Independent Health is closely following efforts by the Trump Administration and Congress to repeal and replace the Affordable Care Act (ACA), a process that involves a three-pronged approach: reconciliation legislation through the proposed American Health Care Act; administrative action, and additional legislation outside of the reconciliation bill.

We provide this latest overview in our occasional series of ACA updates.

May 26, 2017 Update:
Status of the House’s AHCA and the implications of changes to a risk adjustment provision

The AHCA has not yet been sent to the Senate since it passed on May 4. Members of Congress were awaiting the Congressional Budget Office’s (CBO) analysis of the AHCA, which was released on Wednesday afternoon. The CBO analysis showed that the AHCA would result in 23 million uninsured by 2026 and a $119 billion reduction in federal spending over the next decade. The analysis also finds the plan would lower premium costs for already healthy consumers, but significantly raises costs for sicker and older Americans.

The Senate will keep this analysis in mind as it develops its own ACA repeal and replace bill. As such, the Senate developed a 13-member workgroup, led by Senate Majority leader Mitch McConnell, to develop recommendations for health reform.

The Impact of a Risk Adjustment Provision on 2018 Rates
Regardless of how Congress moves forward with the AHCA, recent federal and state regulatory actions will impact premium rates for 2018 and beyond.

The ACA created several provisions designed to help level the playing field among insurers and promote competition based on quality and efficiency. The federal risk adjustment program allows for the transfer of funds within a state from plans with a healthier and less costly membership to plans with a less healthy or sicker membership in order to subsidize the premium rates so they can cover the claim costs of the high risk members. Plans with costlier membership, including Independent Health, rely on this fund transfer to keep their plan premiums affordable to small groups and individual subscribers.

The methodology used to determine each carrier’s insured population risk and ultimate payment or receipt is maintained by the Center for Medicare and Medicaid Services (CMS).

Two regulatory changes are expected to reduce the amount that Independent Health and other receiving plans will get in 2018:

  • The first is a reduction due to a change in the risk adjustment transfer formula made by CMS.
  • The second is a reduction due to the creation of a New York State market stabilization pool by the New York State Department of Financial Services.

These two regulatory changes will impact small group and individual rates. Independent Health will issue our required notices to small groups and individuals about our proposed 2018 premium adjustments the week of May 30

Administrative Activity
Last year, the House of Representatives initiated a lawsuit against the Obama Administration, arguing that the Administration did not have the authority to pay out certain ACA subsidies because Congress had not appropriated the funding. Cost sharing reduction subsidies are the funding that is used to lower deductibles and out of pocket costs for lower-income populations. This past May 22, President Trump requested a 90-day delay to a scheduled hearing on this lawsuit.

For additional information on the ACA, check out Independent Health’s website for our ongoing series of updates, listed by date. In addition, click here for a helpful summary of the key provisions of the proposed American Health Care Act.