The rule is aimed to quash worries in the insurance industry that consumers were signing up for expensive health care treatments during the special enrollment period and dropping out later.
But in practice, that means Americans would have to prove they chose the special enrollment period due to major life changes. There would also be consequences to dropping out before the year is over. People would have to pay premiums they accrued for that year before enrolling next year. And insurers would have more wiggle room to design lower cost coverage for younger people, since they would be able to move away from some of the mandates for levels of coverage under the ACA.
The IRS also announced it will change its enforcement efforts on Wednesday. Although people are still required to have coverage, the IRS will stop its plans to reject tax returns if people did not say whether they had coverage. Now it will keep processing returns.
In a discussion with journalists on Thursday, former Obama administration officials rejected the claim that the new rule would do anything to provide stability, in the midst of uncertainty over the future of the health care industry.
Aviva Aron-Dine, senior adviser at the Center for Budget and Policy Priorities who previously worked as senior counselor to Health and Human Services Secretary Sylvia Burwell, said one provision in particular would harm middle class families.
“The rule allows for less generous silver plans, and since tax credits are based on silver plans, when you make plans less generous, premium tax credits buy less. That means moderate-income families — millions of them— are in the position of either having to pay more themselves in premiums or having to purchase worse coverage,” Aron-Dine said. “That is obviously bad for families, and it is a pretty striking choice for a first executive action on the ACA. But it is also extremely counterproductive in terms of market stability because the effect is to make marketplace coverage less affordable and less attractive, therefore reducing demand for that coverage and reducing enrollment.”