He has considerable discretion to loosen the law’s requirements.
This month brought fresh headlines about how Obamacare continues to implode. No fewer than five insurers have announced they will be withdrawing from the Obamacare marketplaces or raising their rates. Most recently, Medica — the sole Obamacare provider in Iowa — announced plans to hike premiums for Silver plans in the state by an average of 56.7 percent next year.
Unfortunately, dwindling options and rising premiums have become the norm under Obamacare. A recent report by the U.S. Department of Health and Human Services (HHS) showed that Obamacare’s key provisions have caused premiums for individual plans to more than double since 2013. Meanwhile, Americans in nearly half of all counties could have only one insurer to choose from on the exchanges next year.
HHS Secretary Tom Price was right when he said “the status quo is not acceptable or sustainable.” And while Congress has not yet passed a repeal bill, there are steps Secretary Price can take right now to deliver relief to those suffering under Obamacare. The HHS secretary has enforcement discretion over 1,442 Obamacare provisions.
First, he can loosen Obamacare’s coverage mandates, which rob patients of choice and drive up premiums — forcing many Americans to pay more for services they don’t want or need. While the text of the law requires plans to cover certain broad categories of benefits, such as maternity and preventive care, it allows the HHS secretary some leeway to define these requirements’ scope. Loosening the coverage mandates would allow individuals to select more affordable plans that provide the coverage they individually need.
Next, Secretary Price can give states more flexibility from Obamacare’s regulations. Under Section 1332 of the law, states can apply for waivers that free them from certain costly regulations and allow them more discretion to restructure their health-care markets in ways that benefit patients. To his credit, Secretary Price has already made it easier for states to apply for these waivers. Now, he should begin formally rescinding previous administrative guidance, which would in practice expand the number of regulations that states can opt out of, leading to new and more affordable options for consumers.
Secretary Price should also undo a rule implemented at the end of the Obama administration that limits short-term insurance plans to three months. Short-term plans, which are more flexible in their benefits and pricing, are an affordable choice for those who are between jobs, traveling out of network, or otherwise looking to fill gaps in their insurance. They also offer an alternative for consumers living in counties that could be left without any Obamacare insurers next year. So why limit them to just 90 days?
Relaxing two other Obamacare rules would help drive down costs for consumers. The first is the law’s “minimum actuarial value requirement,” which mandates that insurers must pay at least 60 percent of the cost of covered services — essentially setting a price floor or restriction on the affordable plans that insurers are allowed to offer.
Higher actuarial values typically mean that patients pay less out of pocket but pay more in monthly premiums. This heavy-handed regulation has “increased the cost of the least expensive plans by an average of 8 percent,” according a report by the Heritage Foundation. The 60 percent threshold is written into the law, but Price can increase the “allowable variation,” which would let insurers sell plans that fall in a wider range around that number.
Secretary Price should continue using his powers to help those suffering from higher premiums and narrowing options.
Another Obamacare provision driving up costs is the law’s “medical loss ratio” rule, which arbitrarily limits what insurers may spend on administrative costs to 15 or 20 percent of their premium revenues. Insurers that can’t make this cutoff are forced to raise their premiums. Even the liberal Urban Institute admits that this provision caused premiums to rise 2 to 15 percent in 2014. The provision also deters new companies from entering the market, because start-up costs like marketing and credentialing doctors are subject to the spending limit.
Easing this rule — which the secretary may do in the individual and small-group markets on a state-by-state basis — would lower costs while encouraging more insurers to enter the marketplace.
Ultimately, Congress must fully repeal Obamacare and pass step-by-step health-care reforms to give Americans the choice, affordability, and quality of care they deserve. In the meantime, however, Secretary Price should continue using his powers to help those suffering from higher premiums and narrowing options. With legislative efforts at a standstill, there’s no reason to delay.
READ MORE:
The Next Obamacare Mess and the Rule of Law
Obamacare Is Uninsuring the Insured
Maybe Health Care Was Impossible
— Nathan Nascimento is the vice president for policy at Freedom Partners Chamber of Commerce.