Several insurers say the Biden administration’s proposal to limit nonstandard plan options on the Affordable Care Act’s (ACA’s) HealthCare.gov next year will stifle innovation and consumer options.
Insurers took aim at the proposal in comments to the Notice of Benefit and Payment Parameters released in December, which outlines proposed regulations for the 2024 coverage year on the ACA’s exchanges. The proposed rule would limit the number of nonstandard options to two per product network type and metal tier in a service area.
“We strongly oppose adopting blunt instruments like limiting non-standardized plans that would harm competition, disrupt coverage for existing enrollees, and stifle value-based insurance designs,” wrote the advocacy group AHIP in comments.
The Centers for Medicare & Medicaid Services (CMS) said back in December that the limit will help consumers make a meaningful selection to compare plan offerings. The agency has been worried about a marked increase in the number of plans available on the exchanges. The final rule is expected to be released later this spring.
Insurers slammed that reasoning in comments to the proposed rule.
Major ACA insurer Centene wrote that while it understands CMS’ concern, “that there may be too many choices in some areas, however, we believe that consumers are still capable of making the best decisions for their health insurance plans.”
An internal analysis from Centene estimated that 30% of consumers who have selected plans for 2023 would lose access to their desired plan if “we were only allowed to offer our two most popular non-standardized plans at the product network type,” the comments said. “This is significantly higher than CMS’ estimate of approximately 18%.”
Some insurers were worried about how the plan limit will affect innovation.
Oscar Health noted that it offers plans that serve specific diabetes populations across 15 states this year. The plan aims to manage diabetes via unique benefits that include $0 on foot care and monthly caps on insulin copays.
“A plan such as this is attractive to a very specific population but would not be appropriate for the majority of insureds and thus is unlikely to survive if only two non-standard plans are allowed,” Oscar wrote in comments. “Thus, if finalized, this proposal could abruptly halt innovation in individual product development and preclude vulnerable consumer populations from accessing plans that more directly meet their needs.”
The nonstandard limit only applies to plans sold on HealthCare.gov, which is used by residents in more than 30 states that don’t have their own exchanges. Catastrophic plans are also exempt from the requirement.
Insurer groups were also concerned about a proposal to automatically reenroll consumers eligible for cost-sharing reductions (CSRs) into a silver-tier plan with income-based CSRs. Currently, such consumers would be enrolled in a bronze-tier option without CSRs.
A consumer who has a plan that is no longer available would automatically be reenrolled in a plan with a similar network.
AHIP charged that this proposal will stifle consumer choice.
“Americans actively choose their health plan for several reasons, including but not limited to net premium, provider network and out-of-pocket costs,” the comments said. “This proposal assumes consumers always value income-based CSRs and net premium above all other factors.”
The Blue Cross Blue Shield Association also wrote in comments that consumers will pick a plan for reasons beyond price, including their network.
“Moving enrollees to a new plan without their knowledge may disrupt their care, impose tax liabilities and erode their trust in their exchange and their health plan,” the association, which represents 38 Blues plans, wrote.