Faced with high premiums and low competition, the Obama administration on Monday announced a series of moves to shore up Obamacare's marketplaces.
The federal government issued a proposed rule that aims to improve Obamacare's risk adjustment program, which helps insurers cover claims from their sickest customers.
Risk adjustment redistributes funds from Obamacare plans with healthy enrollees to plans with enrollees that are sicker and have higher health risks. The goal is to help insurers mitigate any major losses, but it hasn't been working out as intended.
Major insurers such as Aetna, Humana and UnitedHealth are leaving some exchanges next year due to hundreds of millions of dollars in losses stemming from high medical claims for Obamacare enrollees.
Insurers have pleaded for changes to the risk adjustment program, specifically complaining that smaller insurers have to pay out to larger and more established insurers. Other insurers have criticized how the administration defines risk.
The proposed rule introduces changes that the Centers for Medicare and Medicaid Services said would make risk adjustment more effective.
For instance, in 2017 the program would better "reflect the risk associated with enrollees who are not enrolled for a full 12 months." In 2018, the program would start to use prescription drug use data to better predict the health risk of enrollees, CMS added.
It also proposed transfers that will better spread the money from risk adjustment, according to CMS.
The change to the proposed rule comes as other programs to help mitigate financial losses expire after this year.
The moves were included in a federal rule that lays out the standards for the risk adjustment program and cost-sharing parts under the marketplace for the 2018 coverage year. CMS said it issued the rule "earlier in the calendar year in order to provide more certainty to the marketplace."
Obamacare has been beset by headlines in recent weeks focusing on major premium increases higher than 50 percent in some states.
In addition, analysts predict there will be less competition on the exchanges in 2017 due to insurer defections. An analysis from the nonpartisan Kaiser Family Foundation show a cluster of Midwestern and Southern states are losing a large number of insurers.
Overall, 62 percent of enrollees will be able to choose from three insurers in the marketplace during the upcoming enrollment season, down from 85 percent in 2016.
Other reforms in the proposed rule, which is open for comment for 30 days, help appease insurers by clarifying who can enroll in special enrollment periods to tamp down abuse. Such periods let someone enroll in Obamacare year-round, but they can enable patients to sign up when they are sick and then leave once they get care.
Insurers complained about the large number of special enrollment periods in Obamacare as that abuse can wreak havoc on their finances.
CMS also hopes to make some changes to how consumers shop for Obamacare plans, hoping to shore up the offerings insurers are required to provide. CMS proposes requiring insurers to provide at least one silver plan and one gold plan throughout each service area that an insurer offers coverage on.
To help consumers shop for a plan, the proposed rule calls for creating standardized options for plans.
For instance, a standardized option for a bronze plan would be a high-deductible plan that is eligible to get a health savings account, which allows enrollees to set aside money for healthcare expenses tax-free.
One expert said the proposed rule deals with some of the concerns from insurers but some will continue to be worried.
"There may be additional concerns, not just with accuracy [of risk adjustment payments] but also predictability of the actual transfer formula and ability of plans to predict their payments year over year," said Elizabeth Carpenter, vice president with consulting firm Avalere Health.
Of course, another important element to boost Obamacare is partly out of the administration's control: enrollment.
"Enrollment has not met expectations and in order to achieve greater confidence, then enrollment is going to have to grow," Carpenter said. However, the policies could help as creating robust insurer competition is necessary to enticing enrollees, she added.
White House press secretary Josh Earnest said that the reason enrollment hasn't met projections is because businesses didn't shed employer-sponsored plans at the expected rate. He added that there aren't any problems with Obamacare.