Wednesday the Trump Administration took steps intended to calm jittery insurance companies and make tax compliance with former President Barack Obama’s health law less burdensome for some people.
But the changes could lead to policies with higher annual deductibles, according to the administration’s own proposal. That seems to undercut President Donald Trump’s assurance in a recent Washington Post interview that his plan would mean “lower numbers, much lower deductibles.”
Recently confirmed HHS Secretary Tom Price called them “initial steps in advance of a broader effort to reverse the harmful effects of Obamacare.” Premiums are up sharply this year, while many communities were left with just one insurer.
For consumers, the proposed HHS rules mean tighter scrutiny of anyone trying to sign up for coverage outside of open enrollment by claiming a “special enrollment period” due to a change in life circumstances such as the birth of a child, marriage, or the loss of job-based insurance. Also, sign-up season will be 45 days, shortened from three months currently.
For insurers, the curbs on special enrollments are a big item. The industry claimed that some consumers were gaming the system by signing up when they needed expensive treatments, only to drop out later.
Insurers would also gain more flexibility to design low-premium plans tailored to younger people. But that flexibility could lead to higher deductibles, according to HHS.
“The proposed change … could reduce the value of coverage for consumers,” the administration proposal said. “However, in the longer run, providing (insurers) with additional flexibility could help stabilize premiums.”
Larry Levitt of the nonpartisan Kaiser Family Foundation said “this would allow insurers to offer plans with higher deductibles, which seems counter to President’s Trump promise to lower deductibles.” A deductible is the annual amount consumers pay for medical care before their insurance kicks in.
Democrats said the HHS changes would undermine consumer protections and make more people uninsured. Some called the move “sabotage.”
Separately, the IRS said it’s backing off from a tighter approach to enforcement that was in the works for this tax-filing season. The IRS said that’s in line with Trump’s executive order directing agencies to ease requirements of the health law.
Under the law, people are required to have health coverage or risk fines from the IRS — an unpopular provision. That underlying requirement remains on the books, and taxpayers are still legally obligated to comply, the IRS said.
But the agency is changing its approach to enforcement. Originally, the IRS had planned to start rejecting returns this year if a taxpayer failed to indicate whether he or she had coverage. Now the IRS says it will keep processing such returns, as it has in the past.
Administration officials said the HHS rules will help to stabilize the individual health insurance market for next year. That could buy time for Congress to make bigger changes.
The industry group America’s Health Insurance Plans commended the administration, but said more is needed. In particular, insurers want Trump and Congress to remove a legal cloud over billions of dollars in subsidies that the companies are obligated to pay to cover deductibles and copayments for low-income people.
It remained unclear if insurers would be swayed. Only Tuesday, Humana announced it will not participate in next year in the government-run marketplaces, where insurer exits have already diminished consumer choice.
“I don’t necessarily think these changes are enough to alter insurers’ decision-making about staying in the markets,” said Caroline Pearson of the consulting firm Avalere Health.
Pearson said consumer reviews may also be mixed. Healthy people may appreciate more affordable premiums. But people with health problems could see an erosion in coverage.
Separately, a government report Wednesday said the nation’s problem with rising health care spending is back and here to stay, regardless of what happens to the Obama health law.
Nonpartisan experts at HHS said health care spending will claim a growing share of national resources for the foreseeable future.
Health care will grow at an annual average of 5.6 percent from 2016-2025, outpacing expected economic growth. Now $3.5 trillion, the nation’s health care tab will increase to nearly $5.5 trillion in 2025, accounting for about one-fifth of the economy.
The unwelcome trend is due to fundamentals such as rising prices for treatments and services, as well as an aging population.