Erosion of the Patient Protection and Affordable Care Act Has Begun

The Internal Revenue Service and the Department of Health and Human Services announced plans this week which would undermine or eliminate a wide variety of ACA consumer protections.

Internal Revenue Service: On February 15th, the IRS announced that it won't withhold tax refunds for those who do not provide proof of insurance coverage. The direct effect of this will be fewer young and healthy people in the market - exactly what the insurers fear. The IRS is still required to levy the individual mandate fine of up to $695 for those who remain uncovered, because the individual mandate provision is written into the law, but they'll have to do it retroactively for those who don't provide proof of coverage. 

Department of Health and Human Services:  On the same day, HHS also proposed "market stabilization rules." Under these proposed rules:

  • The annual open enrollment period would be shortened by half, from 3 months to just 45 days;
  • Pre-enrollment verification of eligibility for individuals seeking coverage outside of the annual open enrollment period would be required;
  • Regulations would be revised to close a guaranteed issue loophole by allowing insurers to collect past due premiums, and deny coverage until the debt is paid;
  • The actuarial value (AV) variation requirements for determination of Bronze, Silver, and Platinum levels of coverage would be increased; and
  • States using Marketplace Exchanges would be allowed to establish their own network adequacy standards.

The new HHS rules, will be published in the Federal Register on February 17th. Comments are due on March 7th, an unusually tight timeframe of just 20 days (the usual time period is 30 days). A final rule would need to be published shortly after that, since insurers need to file initial rate requests for 2018 in April.