06.01.18

Democratic Health Leaders Call on Departments to Hold Off on Junk Insurance Rule and Redo Dubious Analysis

Democratic heath leaders question large discrepancies between Departments’ analysis and nonpartisan analyses regarding potential damage of rule to expand junk insurance plans

 

Departments’ analysis is far off from others by the Centers for Medicare & Medicaid Services, the Urban Institute, and Oliver Wyman that show large potential harm of the proposed rule

 

Members call for the Departments to hold off on finalizing the rule, update their analysis, and re-open the public comment period

 

Members: “This rule would affect millions of people and should not rely on a faulty, biased, or incomplete analysis.”

 

ICYMI—LA Times: “Trump's new insurance rules are panned by nearly every healthcare group that submitted formal comments”

 

Proposed rule is latest Trump Administration step to sabotage health care; take patients’ coverage away

 

(Washington, D.C.) –Yesterday, U.S. Senator Patty Murray (D-WA), Ranking Member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, Senator Ron Wyden (D-OR), Ranking Member of the Senate Finance Committee, Congressman Frank Pallone Jr. (D-NJ), Ranking Member of the House Committee on Energy and Commerce, Congressman Richard Neal (D-MA), Ranking Member of the House Committee on Ways and Means, and Congressman Bobby Scott (D-VA), Ranking Member of the House Committee on Education and the Workforce, sent a letter to Secretary Alex Azar at the Department of Health and Human Services, Secretary Alexander Acosta at the Department of Labor, Secretary Mnuchin at the Department of the Treasury, and Director Mick Mulvaney at the Office of Management & Budget to express their concern about the Departments’ proposed rule on short-term limited-duration insurance and the large differences between the Departments’ analysis and independent experts’ regarding the potential harm of the rule. These junk plans do not offer the consumer protections that are required under current law, and leave consumers uncovered for major medical expenses.

 

In the letter the members note that nonpartisan analyses, including one prepared by the Centers for Medicare & Medicaid Services Chief Actuary, show the rule would have much larger and more damaging impacts than the Departments’ analysis suggests. They urge the Secretaries to hold off on finalizing the rule, update their analysis of the regulation’s economic impact, re-publish the rule following this new analysis, and re-open the rule for public comment.  

 

“We write to express our concern about the flawed analysis provided in the Economic Impact and Paperwork Burden section of the proposed rule on Short-Term, Limited-Duration Insurance (STLDI) issued on February 21, 2018 (CMS-9924-P).  This rule would affect millions of people and should not rely on a faulty, biased or incomplete analysis. There are wide differences between the analysis prepared by the Departments of Health and Human Services, Labor, and Treasury (“Departments”) and analyses prepared by nonpartisan sources that show the rule would actually cause serious harm to our health care system. We urge you to re-publish the proposed rule with an updated analysis of the regulation’s economic impact and re-open the comment period before finalizing this rule.” wrote the members.

 

The full text of the letter is below and the PDF can be found HERE.

 

May 31, 2018

 

The Honorable Alex M. Azar

Secretary

U.S. Department of Health and Human Services

200 Independence Avenue, SW

Washington, DC 20201

 

The Honorable R. Alexander Acosta

Secretary

U.S. Department of Labor

200 Constitution Avenue, NW

Washington, DC 20210

 

The Honorable Steven Mnuchin                                

Secretary                                                                    

U.S. Department of the Treasury                              

1500 Pennsylvania Avenue, NW                               

Washington, DC 20220                                             

 

The Honorable Mick Mulvaney

Director

The Office of Management & Budget

725 17th Street, NW

Washington, DC 20503

 

Dear Secretary Azar, Secretary Acosta, Secretary Mnuchin, and Director Mulvaney,

 

We write to express our concern about the flawed analysis provided in the Economic Impact and Paperwork Burden section of the proposed rule on Short-Term, Limited-Duration Insurance (STLDI) issued on February 21, 2018 (CMS-9924-P).[1] This rule would affect millions of people and should not rely on a faulty, biased or incomplete analysis. There are wide differences between the analysis prepared by the Departments of Health and Human Services, Labor, and Treasury (“Departments”) and analyses prepared by nonpartisan sources that show the rule would actually cause serious harm to our health care system. We urge you to re-publish the proposed rule with an updated analysis of the regulation’s economic impact and re-open the comment period before finalizing this rule.

