The Affordable Care Act continues to face repeal threats from the Trump administration. Despite a series of changes that weakened the law in late 2018 and early 2019, the fate of the ACA still looks promising. However, it is too early to tell if the attempts to diminish the exchange markets will have broader impacts.
The story so far
Some of the major setbacks for ACA-compliant plans in recent years include: health plans that circumvent the law (association health plans and short-term health plans), withdrawal of cost sharing reduction funding for exchange enrollees, and the removal of individual mandate in 2019. Among these changes, the introduction of cheaper plans as an alternative to exchange plans is eye-catching. Tennessee was the first state to offer non-ACA compliant Farm Bureau Health Plans, followed by Iowa and Kansas. It is highly likely that other states may follow in their footsteps.
Features of the non-ACA compliant plans in favor of patients and payers
While enrollees in non-ACA coverage will pay smaller premiums and have greater flexibility, these plans are better suited for healthy members. Payers will benefit from these plans in the following ways: they will not have to provide benefits like preventive care for free, will get to cover members without pre-existing conditions, and won’t have to offer limits on out-of-pocket coverage. With the ongoing trend of shifting from fully to self-insured plans, cheaper plans like these may gain more popularity as employers look to reduce costs. Insurers in states that have not expanded Medicaid and have people trapped within the coverage gap, have a better chance of gaining membership of people who were uninsured, although even low premium rates could lie beyond the means of that low-income population.
Feature of non-ACA compliant plans that might not work for patients and payers
If healthier people choose non-ACA-compliant plans, the exchanges could be left with a smaller, sicker pool of patients paying exceedingly high premiums. Since the non-ACA compliant plans are also permitted to raise their premium cost, the out-of-pocket costs of those benefits that are not covered by these plans will make it equally expensive. The overall individual market might become fragmented and destabilized. Additionally, these plans are very lightly regulated with no essential benefit coverage and no coverage for people with pre-existing conditions. With no fixed premium rates throughout the coverage span, they do not have the same patient protections as ACA plans.
Steps taken by states to stabilize marketplace
Many states are stabilizing their exchange markets through reinsurance programs and state-based, individual mandates. States such as Oregon, Alaska, Minnesota, Wisconsin, Maine, Maryland, and New Jersey have added reinsurance programs. Rhode Island is likely to join these states in 2020. California, Connecticut, Hawaii, Maryland, Minnesota, Rhode Island, and Washington are considering mandates. The District of Columbia, New Jersey, Vermont, and Massachusetts have already enacted their own mandates. Some states have limited the time duration of short-term plans to less than three months, despite CMS permitting its expansion up to 36 months. The Trump administration has also allowed states to seek waivers to create subsidy programs that support non-ACA compliant plans.
In 2019, a fair number of payers showed interest in exchange participation in almost every state, and there was an overall drop in premiums. Silver loading—in which insurers pack premium increases onto silver-level plans—is expected to stay for a bit longer, meaning patients will continue to receive larger subsidies, making the marketplace plans more affordable. Almost 87 percent of members participating in the exchanges in 2019 will receive tax credits, and chances of that population opting out of exchanges for cheaper plans could be narrow. However, 73 percent of insurers are increasing the number of non-ACA compliant plans through 2019. Both of these plan options have a good chance of attracting market share and changing individual market dynamics.