Trump administration proposes new Obamacare regulation that could make ‘special enrollments’ tougher

President Donald Trump delivers remarks at the National Prayer Breakfast February 2, 2017 in Washington, DC.

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President Donald Trump delivers remarks at the National Prayer Breakfast February 2, 2017 in Washington, DC.

The Trump administration filed notice of a proposed new federal rule on Obamacare — and a person involved in its development says it could tighten up restrictions on people signing up for individual health plans in so-called special enrollment periods.

Edmund Haislmaier, senior research fellow at the Heritage Foundation, said the rule will provide financial relief to insurers who have complained about loose standards for people signing up in coverage outside of the normal enrollment season, particularly those who enroll only when they need medical care.

In turn, tighter restrictions would help control premium increases for customers who don’t receive Obamacare subsidies, he said.

The actual contents of the proposed rule are not public, but notice of it was posted on Reginfo.gov, the federal regulatory website.

When asked what was in the rule, Health and Human Services Department spokeswoman Matt Lloyd said only, “We will have more for you down the road.”

But Haislamier said, “This is going to be a fix in controlling costs and disruption in the market, which is something that the Obama administration had been willing to tolerate as the cost of expanding the market.” He had been involved in drafting proposals for the rule while working for the Trump health-care transition team until two weeks ago.

Haislmaier said suggestions for the proposed rule had included limiting the number of special enrollment periods during which people can sign up for insurance plans outside of the narrow open-enrollment season, and tightening eligibility verification standards for special enrollment.

Haislmaier also said the rule could include a requirement that people whose insurance premiums are in arrears settle those debts before signing up for a new plan.

However, a person who was informed about the new rule told CNBC that there appeared to be neither a decrease in the number of special enrollment periods, nor a provision of requiring people to settle their past-due premiums before a new enrollment.

That source said that they believed the new rule would require documentation proving eligibility for a special enrollment from 100 percent of customers, as opposed to just 50 percent of customers.

People who buy Obamacare plans normally can sign up for coverage only during open enrollment, which for 2017 ran from November 2016 through Jan. 31. People who don’t sign up during that time are normally barred from enrolling in coverage until next November, when 2018 enrollment begins.

However, the law allows exceptions for people who experience certain life events — including marriage, divorce, birth of a child, loss of health coverage and moving one’s residence. In past years, the Obama administration also allowed special enrollment periods for people who were confused about when to sign up, or who had to pay an Obamacare fine in 2015.

Haislmaier said that the possible changes, which would go further than recent efforts by the Obama administration to tighten up rules around special enrollments, could make a substantive difference for insurers, “in the aggregate.” Some insurers would benefit more from the moves than others, he said.

Haislmaier said controlling costs and disruption in the individual insurance market is “part of the political impetus of the Trump administration agenda of ‘repeal-and-replace’ ” Obamacare.

And if fewer people end up being enrolled in Obamacare plans as a result of the proposed rule, the administration “can live with that,” he said.

While the Trump administration pursues its strategy of repealing and replacing Obamacare, Haislmaier said, insurers have to file their proposed rates for individual plans for 2018 by this spring. The new rule would help alleviate some insurers’ concerns about their costs as they prepare those rates, he said.

Since 2014, when Obamacare individual health plans first took effect, insurers have complained that the cost of providing medical benefits to their customers were higher than they should have been because of loose restrictions around both the number of special enrollment periods and the verification, or lack thereof, of people’s eligibility for those periods.

The Associated Press on Thursday reported that the CEO of big insurer Anthem, Joseph Swedish, said that the company has had extensive talks with leaders in Congress, and wants to see fewer SEPS and improved verification of who is eligible for them.

The insurers worry too many people are using SEPs to enroll in insurance only when they need medical services, and then dropping out of their plans after they obtain those services. In those scenarios, the premiums that the customers pay are likely not enough to cover the costs for benefits paid by the insurance plan.

Haislmaier said he was aware of instances where someone would move temporarily to another state to undergo drug or alcohol rehab, and the treating facility would enroll that person in an Obamacare plan through a SEP, and pay that person’s premiums, and in turn get reimbursed for the cost of their care from an insurer. Then the patient would return to their home state, drop enrollment in the plan, and then the premiums would cease being paid.

Obamacare, which requires most Americans to have some form of health coverage or pay a fine, encouraged expansion of the individual insurance market so that people could satisfy that requirement.

The Obama administration last summer announced plans to screen at least some people who signed up in SEPs during 2017 to verify their eligibility. At the time, health regulators also said that a new document confirmation process implemented earlier in 2016 had led to a nearly 15 percent drop in the number of special enrollment sign-ups compared to the same period last year.

Haislmaier said that while those changes had been of some help, they did not go far enough to control costs for insurers, and by extension millions of customers in the individual and small-group health insurance market who don’t get Obamacare subsidies, and who have to personally cover the cost of any premium increases.

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