 

On May 15th, the New York Times reported that the Chief Actuary at the Centers for Medicare & Medicaid Services (CMS) had issued a report that the proposed rule could have a substantial effect on the individual insurance market.[2] Only after the New York Times report did CMS post the Chief Actuary’s analysis even though it was issued on April 6, 2018, weeks before the comment period for the proposed rule closed on April 23, 2018.[3] The Chief Actuary’s report found that approximately 1.4 million people would sign up for short-term, “junk” insurance in 2019, increasing to 1.9 million by 2022. The Chief Actuary estimated that most of the individuals who would shift to these short-term plans would be younger and healthier, leaving the risk pool in the individual insurance market older and sicker.  As a result, the Chief Actuary projected that premiums in the individual insurance market would be three percent higher in 2019 and six percent higher by 2022. The increasing premiums would result in the Federal government paying more in advance premium tax credits: in 2019 alone, spending on tax credits would increase by $1.2 billion. Ultimately, expanding the use of short-term, “junk” coverage would increase the federal deficit by $38.7 billion over the next ten years.

 

The CMS Chief Actuary’s analysis, as well as outside analyses conducted by Oliver Wyman[4] and the Urban Institute,[5] all stand in stark contrast to the analysis provided in the Departments’ proposed rule. The rule estimated that only 100,000 to 200,000 people would switch to short-term plans and that individual market premiums would increase between $2 and $4 per month. Finally, it estimated that Federal spending would only increase by between $96 million and $168 million annually.

 

At the time the proposed rule was published, the Washington Post reported, “Government actuaries predict that the number is likely to be 100,000 to 200,000, said Verma, who added that ‘the shift will have virtually no impact’ on insurance premiums in the Affordable Care Act marketplaces.”[6] More recently, the Congressional Budget Office estimated that upwards of 2 million individuals would sign up for STLDI and that this would increase premiums between two and three percent as a result of healthy enrollees leaving the individual market.[7] The substantial differences between the estimates prepared by the CMS Chief Actuary and other non-partisan estimates and the economic impact analysis in the proposed rule raise serious questions about how the Departments conducted the analysis.

 

CMS received thousands of comments from insurers, providers, patients, and Members of Congress opposing the rule. Notably, a group of 113 patient organizations wrote a letter to Congressional leaders expressing concern that the rule would undermine critical consumer protections for people with pre-existing conditions.[8] These stakeholders should be able to take into account an unbiased and complete analysis from this Administration’s own CMS Chief Actuary when submitting comments. As a result of these discrepancies, we request that you re-publish the proposed rule with an updated economic impact analysis and re-open the comment period so that stakeholders can provide input with the benefit of a full analysis. Additionally we request that you answer the following questions by June 14, 2018:

 

  1. Did the Departments consult the CMS Chief Actuary in the development of the proposed rule’s economic impact analysis? Is it common practice to publish a proposed regulation and economic impact analysis without taking into account the Chief Actuary’s analysis?

 

  1. What data did the Departments use and which experts did they consult in formulating the assumption that only 100,000 to 200,000 would purchase short-term coverage? Did the Departments contract with an outside firm for its analysis? If so, which firm? If so, please provide the outside analysis in full.

 

  1. In light of estimates by the CMS Chief Actuary, the Urban Institute, and the consulting firm Oliver Wyman that all indicate that the proposed rule’s economic impact analysis underestimated the impact of the regulation, do the Departments still believe that this is a realistic projection of the rule’s effects?

 

We appreciate your prompt response to these questions. If you have any questions, please have your staff contact Colin Goldfinch with Ranking Member Murray at 202-224-7675,Arielle Woronoff with Ranking Member Wyden at 202-224-4515, Melanie Egorin with Ranking Member Neal at 202-225-4021, Una Lee with Ranking Member Pallone at 202-225-3641 and Carrie Hughes with Ranking Member Scott at 202-225-3725.

 

Sincerely,

 

Patty Murray

Ranking Member

Senate Health, Education, Labor, and Pensions Committee

 

Ron Wyden

Ranking Member

Senate Finance Committee

 

Frank Pallone, Jr

Ranking Member

House Committee on Energy and Commerce,

 

Richard E. Neal

Ranking Member

House Committee on Ways and Means

 

Robert C. “Bobby” Scott

Ranking Member

House Committee on Education and the

Workforce

 

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[1] https://www.federalregister.gov/documents/2018/02/21/2018-03208/short-term-limited-duration-insurance

[2] https://www.nytimes.com/2018/05/15/us/politics/trump-health-insurance-costs.html?action=click&contentCollection=politics&contentPlacement=1&emc=edit_cn_20180516&module=stream_unit&nl=first-draft&nlid=84076584&pgtype=sectionfront&region=stream&rref=collection%2Fsectioncollection%2Fpolitics&te=1&version=latest

[3] https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/Downloads/STLD20180406.pdf

[4]https://hbx.dc.gov/sites/default/files/dc/sites/hbx/publication/attachments/OWReview%20of%20Impact%20of%20Short%20Term%20Duration%20Plans%204.11.2018%20%28002%29.pdf

[6] https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/Downloads/STLD20180406.pdf