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Insurers eye loosened ACA requirements as hope for cost-sharing subsidies fades

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Insurers eye loosened ACA requirements as hope for cost-sharing subsidies fades

Some health insurers are less convinced that cost-sharing subsidies would help stabilize individual markets, instead favoring the ability to tinker with the minimum coverage benefits required under the Affordable Care Act.

According to news reports, Congress is likely to eschew a measure to fund cost-sharing reductions, or CSRs, the federal subsidies the government pays insurers to help cover high-risk and low-income individuals. In an executive order in October, President Donald Trump pulled the plug on disbursing the payments to insurers. Since then, lawmakers have tried unsuccessfully to fund the payments through legislation. It is now increasingly unlikely that the CSRs will be included in a spending bill to fund the government.

In 2017, Anthem Inc. withdrew or wound down its participation in the individual health insurance market from several states, each time citing uncertainty whether CSRs would be paid. But reintroducing the CSR payments may no longer be the industry's priority, a new survey conducted by healthcare technology company eHealth Inc. suggests.

The industry may have already steered away from CSRs to flexibility in the essential health benefits makeup of plan designs, said Paul Rooney, vice president of small business, individual and family products at eHealth, citing his company's recent survey of 19 health insurers.

Essential health benefits, or EHBs, are 10 comprehensive benefits all ACA plans must cover, from maternity and newborn benefits to prescription drugs and mental health.

The survey showed that 68% of insurers said the ability to offer less-expensive plans with worse EHB coverage was "critical to enticing" more people to enroll in the market. Meanwhile, less than half of the respondents said the return of CSRs and implementation of reinsurance would stabilize markets.

EHB requirements in plan designs have been regarded as the highest-cost provision in the ACA. Covering a comprehensive set of benefits is expensive, and while state regulators have authority to adjust benefits, all 10 categories must still be covered under the law.

Rooney said large insurers are in a holding pattern, observing what develops on Capitol Hill before deciding to re-enter or stay out of marketplaces.

According to the survey, 42% of respondents said both CSRs and reinsurance would help stabilize the market. However, less than 40% indicated funding CSRs would "likely lead their company to reduce monthly premiums or slow the rate of premium increases," according to the survey results. And 28% of insurers said that reinstating cost-sharing reduction payments would not impact premiums.

Molina Healthcare Inc. wrote in a statement to S&P Global Market Intelligence that without future CSR payments, the company "expects to see premiums continue to increase" and coverage to become too expensive for many consumers, especially those not eligible for subsidies.

"This may lead more consumers to exit the marketplaces, which in turn will undermine the risk pool," the company wrote.

Rooney said the shift represents a mix of insurers' views that there is no "silver bullet" to stabilize the market, based on the survey and meetings his team has had with insurers. While CSRs and reinsurance are "key ingredients," he said, the main issue to be resolved is uncertainty.

"Carriers just want to know what the rules are," Rooney said. "Certainty is the first thing for these carriers. They need certainty so they can make their decision."