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Trump Administration Memo Reveals ACA Exchange Policy Disagreements

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House Democratic leaders have revealed that Seema Verma, the Trump administration official directly in charge of overseeing Affordable Care Act rules and programs, is trying to help people with  ACA public exchange plan coverage keep their coverage.

Verma — President Donald Trump’s administrator of the Centers for Medicare and Medicaid Services (CMS) — predicted in August that some ACA public exchange program changes proposed by other administration officials could cut exchange plan enrollment by about 1 million in 2020 and later years.

She recommended that the administration stick with the 2019 exchange program rules, to help people stay covered.

Adopting the changes proposed for 2020 could hurt middle-income consumers, who have to pay the full retail price for exchange coverage;  “undermine the limited progress made thus far in stabilizing the market; and set back the Administration’s priorities of devolving power to states, increasing affordability, and expanding consumer choice in health insurance coverage,” Verma wrote in the memo.

(Related: CMS to You: How Should the ACA System Change?)

She wrote that some of the health system changes the administration has adopted or proposed, such as giving states more flexibility to change ACA rules and programs for their residents, depend on consumers having access to a stable individual health insurance market.

The Trump administration is still considering two of  the proposed changes and has adopted one.

Three House leaders — House Energy and Commerce Chairman Frank Pallone Jr.; House Ways and Means Chairman Richard Neal; and House Education and Labor Chairman Bobby Scott — included a copy of Verma’s memo in a letter sent to Alex Azar II, the secretary of the U.S. Department of Health and Human Services (HHS).

The lawmakers say they found Verma’s memo when they asked HHS for materials related to the position of HHS on a federal suit that could give the U.S. Supreme Court a chance to strike down all of the Affordable Care Act.

CMS officials were not immediately available to comment on the lawmakers’ letter.

The Proposed Changes

The changes under consideration in August 2018 were:

1. Ending ‘silver loading’: The ACA public exchange system was originally supposed to pay insurers extra cash to help insurers reduce deductibles, co-payments and coinsurance amounts for low-income exchange plan users. ACA opponents in Congress cut off funding for the “cost-sharing reduction” program subsidy payments to insurers.

Some states and insurers have been getting around the cost-sharing reduction subsidy cut by increasing the full retail cost of mid-level, “silver level” coverage, with the understanding that most of the purchasers of that type of coverage will be low-income people, who will be able to use federal ACA premium tax credit subsidy help to limit their monthly payments for health coverage.

Verma predicted in her memo that ending silver loading could cut 2020 exchange plan enrollment by about 300,000, or about 3%.

2. Ending auto-enrollment: has been helping people who already have ACA exchange plan coverage renew their coverage without doing anything.

Eliminating auto-enrollment could cut 2020 exchange plan enrollment by about 200,000, or about 2%, according to Verma’s memo.

3. Changing the rules for calculating ACA premium tax credit subsidy amounts: More than two-thirds of exchange plan users qualify for ACA premium tax credit subsidies to pay for their coverage. For most tax credit users, the tax credits have the effect of reducing monthly cash payments for coverage.

Verma estimated in the memo that the premium indexing rule change could cut 2020 exchange plan use by about 600,000, or 6%.

What the Administration Has Done

HHS moved in April to adopt the new premium indexing rules for 2020.

Officials said they are still considering the auto-enrollment and silver-loading proposals.

The House leaders have objected to the idea of the administration going ahead with the auto-enrollment and silver-loading proposals, and asked why the administration went ahead with changing the premium indexing rules even though Verma predicted the new rules would cut the number of people with coverage.


A copy of the House leaders’ press release, a link to House leaders’ letter, and a link to a copy of the Verma memo are available here.

— Read 7 Facts About the New 2020 Federal Health Insurance Rules, for Agents, on ThinkAdvisor.

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