HHS Proposal Would Erode the Value of Insurance Coverage, Make it Harder to Shop

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Consumers-Union-comments-CMS-9930-P-2.pdf | 556.8 KB

Monday, November 27, 2017

WASHINGTON, D.C. — Consumers Union, the policy and mobilization division of Consumer Reports, today warned that the Department of Health and Human Services’ proposed changes to the implementation of the Affordable Care Act for 2019 would weaken key consumer protections and pose a very real threat to the value of the insurance options available to consumers. In comments filed in response to the Notice of Benefit and Payment Parameters for 2019, the consumer group outlined how the proposals would also hurt consumers by making it harder for them to shop for coverage and complicating the eligibility process.

Dena Mendelsohn, senior attorney for Consumers Union, said, “The changes proposed by HHS would diminish the value of health insurance offered to consumers on the individual and small group markets and make purchasing insurance more complicated. This proposal would undermine key consumer protections in the Affordable Care Act — including health insurance rate review, the medical loss ratio (MLR), and essential health benefits (EHBs) — which work together to ensure that consumers who purchase health insurance will get at least a baseline value from their insurance. It is a delicate balance, and if one of these components is eroded, the system does not work. This proposed system is one that favors insurer profits at the expense of quality, affordable care for consumers.”

Considered as a system, rate review seeks to protect consumers from being overcharged, MLR corrects the balance if consumers are overcharged, and the EHB standard guarantees that consumers get high quality insurance coverage. The group highlighted the significant threats to these protections in the proposal:

Rate Review: Comprehensive review of rate filing justifications (RFJs) plays a key role in ensuring that consumers pay a fair price for their health insurance coverage. The proposal, which would raise the rate review threshold from 10 percent to 15 percent, would normalize excessive rate increases and ultimately cost consumers more. The justification that this change would reduce the burden on the states or on the carriers ignores the fact that this change would allow carriers to finalize exorbitant rate increases without oversight. This, combined with the specter of lowered MLR safeguards, is especially troubling.

Medical Loss Ratio: The changes proposed to the Medical Loss Ratio (MLR) sections would allow carriers to spend more premium dollars on profit and salaries without improving the quality of a plan’s coverage. Currently, the MLR and the rate review process work in tandem to protect consumers from being overcharged for their health insurance. Simultaneously lowering the guardrails for these protections will raise costs for consumers, with increased profits for carriers. In addition, by changing how quality improvement is calculated, the new rule would reduce the incentive for carriers to improve the quality of their products and of the care consumers receive.

Essential Health Benefits: The Essential Health Benefit (EHB) requirement ensures that millions of consumers have adequate healthcare coverage by mandating that plans sold must cover ten EHB categories. Additionally, the EHB requirement has made it easier for consumers to compare different insurance products because they are making apples-to-apples comparisons. However, HHS’ proposal could potentially weaken the EHB standard by allowing states to create new benchmarks — including building their own standard EHB plan from scratch or substitute categories — meaning the quality of consumers’ coverage could vary based on what state they live in, and consumers may not be able to rely on specific benefits being covered year after year.

“It is extremely troubling that the changes proposed by HHS would make it easier for carriers to overcharge consumers, free carriers from the obligation to repay consumers they overcharged, and make the quality of coverage dependent upon the state where a consumer lives. We urge HHS officials to reconsider these proposals to ensure that consumers are able to get meaningful, comprehensive health insurance for their families,” said Mendelsohn.

The full comments are available here or by visiting ConsumersUnion.org.