White House finalizes ACA rule to strengthen individual market

(Story updated at 6:29 p.m. ET)

The White House has finalized a rule that aims to appease insurers looking for some stability in the individual marketplace before they must submit rates for 2018.

The rule limits when consumers can gain coverage outside of open enrollment periods, shifts authority to states to determine whether health plans have adequate provider networks, lets insurers potentially pay a lower percentage of consumers' medical costs, and allows insurers to refuse to cover persons who haven't paid their premiums.

The administration rushed to publish the final rule even though it had to run through more than 4,000 comments.

The rule, however, does not address the insurance industry's major concern regarding continued enforcement of the individual mandate. It does continue and even increase subsidies for people who buy coverage on the Affordable Care Act's individual coverage exchanges.

Both requests were made in a letter sent Wednesday to President Donald Trump that was co-signed by the U.S. Chamber of Commerce, which previously supported a rollback of the ACA.

Other signers included America's Health Insurance Plans, the American Academy of Family Physicians and the American Hospital Association.

The final rule drops by 4% the amount insurers pay out for the average silver plan. Right now, insurers cover 70% of costs, with the consumer paying the rest out of pocket. The rule drops that amount to 66% of costs, meaning cheaper plans but increased out-of-pocket costs for consumers—a difference of anywhere from $500 to $1,000.

To offset these costs, the administration will increase the cost-sharing reductions provided to enrollees in 2018. That bump is expected to be between $200 million to $400 million. Some 7 million people receive the subsidies, or 58% of those who signed up for Obamacare coverage for 2017. The payments are expected to cost $7 billion this year.

That move shows "An inconsistency between the rule and what Trump is saying," said Topher Spiro is the vice president for health policy at the Center for American Progress a left leaning organization.

Tim Jost, an emeritus law professor at Washington and Lee University said the reference to additional cost sharing does not bind the CMS or the Trump administration to actually make the payment to insurers.

He believes the cost-sharing reduction passage was included because the ACA has not been repealed.

The final rule shortens the 2018 enrollment period from three months to a six-week window of Nov. 1 to Dec. 15.

Kaiser Permanente was opposed to this move, saying in a comment posted on March 6 that the shortened window would reduce plan sales, which would impact the overall risk pool and could result in higher premiums.

The final rule subjects anyone who signs up during special enrollment to strict documentation.

The agency is doubling the number of new applicants who must submit documents before their coverage begins. That move should result in 650,000 more people having their enrollment delayed every year until eligibility verification is completed.

Insurers say both issues are key to discouraging people from signing up when they realize they need costly medical services and then dropping coverage after they receive care.

But insurers are not likely to be satisifed by the rule.

In a March 7 letter, Anthem, which sells plans in 14 markets on the exchange, proposed that in 2018 people signing up during special enrollment periods prove they had 12 months of continuous coverage with no more than a 63-day gap in coverage to qualify. Anyone not able to verify that would have to wait until the next open enrollment to sign up.

Anthem wanted the CMS's more rigorous verification standards to also apply to state-run exchanges during special enrollment.

The final rule allows insurers to refuse coverage to people who haven't paid their premiums.

The rule also relieves the CMS of the responsibility for ensuring network adequacy. Insurers currently must meet both federal and state standards.

It's not clear whether these measures adhere to the ACA's statutory provisions.