The 523-page final rule from the U.S. Department of Health and Human Services allows states to develop their own version of essential health benefits, starting in 2020. State officials will still have to offer the 10 essential health benefits established by the ACA -- including coverage for maternity care and mental health services -- but they’ll be able to pick and choose new benchmarks -- such as fewer covered doctors visits or prescription drugs -- for those services.
Under the current rules adopted by the Obama administration, states have one benchmark plan that defines how essential health benefits are covered in every plan.
The new rule also lets states loosen regulations on insurers' spending. The ACA required insurers to spend 80 percent of their profits on patient health care and quality improvement. Starting in 2020, states can request permission from the feds to allow insurers to spend more on their overhead costs -- like travel expenses and salaries -- if officials can prove it will stabilize premiums.
This is all in an effort to reduce premiums, which have risen sharply in recent years. Premiums rose 34 percent on average this year from 2017, and in 2017, they jumped 25 percent from 2016 rates.
But most health policy experts say Trump's actions are not likely to stunt that growth.
Andy Slavitt, a health official during the Obama administration, told The Washington Post that the new rule is “a gift to the insurance companies by finding lots of ways for them to get around the standards Americans have come to expect.”
Nevertheless, some states are likely to take the Trump administration up on this offer.
Idaho and Iowa, for instance, were already barreling ahead with plans to skirt some ACA rules before Health and Human Services Secretary Alex Azar signed off on this new rule. Iowa passed a law earlier this month that would allow some health insurance plans sold off the ACA exchange to not comply with ACA requirements. It still needs federal approval. But even if it is rejected, Trump's new rule means the state can skirt some ACA rules for plans on the exchange.
Idaho is another state that recently tried to skirt ACA rules. But in a surprise to some, its attempt was rejected by the Trump administration last month. This new rule, however, gives the state a way to skirt at least some ACA regulations.
It's usually conservative states seeking the power to tweak ACA rules to their liking. But in Oklahoma, one of the 18 states that refused to expand Medicaid under the ACA, state insurance officials say they don't intend to make use of Trump's latest rule.
“We did extensive consumer surveys, and we learned that the essential health benefits are really valued by consumers. That high approval gives us indication on where we need to be,” says Mike Rhoades, Oklahoma's deputy insurance commissioner.
In Colorado, a purple state that did expand Medicaid and has a relatively stable marketplace, Vincent Plymell, a spokesperson for the state's Department of Insurance, said they wouldn’t rule out trying some of these new provisions.
“It’s a wait and see for us. We have no immediate plans to revamp the essential health benefits, but we’ll evaluate things as they come up,” he says.
But whether states take advantage of this new rule or not, health policy experts agree that it won't make a big difference.
“The markets going forward will be shaped more from things like the end of the individual mandate, association health plans and low enrollment [than Trump's new rule],” says Elizabeth Carpenter, vice president of Avalere, a health care consulting firm.
Congress eliminated the mandate requiring people to have health insurance as part of its tax overhaul in December. Without it, the Congressional Budget Office estimates that, over the next decade, premiums will rise by 10 percent a year in most years and the uninsured population will increase by 13 million.
A handful of states are considering bills to restore the mandate for their residents, but most of them have stalled.
Meanwhile, the Trump administration is speeding up the impending death of the individual mandate, which Congress didn't set to expire until 2019. This year, the feds will allow people who live in a county with only one insurer to apply for a “hardship exemption” from the tax penalty. Americans can also apply for an exemption if the only plans offered cover abortion services.
Tim Jost, professor emeritus of health care law at Washington and Lee University, argues that there are several other steps the federal government could take to help stabilize the marketplace, such as allowing states to pass so-called reinsurance programs.
“The federal government must confront a basic question of fairness. It subsidizes the purchase of insurance for the vast majority of Americans ... but not for middle-income Americans who must purchase insurance on their own. There are a number of options the government could consider to reduce the cost of insurance for this remaining group. For example, reinsurance for the entire individual market significantly reduced premiums for all during the first three years of the ACA and could be reinstated,” Jost wrote.
In reinsurance programs, the government pays for high-cost claims from the sickest patients in an effort to lower insurers' costs and the premiums they charge. Almost 10 states have launched their own, and several -- including Oklahoma -- have asked the Trump administration for help funding them. But so far, only Alaska and Minnesota have been granted any federal reinsurance money. In Alaska, reinsurance led what was supposed to be a 42 percent hike in premiums to just a 7 percent hike last year.
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