The Biden Administration and Congressional Democrats successfully enhanced the Affordable Care Act’s (ACA) premium subsidies for 2021 and 2022 through the recently enacted American Rescue Plan Act. For individuals and families shopping for health insurance on HealthCare.gov or a State-Based Exchange, premiums will now be significantly less, and households with income above 400 percent of the Federal Poverty Level (FPL) can access a premium subsidy for the first time.
Now that these temporary changes are effective, what else might be in store for the ACA Exchange markets?
We could see regulations requiring insurance carriers to offer “standardized” plans through HealthCare.gov.
Why might “standardized” plans be in our future?
History, precedent, and policy.
History
The Obama Administration went down the path of incorporating “standardized” plans into HealthCare.gov. More specifically, for the 2017 and 2018 plan years, insurance carriers selling through HealthCare.gov could voluntarily elect to sell a plan with fixed deductibles, out-of-pocket limits, and co-pays for health care services (i.e., a “standardized” plan).
These “standardized” plans also covered certain medical services and prescription drugs before the deductible is met. For example, the plan covered up to three doctor office visits without costing the policyholder any money. Compare this to existing non-“standardized” plans where policyholders must pay amounts out of their own pocket for non-preventive doctor visits until their deductible is met. In other words, unlike the “standardized” plans that provided free coverage for at least three doctor visits, existing non-“standardized” plans require the policyholder to pay for the cost of doctor visits that are not considered preventive services.
The Trump Administration abandoned “standardized” plans in 2019. However, with the election of President Biden – and with the addition of many former Obama Administration officials in leadership roles at the Department of Health and Human Services (HHS) – we expect that the Biden HHS will re-visit the idea of “standardized” plans, and even take the idea a step further (by making “standardized” plans a requirement, instead of a voluntary choice).
Precedent
California currently requires “standardized” plans to be made available through its State-Based Exchange (Covered California). In particular, Covered California plans must have prescribed deductibles and co-pays for certain covered benefits (e.g., dollar caps on things like prescription drugs and physician visits and other outpatient services). ACA supporters suggest that one of the reasons California’s Exchange market remains stable is because consumers are offered simplified plans, which in turn, increases take-up.
Several other State-Based Exchanges also require some form of a “standardized” plan. For example, Oregon requires silver plans sold to Oregonians through HealthCare.gov to have a $3,650 individual deductible and $40 primary care office visit co–pay. New York requires its carriers to offer at least one “standardized” plan at each metal level. Washington, DC’s DC Health Link requires a carrier to offer a “standardized” plan for a metal level at which the carrier is offering plans, and Connecticut’s Access Health CT requires carriers to offer at least one “standardized” gold plan, at least one “standardized” silver plan (which must be the lowest-cost silver plan the carrier offers), and at least two “standardized” bronze plans, one of which must be HSA-compatible.
New Policies
With the Biden Administration’s interest in adding a “public option” to the ACA Exchange markets, requiring carriers to offer “standardized” plans could get the Administration one step closer to this policy goal. More specifically, the “public option” contemplates a plan that covers a prescribed set of benefits and services at prescribed deductible and co-pay levels. As discussed, this is essentially how a “standardized” plan is structured.
Standardized plans and public option are by no means a panacea. Some states, notably Colorado and Washington State are pursuing a ‘public option’ on their own. Colorado is seeking a waiver from the ACA for its version of the public option plans, while Washington’s experiment with a public option, Cascade Care plans, has seen mixed results with premiums for Cascade plans higher than expected and receiving only a few exchange enrollments.
Stay tuned as we continue to track the Biden Administration’s regulatory activity in this – and other – areas.
