noted that unexpected insurer exits can produce considerable disruption, particularly if remaining insurers lack sufficient time or ability to readjust their pricing.A worsening of the risk pool will likely cause many insurers to reduce their market presence, will cause all insurers to raise their premiums, and may lead to more exits.

Regulation of Health Plan Provider Networks: Narrow Networks Have Changed Considerably under the Affordable Care Act, but the Trajectory of Regulation Remains Unclear

July 28, 2016

Health insurance plans with limited networks of providers are common on the Affordable Care Act's (ACA's) health insurance Marketplaces. Recent studies have found that these "narrow network" plans constituted nearly half of all Marketplace offerings in the first two years of coverage, with one analysis concluding that about 90 percent of all consumers had the option of buying such a plan if they chose.Plans with limited networks are not new and are not confined to the Marketplaces. Yet there is reason to believe that they have grown in prevalence partly because of the ACA. Many of the health law's consumer protections--prohibitions on health status underwriting, increased standardization of benefits, a maximum limit on out-of-pocket spending, and the elimination of annual and lifetime limits on benefits, for example--have foreclosed traditional strategies used by insurers to keep costs in check. Meanwhile, other elements of reform, including online Marketplaces that make it easier for consumers to compare plans based on premiums and a financial assistance framework that links the amount of a person's premium tax credit to the cost of the second cheapest plan available to them at the silver metal tier, explicitly encourage insurers to compete on price. These developments appear to have led many insurers to design Marketplace health plans that combined a comparatively low premium with a more restricted choice of providers.Limited network plans might offer value to consumers. Coverage that pairs a low premium with a network that provides meaningful access to health care might meet the needs of many enrollees, no matter the network's overall size. Negotiations between insurers and providers over network participation might encourage more efficient delivery of care. And the power to contract selectively might allow insurers to create networks comprising a subset of providers who meet raised standards of quality, potentially resulting in higher-value care.But these plans also pose risks. A network can be too narrow, jeopardizing the ability of consumers to obtain needed services in a timely manner. This can happen if the network contains an inadequate mix of provider types. For example, a recent examination by Harvard researchers of the network composition of health plans offered on the federal Marketplace during 2015 found that nearly 15 percent of the sampled plans lacked in-network physicians for at least one specialty. Or a network might have an insufficient number of providers: There might be too few physicians who are taking new patients, who are available for an appointment within a reasonable time, or who speak the same language as the enrollee. Certain network limitations also might have the effect of discouraging enrollment by sicker consumers, potentially skewing the risk pool. Plans that provide limited or inadequate access to in-network providers make it more likely that enrollees will obtain care from out-of-network sources, exposing them to significant expenses and the possibility of surprise medical bills.Surveys show that many consumers are open to trading network breadth for a lower premium. They also suggest that, in practice, large numbers of consumers do not find network designs to be transparent. If the features of a plan's network are inadequately explained or its list of participating providers is inaccurate, it might be impossible for consumers to make an informed decision about whether the plan's combination of network and price is right for them.Consumers' experiences with narrow network plans since the ACA's implementation have defied easy characterization. Surveys of the insured, including those with Marketplace coverage, suggest that the vast majority are satisfied with their plan's choice of doctors. Yet anecdotal complaints about networks have proliferated, and the exclusion by some health plans of high-profile hospitals and care facilities has generated media headlines.In light of these developments, and as part of a larger effort to keep pace with changes to the health insurance markets since passage of the ACA, lawmakers and regulators have devoted significant attention to determining how networks should be regulated to ensure they are adequate and transparent. This work has involved efforts to establish or update standards for evaluating the sufficiency of a plan's network, improve the accuracy of provider directories, and protect enrollees from surprise bills from out-of-network providers. This brief offers an overview of state and federal actions that address the first two categories--network standards and provider directories--with a focus on rules that govern plans sold on the ACA's health insurance Marketplaces.

Implementing the Affordable Care Act: State Regulation of Marketplace Plan Provider Networks

May 5, 2015

Health plans with relatively narrow provider networks have generated widespread debate, mainly concerning the level of regulatory oversight necessary to ensure plans provide consumers meaningful access to care. The Affordable Care Act creates the first federal standard for network adequacy in the commercial insurance market for plans offered through the law's insurance marketplaces. However, states continue to play a primary role in setting and enforcing network rules. This brief examines state network adequacy standards for marketplace plans in the 50 states and District of Columbia. We identify state requirements in effect at the outset of marketplace coverage, focusing on quantitative measures of network sufficiency and rules designed to ensure the delivery of accurate and timely provider directories. We then explore the extent to which those standards evolved for 2015. Though regulatory changes were limited in year one, states were most likely to act to promote network transparency and enhance oversight.

