New Affordable Care Act Rules Get Mixed Reviews

Three new sets of proposed federal regulations relating to the Affordable Care Act (ACA) were issued today by the Department  of Health and Human Services (HHS) and the Treasury Department. I haven’t reviewed them carefully, but I was pleased to read that Tricia Brooks at the Center for Children and Families (CCF) at Georgetown University said the proposed rules “take a number of positive steps forward to remove administrative barriers to coverage and reduce churning.”

In a CCF blog post, Brooks explained that the draft rules incorporate lessons learned from the Children’s Health Insurance Program (CHIP) about the importance of streamlining eligibility, coordinating enrollment in Medicaid and CHIP, and improving retention. She said that, “the ACA's vision for seamless, coordinated coverage is reflected in the details of the regulation,” which she said answers “a number of questions states have as they move forward in building the important IT systems that will support these goals.”

Although Brooks’ comments are heartening, child advocates also have a significant concern about the Treasury Department proposal because they think it interprets the law in a way that will significantly reduce the number of families eligible to purchase subsidized insurance through the new health insurance exchanges, thereby increasing the number of people who remain uninsured.

The ACA bars individuals from purchasing coverage through an exchange if they are offered “affordable” coverage through an employer. The law defines a health plan as unaffordable if an employee would have to spend more than 9.5 percent of household income. The preliminary IRS interpretation in the proposed rule is that the affordability requirements apply only to the coverage of the employee, not to the cost of family coverage. The result is that far fewer people will be eligible to participate in the exchanges, despite the fact that their employer's family coverage costs more than they can afford. 

The Obama Administration was caught in a bind on this issue because even though many people thought the intent was to look at the affordability of family coverage, apparently the Joint Committee on Taxation and the original cost projections for the law assumed otherwise. Thus, basing affordability on family coverage would boost the law's cost -- perhaps significantly (though the amount is still in dispute).  We’ll review the issue more carefully in a future post. 

The full regulations can be found here. There is also a 4-page overview of the rules and fact sheets explaining each of the three proposed rules: 

• Easy, Simple Access to Coverage for Consumers and Small Businesses
• Insurance Premium Tax Credit  
• Medicaid Eligibility  

HHS and the Treasury Department are soliciting comments on the proposed rules. 

Jon Peacock