December 22, 2014

Patient Protection and Affordable Care Act; Establishment of the Multi-State Plan Program for the Affordable Insurance Exchanges

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This comment considers the potential impact of the Office of Personnel Management’s (OPM) proposed rule change to the Multi-State Plan Program (MSP) for the affordable insurance exchanges created through the Patient Protection and Affordable Care Act of 2010. The purpose of the proposed rule is to further explain OPM’s direction in meeting the statutory requirements of the MSP program concerning health issuers that establish an MSP option with OPM. 

The comment examines whether the amendments will help meet the objectives to enhance competition that benefits all consumers, yield at least two high-quality options of health insurance coverage on all exchanges, and facilitate a fair environment between MSP issuers and non-MSP issuers in coordination with states and the Department of Health and Human Services.

Increased competition within the new health exchanges may not arise from the MSP program:

  • Entry into the MSP program is made relatively harder for for-profit insurers and small insurers.
  • The MSP program may lead to further consolidation through providing a competitive advantage to large insurers that already dominate the health insurance industry.
  • Consolidation of the health insurance industry may lead to decreased competition and higher prices for consumers of health care.

OPM appears to have not fully considered the possible effects of the proposed rule on competition. The comment examines several specific recommendations and concludes that OPM should:

  • Conduct a full regulatory impact analysis of the proposed rule.
  • Allow 60 additional days for more analysis of the proposed rule. 
  • Consider changing the phase in period to reduce barriers to entry in the MSP program. 
  • Provide a reduction in user fees for a given period of time to promote faster participation by MSP issuers on exchanges where competition is lacking. 
  • Negotiate with issuers to determine the coverage area for an issuer rather than requiring that a coverage area must be statewide. 
  • Open to different options in the package of benefits to help bring new issuers to the MSP program in an effort to enhance competition on the exchanges.
  • Edit and obtain comments on the definition of group of issuers in an effort to attract additional issuers to the MSP program should be undertaken as OPM intends.