In April, the federal Department of Health and Human Services changed the rules to make buying health insurance through the Affordable Care Act’s marketplaces harder (you can read HCFANY’s comments on those rules here). The rules were ostensibly meant to prevent adverse selection, the problem of people waiting until they are sick to buy health insurance. Imagine if people didn’t buy car insurance until after an accident – the car insurance companies would quickly go out of business. The same thing happens with health insurance companies if all of their customers are sick. However, consumer advocates and most experts think that the rules will raise the costs of health insurance, reduce the value of having health insurance, and generally weaken the marketplaces.
Families USA released an issue brief today describing how states can fight back against these new rules to prevent them from harming consumers. Since New York chose to run its own marketplace (other states have marketplaces run by the federal government), we’re in good shape to implement a lot of these recommendations:
Open Enrollment: The rules limit open enrollment to just six weeks. Families USA recommends that states increase outreach, education, marketing and enrollment activities, for example by providing additional funding for in-person assistance.
Nonpayment of Premiums: Under the new rules, insurance companies can refuse to let you renew your plan if you owe a late premium. This is a big problem, because the health care bill being pushed forward in Congress severely punishes people if they don’t maintain continuous coverage. States can protect consumers by passing laws prohibiting carriers from actually doing this. They can also require carriers to set up payment plans, create an appeals process so consumers can fight back in the case of administrative errors, and force carriers to provide notices to consumers that they could be prevented from renewing if they do not pay their bill or set up a payment plan.
Actuarial Value: Insurance companies are allowed to sell plans with lower actuarial values (AVs) under the rules. The actuarial value is a measure of cost-sharing – Families USA’s example is a plan with a 70 percent AV. The average customer who bought that plan will pay 30 percent of their own health care costs through co-pays, deductibles, and other cost-sharing. The insurance company would on average cover 70 percent of the costs. Lowering the AVs means that plans can cover less of their customers’ costs, meaning consumers pay more. States can create their own rules or even pass legislation preventing this.
The issue brief also provides explanations and recommendations for protecting consumers from other parts of the new rule that make it harder to get insurance during a special enrollment period and reduce requirements placed on insurance companies to provide appropriately sized networks.