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Stabilizing the Market for Patients

We’ve released new rules for the individual insurance market to boost competition, keep down premiums, and discourage gaming the system. Read on to find out how they work.

Doctors in surgery

HHS released a number of proposals on February 15 intended to help boost competition in insurance markets and ensure people see the lowest premiums possible under current law.

On April 13 these proposals became formal rules. Here’s how they work, and how they’ll increase choice and competition:

Plans That Fit Your Budget

One of the rules gives insurers greater flexibility to offer plans with different financial structures — and lower premiums.

Currently, insurers have to sell plans that adhere to rigid rules about how much is covered: “Bronze” plans must cover between 58 and 62% of the costs a patient has in a given year, “silver” plans 68–72%, and so on.

The new rule widens the bands within which insurers can offer plans—including plans with lower premiums than have previously been possible under the Patient Protection and Affordable Care Act—so more Americans can find plans that work for their budgets.

Plans That Work for Patients

Many Americans want to purchase coverage that provides access to a wide range of hospitals and doctors. But that does not make sense for everyone: Plenty of others want to save on their premiums by purchasing plans that only contract with a certain set of health providers.

HHS has lifted and streamlined one-size-fits-all requirements about what kind of access insurers have to offer. This means lower regulatory costs (passed on to individuals and families in lower premiums) and broader options for Americans who want affordable insurance.

No More Gaming the System

The Patient Protection and Affordable Care Act, along with other existing laws, helps protect sick people from being denied insurance coverage. We strongly believe in that promise, but it can encourage people to buy into the market when they are sick and then drop the coverage once they are healthy.

This gaming of the system is pretty common. It raises insurance premiums and reduces choices for people who are trying to do the right thing.

So HHS has issued some clarifications that will make it harder for people to game the system. The most important measures:

  1. Under current law, all Americans are allowed to buy insurance on the individual market, for any reason, during a designated enrollment period, called “open enrollment.” This year, we are adjusting the length and timing of that period to align more closely with the one offered for Medicare and job-based insurance.

    The new period provides plenty of time for Americans to buy the coverage they need, while discouraging healthy people from putting off insurance purchases until the last minute. This means a better-functioning market, which means better options for patients.
  2. People are allowed to change their coverage outside of open enrollment when they have lost a job, gotten married, had a child, or gone through a similar life event. Under the new rules, if they want to do so, they have to provide proof documenting that the event actually occurred.

    This is a commonsense requirement, similar to what exists in the employer-based insurance market, that will help hold premiums down by keeping out fraud.
  3. If someone purchased coverage but chose not to pay for it in the past, and then wants to buy new coverage from the same insurer, the company will be allowed to collect the past unpaid premiums.

    The rules under the previous administration allowed people to skip paying premiums, hold onto their coverage for some time, and then enroll in new coverage the next year without having to pay up.

    Fixing this loophole will help insurers offer the best deal possible for Americans who are playing by the rules.

Read the final rule

Posted In: 
Health Insurance Reform