State-level insurance mandates and requirements that insurers sell in the ACA marketplaces could be among the policies state legislators advance in 2018.

Dec. 28—Following the repeal of the individual mandate tax penalty, state legislators could consider a range of approaches aimed at bolstering their individual health insurance markets.

 Officials in several Democrat-leaning states—including New Jersey, California, Connecticut, and Maryland—are pondering the possibility of implementing in 2018 their own version of the Affordable Care Act’s (ACA’s) individual mandate, according to published reports. State proposals range from creating their own penalty-enforced mandates, requiring the payment of higher premiums for lacking continuous coverage, or instituting auto-enrollment.

Consideration of such state-level requirements follows the recent enactment of the Tax Cuts and Jobs Act (PDF), which starting in 2019 eliminates the federal penalty for most Americans who lack qualifying insurance coverage. For 2018, anyone who lacks qualifying insurance will owe either $695 for each uninsured adult and $347.50 for each uninsured child, or 2.5 percent of his or her household income—whichever is higher.

According to the Congressional Budget Office (CBO), this repeal provision is projected to increase the number of uninsured by 4 million in 2019 and 13 million by 2027 because more will choose to forgo insurance. However, the CBO acknowledged possible methodological flaws in its latest analysis of the mandate, projected a smaller effect on the number of people with insurance than it found in its previous analyses, and promised more analysis of the issue in the future.

But any reduction in the number of insured will likely mean more bad debt and charity care for providers, noted a recent analysis from market research firm Hedgeye. As a result, providers may push state legislators to take steps to bolster their individual insurance markets.

“Hospitals all over the state are in trouble financially because too many bills go unpaid and charity care is crippling their ability to respond to community needs,” wrote State Sen. Scott Jensen, a Republican from Minnesota, in an op-ed urging discussions about the creation of a state mandate.

Offering Requirement

Another individual market issue that may arise in 2018 among the states is a requirement that insurers in other markets there also sell plans in the ACA marketplaces.

The issue was resurrected in December after the  publication of research that chronicles how the largest private insurers in recent years have derived growing shares of their revenue from public health insurance programs. The researchers—including one from the left-leaning Commonwealth Fund—used their findings to argue that insurers that sell such profitable plans also should sell ACA plans.

“If the goal is to ensure access to insurance and stabilize markets across all segments, one step forward would be to require any carrier that wanted to participate in Medicare or state Medicaid programs in a given geographic area to sponsor individual-market plans there as well,” they wrote. “This could be done through a combination of federal and state unified actions.”

Critics of these proposals said they would undercut the actuarial soundness of various insurer plans, require greater margins on insurers’ business outside of the ACA plans, and incentivize insurers to provide poor plans that intentionally garner little enrollment in the ACA marketplaces.

One example of such a requirement was New York’s 1993 law requiring individual market sales by health insurers that wanted to sell other health insurance products or other insurance market coverage, such as group health insurance or long-term care coverage.

Another state with such a requirement is Nevada. In 2012, Nevada disqualified Medicaid managed care bids from plans that did not sell silver- and gold-level ACA marketplace plans.

The need for some way to bolster insurer competition in the ACA marketplaces has been cited by many insurance policy experts after insurers fled in recent years. For instance, a recent McKinsey & Co. analysis found the number of on-exchange carriers declined from a 2015 peak of 333 companies to just 194 in 2018. The result is that the share of Americans with access to just one insurer has increased from 2 percent in 2015 to 26 percent in 2018.

The call for the requirement that insurers sell on the ACA marketplaces was common among left-leaning policy advocates in 2016, but many fell silent after the presidential election.

 One variant of the policy that was pushed in 2017 was a proposal from the Health Reform Roundtable, which was a bipartisan group of health policy analysts. The group urged the Trump administration and Congress to require insurers participating in the Federal Employee Health Benefits Program (FEHBP) and that were located in counties that lack an ACA marketplace plan to offer at least one silver-level plan as a condition of FEHBP participation.

“There are many ways the states and federal government could tackle this problem, and we encourage Congress to make this issue a priority,” they wrote.

Federal Push

Any such state insurance policy proposals will come as federal regulators and legislators also seek to augment the marketplaces.

For instance, an executive order that President Trump signed in October will allow an expansion of short-term health insurance plans—which were limited by President Obama to three-month terms—and they don’t have to meet the same coverage requirements as ACA plans. Some industry observers warn that this expansion may siphon people off of the ACA marketplaces, although such plans have previously enrolled a very small number of participants.

Additionally, Congress is expected in January to consider two bills aimed at stabilizing the ACA marketplaces. The so-called Alexander-Murray legislation would fund cost-sharing reduction (CSR) payments for low-income enrollees in ACA marketplace plans and authorize states’ flexibility on the coverage provisions insurers must include in their individual market plans. It was backed by 12 Democrat and 12 Republican sponsors. The so-called Collins-Nelson bill would create a $5 billion risk-pool stabilization mechanism.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Thursday, December 28, 2017