Just days before President-elect Trump is sworn in, the Obama administration implemented on Tuesday a major regulation that will govern rates and payments to insurers under Obamacare.
The rule, which sets the plans that can be sold on the Affordable Care Act’s exchanges in 2018, is common and must be issued to give insurers an idea of what to expect for the coming coverage year. However, the Obama administration implemented the regulation much earlier than years past, and some in the GOP are worried it could complicate the incoming administration’s efforts to provide regulatory relief to insurers.
Normally a rule that has a major financial impact must be implemented 60 days after being published in the Federal Register. The rule was published on Dec. 22 and goes into effect Tuesday, less than a month after publication.
The administration implemented it faster by invoking the “good cause” exemption, which lets major rules be implemented earlier than 60 days, according to a House Republican aide, who added that the Trump administration could use the same tool to make quick changes to the rule.
However, any new regulations would require a new comment period.
The rush is part of a rash of last-minute regulations by the Obama administration. It means the administration issued regulations for an insurance marketplace that it will not oversee, since the Trump administration will be charged with maintaining Obamacare’s marketplaces for 2018.
The rule is a normal part of regulating the marketplaces. However, every other rule has been implemented a few months later in the year.
For instance, the rule was implemented in May 2014 for the 2015 coverage year. For the 2014 year, the first time the marketplaces went online, the rule went into effect in April 2013, according to a memo from the Congressional Research Service obtained by the Washington Examiner.
The rule for the 2016 coverage year was even later. It was finalized in February 2015, but went into effect on Jan. 1, 2016, the memo said.
The Centers for Medicare and Medicaid Services, which oversees the marketplaces, issued the rules earlier this year in response to requests from insurers, said spokesman Aaron Albright.
The insurers wanted the rule to be released earlier to “facilitate their actuarial work estimating rates, which begins in early 2017,” Albright said. “These were largely widely-supported technical changes intended to give issuers certainty as they plan for the 2018 plan year.”
The new leadership at the Centers for Medicare and Medicaid Services can issue new regulations for the marketplace, and could use the “good cause” clause to quickly implement new changes, the GOP aide said.
Insurers in April can start sending in applications for plans to be included on the exchanges.
The Trump transition team did not return a request for comment.
The rule explains various parts of Obamacare’s marketplaces. For instance, it identifies how much insurers must pay via a user fee to offer qualified health plans on the exchanges.
The 2018 rule includes several provisions aimed at improving the marketplace, which has been roiled by defections from major insurers such as Aetna and UnitedHealth. The rule intends to change a formula that pays insurers based on the number of sicker enrollees that they have signed up, hoping to mitigate any future losses from high medical claim costs.
It also includes parameters for the federal rate review program. Insurers proposing big increases in their premiums must submit justification to both the Department of Health and Human Services and the state it is doing business in before implementing the rate.
The rule also sets how much the administration will pay out to insurers in the form of cost-sharing reduction payments. The payments are intended to reimburse insurers for reducing the cost of copays and deductibles for certain low-income Obamacare customers.
In 2016, the federal government paid out $5.7 billion to insurers, the memo said.
CMS isn’t the only federal agency that has been speeding up regulations. Environmental Protection Agency Administrator Gina McCarthy called for staff to speed up the last round of regulations before Obama leaves office.
The quick turnaround comes as Congress is planning to repeal Obama’s signature domestic achievement. Congress passed a budget resolution last week that directs committees to start drafting repeal legislation.
The fact that the Trump administration cannot make changes to Obamacare regulations for 2018 could impact the repeal process.
“There is an urgency to repeal this law,” the GOP aide told the Washington Examiner. “I think that is very evident. There is pressure to do that quickly.”
However, the regulation could “potentially slow down the process of a Trump administration using regulatory relief since that’s the major plan-focused rule each year,” the aide added.
Republicans’ goal is to use a procedural move called reconciliation to pass a repeal bill in the Senate by a simple 51-vote majority. Reconciliation can be used only for spending and budget bills.
The resolution gives the committees until Jan. 27 to draft the legislation, but that deadline is nonbinding and could take longer.
Due to reconciliation’s strict parameters, Republicans won’t be able to fully repeal the healthcare law. A 2015 repeal bill passed via reconciliation gutted Obamacare’s taxes and mandates, but left intact regulations on items insurers had to cover.
Republicans and Democrats have been battling for the past two weeks over repeal, with Democrats charging that Republicans are gutting the law without an immediate replacement.
Republicans counter that the law is already collapsing as evidenced by high premiums and less competition on the marketplace.
However, Republicans aim to keep the marketplaces intact for a few years while a GOP replacement is crafted and approved.
