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June 18, 2019

CMS warned ACA changes could harm coverage for 1.1M people. HHS moved forward with one anyway.

Daily Briefing

    CMS Administrator Seema Verma in August 2018 warned HHS Secretary Alex Azar against three policy changes that she estimated would decrease Affordable Care Act (ACA) exchange enrollment by 1.1 million and jeopardize the exchange market, according to an internal memo, Politico's "Pulse" reports.

    Politico obtained the memo last week, and House Democrats released the memo on Friday.

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    Verma's concerns

    According to "Pulse," Verma in the memo warned Azar against three policy changes the Trump administration was considering:

    • Changing how federal subsidies available to help U.S. residents purchase exchange plans are calculated;
    • Ending automatic re-enrollment in ACA exchange plans; and
    • Prohibiting exchange insurers from engaging in a practice known as "silver loading."

    Verma warned that the changes together could cause 1.1 million people to drop their exchange plans in 2020 and jeopardize the exchange market's stability. For instance, she said changing the way the ACA's subsidies are calculated could be associated with "considerable drawbacks," and experts had projected that the change could lead to some U.S. residents facing higher health insurance costs.

    Overall, Verma wrote, "[W]e recommend not moving forward with changes to any of the … three policies for the 2020 payment year. … Underlying this recommendation is our view that the … three issues under consideration will disproportionately impact unsubsidized enrollees; undermine the limited progress made thus far in stabilizing the market; and set back the [Trump] administration's priorities of devolving power to states, increasing affordability, and expanding consumer choice in health insurance coverage."

    What did HHS do?

    Ultimately, HHS changed the way the ACA's subsidies are calculated, but the department did not change the ACA's re-enrollment policy and did not ban insurers from silver loading, "Pulse" reports. According to The Hill, the administration still is considering the re-enrollment and silver-loading changes.

    House Energy and Commerce Committee Chair Frank Pallone (D-N.J.), House Education and Labor Committee Chair Bobby Scott (D-Va.), and House Ways and Means Committee Chair Richard Neal (D-Mass.) in a letter sent Thursday to HHS are asking for details on how HHS made the policy decisions, and argued that the memo shows the administration is trying to undermine the ACA. "The fact that the … administration would finalize policies despite these serious warnings from CMS is deeply troubling," the lawmakers wrote. They asked HHS to respond to their inquiries by June 27.

    According to The Hill, an HHS spokesperson on Friday confirmed that the department received the letter. "All congressional inquiries are taken seriously by the department and we will respond as appropriate in a timely fashion," the spokesperson said.

    A spokesperson for Verma referred questions regarding the memo to HHS, The Hill reports (Diamond, "Pulse," Politico, 6/14; Sullivan, The Hill, 6/14; Rappleye, Becker's Hospital Review, 6/14; Cohen, Inside Health Policy, 6/14 [subscription required]).

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