Feds issue annual health plan regulation, creating opportunities and challenges for state insurance markets

The Centers for Medicare and Medicaid Services (CMS) recently released its annual regulation on insurance plans, detailing what plans can offer for the upcoming 2019 plan year. This is the first of the annual “plan year” regulations issued under the Trump administration; the current plan year has been governed under a regulation issued under the Obama administration.

Most notably, the CMS regulation gives states much more authority over determining what “essential health benefits” (EHBs) insurers in the individual and small group marketplace must offer. Under the Affordable Care Act, insurance plans had to provide EHBs, or ten designated categories such as hospitalization, maternity care, and prescription drugs. Critics argue that EHBs drive up the cost of insurance by requiring everyone to pay for services that they may not need; proponents point out that prior to the ACA’s EHB requirements, many individuals purchasing insurance on their own did not have benefits such as drug coverage (one in five) or maternity coverage (two in five).

In implementing the ACA, the Obama administration allowed states leeway in determining whether EHBs had been met by allowing the state to pick a plan in that state to serve as a benchmark. However, the new CMS regulation will go even further: starting in the 2020 plan year, a state could adopt another state’s 2017 benchmark plan; adopt some elements from another state’s benchmark plan; or design a new EHB package so long as it is not overly generous or out of line with what a “typical employer plan” would offer. (For more information on additional provisions of the plan regulation, click here and here.)

Additionally, more regulations affecting state insurance markets are pending. One U.S. Senator suggested that another insurance regulation on association health plans would be released by the federal Labor Department “in the next month or so.” Click here for a prior entry on this proposal.

States’ reactions to this and other insurance regulations likely will be a topic of discussion at the upcoming annual CSG-ERC conference.