The Year Ahead: What 2017 ACA Changes Could Mean for 2018 and 2019

Last year was not a quiet one in healthcare reform.

Throughout the summer of 2017, Congress made several failed attempts to repeal and replace the Affordable Care Act (ACA). With Congress unable to reach consensus on an ACA replacement, the Trump administration unilaterally made changes to the healthcare law.

Amid the questions about the ACA’s future, enrollment on the federal and state marketplace was high, despite a reduced enrollment period from three months to 45 days. Changes made to the ACA in 2017 that may result in individuals either losing their insurance or enrolling in plans that are exempt from certain essential health benefits could have a significant effect on providers and hospitals in 2018 and beyond.

What to Look for in 2018 And Beyond

Several actions taken in 2017 are likely to affect the marketplace in 2018 and 2019. First, the Trump administration ended funding for the cost-sharing reduction (CSR) payments. Second, in October, President Trump issued an executive order intended to promote choice and competition in health care. Third, the Centers for Medicaid & Medicare Services (CMS) issued a Notice of Benefit and Payment Parameters (NBPP) for the 2019 plan year that introduces more flexibility around essential health benefits (EHBs). Finally, debate exists over the impact of repealing the individual mandate to purchase health insurance.

Cost-sharing reductions. The ACA created two subsidies to help low-income consumers afford marketplace plans: premium tax credits and cost-sharing reductions (CSRs) to assist with deductibles and other out-of-pocket costs. In 2016, a federal judge ruled these CSRs unconstitutional because Congress had not appropriated the money. After spending a year tied up in court, the question was resolved by the Trump administration, which ended funding of the subsidies effective October 2017.

To offset the end of CSR reimbursements, most insurance companies raised premiums on silver plans, the only marketplace plans that offered cost-sharing reductions. ^a Despite these higher premiums, some individuals bought plans (particularly bronze and gold plans) with lower premiums than they had in 2016 or even no premiums at all. They could do so because the federal government still must provide premium subsidies for low-income consumers, and as plan premiums increase, so do the premium subsidies. Reimbursing health plans for premiums raised in the absence of CSR funding may lead the federal government to spend more money than it would have on both premium tax credits and CSRs. ^b Although rates are set for the 2018 plan year, future changes to the CSRs, including decisions to reallocate funding to the subsidies, would likely cause confusion in the market.

Executive order on healthcare choice and competition. President Trump’s executive order has not led to immediate change; rather, it has directed several federal departments to provide new rules and guidance consistent with its mandate. Issued on Oct. 12, the order directed the U.S. Department of Labor to expand the availability of association health plans (AHPs), which allow small businesses, and perhaps even individuals, to buy insurance as a group. However, AHPs are not required to offer the same robust benefits that marketplace plans must offer, which could attract healthier people seeking to pay less for their insurance.

The order also instructs the U.S. Departments of Labor, Treasury, and Health & Human Services to issue rules and guidance expanding the length of time consumers can receive coverage from a short-term plan, which can exempt people with preexisting conditions, and which, like AHPs, are not subject to ACA benefit requirements.

Finally, the executive order requires those three departments to expand the use of health reimbursement arrangements (HRAs), which employees can use to purchase their own insurance.

Supporters of these changes believe they provide consumers with greater choice and potentially less expensive plans, while critics believe they represent an effort to undermine the ACA by siphoning healthy consumers away from marketplace plans. The changes could take affect throughout 2018, but likely would have the biggest impact on 2019 insurance products.

Notice of benefit and payment parameters. CMS’s proposed 2019 Notice of Benefit and Payment Parameters (NBPP) aims to reduce regulatory burden and increase flexibility in the individual market. The NBPP proposes changes that would take effect for the 2019 plan year, including allowing states more flexibility to define essential health benefits. Critics worry these changes would continue to destabilize the individual market by creating a less healthy risk pool as healthier consumers move to cheaper, but less robust, plans. The American Hospital Association (AHA) released a statement in response to the NBPP that expressed appreciation for the reduced regulatory burden but voiced concern that the NBPP would increase healthcare costs and “reduce access to critical services and providers.” ^c

Individual mandate. The ACA’s individual mandate has been one of, if not the most, unpopular aspects of the law since it was enacted. However, views differ regarding the consequences of repealing the mandate. The nonpartisan Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) projected that a repeal of the individual mandate in 2019 would add 4 million uninsured people in 2019 and 13 million in 2027. The CBO and JCT also estimate that premiums would increase by about 10 percent. ^d Other sources argue the mandate has not been that powerful of a tool to compel coverage, either because the penalty for noncompliance is not sufficiently stringent or because people generally prefer to have health insurance.

A 2016 article in the New England Journal of Medicine finds that the ACA components that have had the greatest impact in reducing the number of uninsured Americans are, in order beginning with the most potent, Medicaid expansion, premium subsidies, and the individual mandate. ^e

Mixed Reviews

Changes made in 2017 that could lead to fewer Americans having health insurance or plans with fewer benefits clearly will have an impact on providers. Although some applaud the administration’s efforts to increase consumer choice and lower regulatory burden, others worry that many of these actions would destabilize the market and lead to both rate increases for consumers and growth in the number of uninsured Americans.

Footnotes

a. Levitt, L., Cox, C., and Claxton, G., “The Effects of Ending the Affordable Care Act’s Cost-Sharing Reduction Payments,” The Henry J. Kaiser Family Foundation, April 25, 2017.

b. Congressional Budget Office, The Effects of Terminating Payments for Cost-Sharing Reductions , August 2017.

c. AHA, “CMS Issues Proposed Notice of Benefit and Payment Parameters for 2019,” Special Bulletin, Oct. 30, 2017.

d. CBO, Repealing the Individual Health Insurance Mandate: An Updated Estimate , November 2017.

e. Frean, M., Gruber, J.G., Sommers, B.D., “Disentangling the ACA’s Coverage Effects—Lessons for Policymakers,” NEJM, Oct. 27, 2016.