The Trump administration has introduced a sweeping proposal to modify the regulatory framework surrounding health plans offered through the Affordable Care Act (ACA) marketplace. The proposed changes, aimed at reducing premiums and broadening consumer options, carry the potential to reshape health care coverage by emphasizing catastrophic plans. However, critics warn that the changes could result in higher out-of-pocket costs and may lead to a significant drop in insurance enrollment.
Key Changes Target Catastrophic Plans
At the heart of the administration’s proposal is an effort to expand access to catastrophic health plans. These plans, which currently see limited enrollment – estimated between 20,000 and 54,000 policyholders – offer lower premiums but come with significantly higher annual out-of-pocket expenses. Historically restricted to individuals under 30 or those facing certain hardships, catastrophic plans were made available this year to older individuals who lost ACA subsidy eligibility. This new rule would further broaden eligibility to anyone below the poverty line or those earning more than 2.5 times the poverty line who no longer qualify for ACA subsidies.
The administration suggests that raising the out-of-pocket maximum for these plans to $15,600 for individuals and $27,600 for families – up from the current limits of $10,600 and $21,200, respectively – could distinguish them more clearly from "bronze" plans, which offer low premiums but higher out-of-pocket costs.
"When there is such a clear difference, the healthier consumers that are generally eligible and best suited to enroll in catastrophic plans are more motivated to select a catastrophic plan in lieu of a bronze plan", the proposed rule stated.
However, critics argue that these changes could leave consumers exposed to unaffordable medical bills, particularly since ACA subsidies cannot be applied to catastrophic premiums.
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Affordability Concerns Amid Dropping Enrollment
The proposal comes during a period of heightened concern over rising health care costs. Many Americans have struggled to maintain ACA coverage following the expiration of enhanced subsidies late last year. Initial enrollment numbers for the ACA marketplace this year dropped by more than 1 million, reflecting the financial strain faced by many households.
Matthew Fiedler, senior fellow at the Center on Health Policy at the Brookings Institution, expressed concerns over new provisions that could increase financial burdens for enrollees. "The proposed rule included a lot of provisions that could expose enrollees to much higher out-of-pocket costs", he noted.
Additionally, the rule would allow insurers to sell ACA plans without a set health care provider network. While such plans would guarantee access to a range of providers, policyholders could face unexpected costs if providers do not accept the insurer’s payment terms.
Multiyear Coverage and Other Provisions
One of the more "novel" aspects of the proposal is the introduction of multiyear catastrophic plans. These plans could span up to 10 years, with out-of-pocket maximums varying over time. Costs could start higher in the early years and decrease in subsequent years. The administration is seeking public comments on how to structure these plans and their potential impact on the overall health insurance market.
Insurers would also be allowed to offer bronze plans with cost-sharing rates higher than current ACA limits, provided they also offer lower-cost-sharing options. This flexibility, the administration claims, would provide more tailored options for consumers.
Mixed Reactions from Experts
The sweeping 577-page proposal has drawn a range of reactions from health policy experts and industry professionals. Katie Keith, director of the Health Policy and the Law Initiative at Georgetown University, observed that the administration appears to be betting heavily on catastrophic plans as a solution to rising premiums. "To me, this proposal reads like the administration has found their next big thing in the catastrophic plans", she said.
Insurance broker Joshua Brooker echoed the need for clarity and balance in expanding coverage options. He expressed cautious optimism about the potential appeal of catastrophic plans to wealthier enrollees who no longer qualify for subsidies. "They’re more worried about the half-million-dollar heart attack", Brooker said, adding that these plans might also help lower-income individuals gain some preventive care coverage while capping potential hospital costs.
However, Brooker also called for additional safeguards, such as requiring insurers to offer lower out-of-pocket catastrophic plans alongside the high-cost options. "Putting more options on the market doesn’t hurt, as long as it is disclosed properly and the consumer understands it", he said.
Looking Ahead
The proposal will remain open for public comment until early March, with finalization expected in the spring. Given the complexity and scope of the changes, the Centers for Medicare & Medicaid Services (CMS) is expected to receive significant feedback from various stakeholders, including insurers, consumers, and policymakers.
CMS Administrator Mehmet Oz defended the proposal, stating in a February 9 press release that it "puts patients, taxpayers, and states first by lowering costs and reinforcing accountability for taxpayer dollars."
As affordability and access to health care remain pressing issues ahead of November’s midterm elections, the administration’s proposed changes are likely to fuel further debate about the future of the ACA marketplace and its ability to meet the needs of diverse consumers.
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