With the law’s future in doubt, the Obama administration on Friday issued nearly 500 pages of regulations for insurers participating in the law’s exchanges for the 2018 coverage year.
The regulations govern a slew of areas for insurers, including how much they will get back from the law’s cost-sharing reduction payments and requirements for submitting plans for the exchanges. The 2018 coverage year is clouded with uncertainty as lawmakers prepare to repeal Obamacare but leave it intact for a few years until a replacement is approved and implemented.
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The regulations are being released now because insurers must start planning for 2018. Open enrollment is underway for the 2017 year.
Republican lawmakers have pledged to repeal Obamacare early next year after President-elect Trump assumes the presidency, but they won’t have a replacement to go along with it.
The lack of a replacement plan could make insurers wary about what they will be getting into in 2018, experts have said.
Insurers must submit their proposed rates for 2018 plans by August and the final plans near the end of September. Insurers already losing money on the law’s exchanges might continue to flee Obamacare in 2018 if there is no market to stabilize and start to become profitable.
The GOP doesn’t want to create any more uncertainty in the market, aides have said.
“We are cognizant that any significant change has that threat, so we are thinking about solutions that would provide much more certainty so there could be smooth a transition as possible,” a Republican senate aide told the Washington Examiner this week.
Insurers are already leaving the market for 2017 after facing heavy losses, but some have stayed in with the hopes the marketplace will become profitable.
A major focus of the new regulations is to stabilize Obamacare’s risk pools, which have contributed to average price hikes of 25 percent for plans.
The risk pools have generally had too many sick people, which has led to higher claims costs for insurers.
The batch of regulations includes new rules to limit the misuse of special enrollment periods that let people enroll in Obamacare year round. Insurers have complained too many people improperly use the periods, which are usually used for people who lose coverage unexpectedly when they have a major event such as losing their job.
The regulations include several updates to the risk adjustment model, which forces plans with lower-risk enrollees to provide funding to plans with higher-risk customers.
The goal was to help insurers deal with new regulations that prevent them from denying coverage to people with pre-existing conditions. The protection for people with pre-existing conditions is a popular part of the law that Trump and Congress want to keep.
Changes to the risk adjustment program include better accounting for the risk of high-cost patients.
The government estimates how much financial risk for an enrollee and creates an average risk score. The score is supposed to determine the enrollee’s predicted expenses and governs how much an insurer gets or pays through the risk adjustment program.
But the problem is that some insurers complain the formula doesn’t work. Some smaller Obamacare insurers, such as Maryland co-op Evergreen Health, even sued the administration, calling the formula arbitrary.
So the administration said the new regulations will better account for the risk of high-cost patients. They also will improve compensation for healthier members and use prescription drug data as another way to account for sicker members, according to the Centers for Medicare and Medicaid Services.
