The Trump administration took steps Wednesday intended to help 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 plans 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."
The moves announced separately by the Health and Human Services Department and the IRS don't amount to sweeping changes to the Affordable Care Act. That would fall to Congress, where Republicans are struggling to reach consensus over how to deliver on their promise to repeal and replace the health law.
But the administration's actions do signal a change in direction.
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, down from the current three months.
For insurers, the curbs on special enrollment periods are a big item. The industry claimed that some consumers were abusing special enrollment by signing up when they needed expensive treatments, only to drop out later.
Insurers would gain more flexibility to design low-premium plans tailored to younger people, yet that flexibility could lead to higher deductibles, according to the department.
"The proposed change could reduce the value of coverage for consumers," the 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.
But U.S. Sen. Lamar Alexander, chairman of the Senate health committee, called the changes "a good first step towards rescuing the health care market that Tennessee's insurance commissioner says is 'very near collapse."
The Chattanooga-based BlueCross BlueShield of Tennessee, faced with nearly $500 million in losses in the first three years of the health exchange plans under ObamaCare, pulled out of Tennessee's three biggest markets this year with its individual plans even after gaining state approval for an average 62 percent rate increase. Earlier this week, Humana announced it will drop its individual health exchange plans next year in 11 states, including Tennessee where it is the sole insurer in 16 counties.
Roy Vaughn, senior vice president and chief communications officer at BlueCross, said the insurer "has tried to make the ACA Marketplace model work for Tennessee," despite unexpected cuts in some federal reimbursements and a sicker-than-expected population that has signed up for ObamaCare program.
"We're doing our best to work through the uncertainties at the federal level and still considering whether we will continue to offer coverage in the same regions for 2018," Vaughn said Wednesday. "At this point, we do not anticipate a scenario where we would expand into the Memphis, Nashville or Knoxville regions (where 131,000 people were previously insured by BlueCross plans)."
Alexander said without changes, many of the 18 million Americans in the individual insurance market "may have zero choices for insurance next year, so having an Obamacare subsidy could soon be like having a bus ticket in a town where no buses run."
Chris Coleman, staff attorney for the Tennessee Justice Center and a supporter of Obamacare, said Wednesday that other insurers may follow Humana's lead in dropping exchange plans next year amid the uncertainty of what changes may be ahead. Health insurers must submit offers and prices to the federal government for next year by May, but Congress may not have finalized any replacement plan for ObamaCare by then.
"I'm afraid we may see other insurers drop or limit their coverage in this uncertain market," Coleman said Wednesday in an interview with the Chattanooga Times Free Press.
Coleman said repealing the Affordable Care Act without an adequate replacement threatens the health of 562,000 Tennesseans who rely upon some part of ObamaCare. Coleman wants Tennessee to take advantage of federal subsidies and new flexibilities under the Trump administration to expand the TennCare program to cover more working Tennesseans who don't now qualify for Medicaid coverage.
Separately, the IRS announced Wednesday it is 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 — a penalty usually deducted from a taxpayer's refund. 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.
Many of the law's supporters consider the coverage requirement essential for nudging younger, healthy people into the insurance pool to keep premiums in check.
The IRS said in a statement that "taxpayers remain required to follow the law and pay what they may owe."
Administration officials said the HHS rules will help to stabilize the individual health insurance market for next year. That could buy time for congressional deliberations on the health care law. Trump's health secretary, former Rep. Tom Price, R-Ga., was confirmed only Friday.
The industry group America's Health Insurance Plans commended the administration, but said in a statement more is needed. In particular, insurers want Trump and Congress to remove a legal cloud over billions of dollars in subsidies that they are obligated to pay to cover deductibles and copayments for low-income people.
"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.