The day after the Trump administration unveiled a proposed rule aimed at stabilizing the health insurance market, a former Obama administration official warned on Thursday that the regulation could actually contribute to market instability.
“It came out in a context where there are some much more important things the administration is doing that are undermining market stability. And the rule itself, its most impactful provision, is also undermining market stability,” Aviva Aron-Dine, former official in the Department of Health and Human Services under President Obama.
The rule proposed by the Trump administration would shorten the enrollment period for those looking to buy a health plan in the marketplace and create a more rigorous process for people to prove they need to switch plans outside of the enrollment period. But the provision that particularly concerned Aron-Dine would allow insurance companies more flexibility in terms of the level of coverage offered in the silver level plans in the marketplace.
Aron-Dine, who was senior counselor to former Health and Human Services Secretary Sylvia Burwell, said at a panel discussion Thursday in Washington, D.C., that because subsidies offered to low-income Americans are based off of the marketplace’s silver plans, allowing insurance companies to offer silver plans with less coverage would devalue the subsidies.
“When you make silver plan coverage less generous, premium tax credits buy less,” Aron-Dine told reporters. “That leaves moderate income families — millions of them — in the position of either having to pay more themselves in premiums or having to purchase worse coverage.”
“That’s obviously bad for families and it’s a pretty striking choice for a first executive action on the Affordable Care Act,” she added.
Aron-Dine said that the proposed rule is “extremely counter-productive in terms of market stability” because it will make coverage in the marketplace less affordable and attractive. This will reduce demand and enrollment, which will undermine stability, she said.
Aron-Dine also co-wrote a report on this provision in the proposed rule for the Center on Budget and Policy Priorities, in which she explains how it would impact the marketplace:
The Trump Administration’s new proposed rule on health care would raise premiums, out-of-pocket costs, or both for millions of moderate-income families. If finalized as proposed, the rule would reduce the amount of health care that marketplace plans have to cover. That would allow individual-market insurers to offer plans with higher deductibles and other out-of-pocket costs than they can now sell through the marketplaces. It would also have the hidden impact of reducing the Affordable Care Act’s (ACA) premium tax credits, which help moderate-income marketplace consumers afford health care. As a result, the rule would force millions of families to choose between higher premiums and worse coverage.
She also said Thursday that the rule comes at a time when other factors are contributing to instability in the marketplace, like uncertainty over Republicans’ plans for Obamacare and the IRS’ recent decision not to automatically reject tax returns if people do not disclose whether they have health insurance.
“It’s described as market stability rule, but it’s happening in the context of this discussion of repeal and delay, which is creating tremendous uncertainty and instability,” Aron-Dine said, adding that the IRS decision is also “destabilizing.”