State Approaches to Premium Rate Reforms in the Individual Health Insurance Market

December 29, 2014

The Affordable Care Act protects people from being charged more for insurance based on factors like medical history or gender and establishes new limits on how insurers can adjust premiums for age, tobacco use, and geography. This brief examines how states have implemented these federal reforms in their individual health insurance markets. We identify state rating standards for the first year of full implementation of reform and explore critical considerations weighed by policymakers as they determined how to adopt the law's requirements. Most states took the opportunity to customize at least some aspect of their rating standards. Interviews with state regulators reveal that many states pursued implementation strategies intended primarily to minimize market disruption and premium shock and therefore established standards as consistent as possible with existing rules or market practice. Meanwhile, some states used the transition period to strengthen consumer protections, particularly with respect to tobacco rating.

Implementing the Affordable Care Act: Revisiting the ACA's Essential Health Benefits Requirements

October 31, 2014

The Affordable Care Act broadens and strengthens the health insurance benefits available to consumers by requiring insurers to provide coverage of a minimum set of medical services known as "essential health benefits." Federal officials implemented this reform using transitional policies that left many important decisions to the states, while pledging to reassess that approach in time for the 2016 coverage year. This issue brief examines how states have exercised their options under the initial federal essential health benefits framework. We find significant variation in how states have developed their essential health benefits packages, including their approaches to benefit substitution and coverage of habilitative services. Federal regulators should use insurance company data describing enrollees' experiences with their coverage—information called for under the law's delayed transparency requirements—to determine whether states' differing strategies are producing the coverage improvements promised by reform.

Implementing the Affordable Care Act: State Action on Quality Improvement in State-Based Marketplaces

July 29, 2014

Under the Affordable Care Act, the health insurance marketplaces can encourage improvements in health care quality by: allowing consumers to compare plans based on quality and value, setting common quality improvement requirements for qualified health plans, and collecting quality and cost data to inform improvements. This issue brief reviews actions taken by state-based marketplaces to improve health care quality in three areas: 1) using selective contracting to drive quality and delivery system reforms; 2) informing consumers about plan quality; and 3) collecting data to inform quality improvement. Thirteen state-based marketplaces took action to promote quality improvement and delivery system reforms through their marketplaces in 2014. Although technical and operational challenges remain, marketplaces have the potential to drive systemwide changes in health care delivery.

Implementing the Affordable Care Act: State Action to Reform the Individual Health Insurance Market

July 7, 2014

The Affordable Care Act contains numerous consumer protections designed to remedy shortcomings in the availability, affordability, adequacy, and transparency of individual market insurance. However, because states remain the primary regulators of health insurance and have considerable flexibility over implementation of the law, consumers are likely to experience some of the new protections differently, depending on where they live. This brief explores how federal reforms are shaping standards for individual insurance and examines specific areas in which states have flexibility when implementing the new protections. We find that consumers nationwide will enjoy improved protections in each area targeted by the reforms. Further, some states already have embraced the opportunity to customize their markets by implementing consumer protections that exceed minimum federal requirements. States likely will continue to adjust their market rules as policymakers gain a greater understanding of how reform is working for consumers.

ACA Implementation Monitoring and Tracking: New York Site Visit Report

April 19, 2012

Examines New York's progress in implementing the 2010 federal healthcare reform, including an executive order to establish a health insurance exchange, legislation to enact insurance reforms, and the debate over implementing the Basic Health Program.

Premium Incentives to Drive Wellness in the Workplace: A Review of the Issues and Recommendations for Policymakers

February 27, 2012

Outlines trends in workplace wellness programs; healthcare reform law provisions allowing greater financial incentives for employees; policy considerations for vulnerable populations, privacy issues, and affordability of coverage; and recommendations.

ACA Implementation Monitoring and Tracking: Oregon Site Visit Report

February 7, 2012

Assesses Oregon's progress in implementing the 2010 federal healthcare reform, including establishing a health insurance exchange, amending the state insurance code, and planning for seamless eligibility and enrollment processes across state programs.

The Role of Exchanges in Quality Improvement

September 28, 2011

Explores state options and considerations for driving healthcare quality improvement and delivery system reform at the plan and provider levels through insurance exchanges, including the need to involve all stakeholders in developing and executing policy.