The Trump administration is trying to make health insurance affordable again. That’s the aim of a regulation issued earlier this month by the Centers for Medicare and Medicaid Services.
The new rule would give states greater leeway over how they comply with ObamaCare’s essential health benefits, or EHB, mandate, which requires all insurance policies to cover a group of ten categories of healthcare services.
Relaxing ObamaCare’s rules is a far cry from the full-scale repeal Republicans promised over the last eight years and especially during the 2016 campaign.
But with Congress seemingly unwilling to take up healthcare reform before this November’s mid-term elections, incremental regulatory tweaks from the administration are the best that Americans desperate for affordable coverage can hope for.
The EHB mandate effectively prohibits insurers from selling low-cost, bare-bones plans. All 22 million people in the individual market — whether they shop on the exchanges or not — must choose a comprehensive policy that covers everything from maternity care to prescription drugs to substance-abuse treatment.
The mandate also requires insurers to cover preventive services, such as vaccines and counseling, at zero cost to patients.
Costs Of Regulation
Those extra benefits aren’t free; providing them costs insurers money. So they have raised premiums. A Heritage Foundation review of several state-level studies found that, on average, the EHB mandate increases premiums by 9%. An analysis by Today eHealth Inc. posits a much larger impact — a 47% increase.
As premiums have soared, thanks in part to the cost-inflating EHB mandate, more and more Americans have turned their backs on Obamacare’s exchanges. Enrollment in exchange plans fell from a peak of 12.7 million in 2016 to 12.2 million in 2017 to just 11.8 million in 2018.
In other words, nearly a million people could no longer afford the plans — or concluded the policies simply didn’t deliver enough value to justify the expense.
Several states have contemplated weakening the EHB mandate in order to reduce the cost of insurance within their borders. Idaho officials, for example, recently proposed a measure that would allow insurers to sell policies that openly ignore Obamacare’s benefits requirements.
The Trump administration rightly blocked Idaho from implementing its plan. Obamacare remains the law of the land. Allowing state officials to openly disregard federal statutes would set a terrible precedent.
Iowa found a more nuanced work-around. Gov. Kim Reynolds just signed a law which empowers the Iowa Farm Bureau and Wellmark Blue Cross Blue Shield to offer “health benefit plans” to any person who joins the Farm Bureau, a non-profit community organization open to all Hawkeye State residents. The Hawkeye State is adapting a model that originated — and worked well — in Tennessee.
Iowa law does not consider these plans health insurance: “a health benefit plan sponsored by a nonprofit agricultural organization domiciled in the state for its members shall not be deemed to be insurance and shall not be subject to the jurisdiction of the commissioner of insurance.”
Iowa’s End Run
Hence, the plans aren’t subject to Obamacare’s cost-inflating regulations — including the EHB mandate. Consequently, Iowans may soon have access to more affordable healthcare options through the Farm Bureau.
The Trump administration’s new EHB rule could give states yet another way to ratchet down premiums. At present, federal regulations define the essential health benefits in a given state relative to a benchmark plan selected by that state. That plan serves as the standard that all other plans have to follow.
Under the new CMS rule, which takes effect in 2020, states have three new options for tailoring their EHB rules. They can set their EHB requirements according to the benchmark plan that another state is using. They can replace one or more of their EHB categories with those from another state. Or they can design their own essential health benefit categories.
If one state’s benchmark plan has slightly less generous — and consequently less expensive — coverage of essential health benefits, another state can “import” those standards as its own. Or a state can take the flexibility the federal rule provides and build custom EHB requirements that draw on the best that other states have to offer.
The CMS rule falls short of scrapping the EHB mandate completely. But it’s a small dose of regulatory relief that should help decrease premiums at the margins. And that’s exactly what the Trump administration should be doing given Congress’s reluctance to act.