Setting the Record Straight: CMS’s Successful Work to Improve Access to Private Health Coverage from 2017 to 2021

While the Affordable Care Act provided coverage through Medicaid expansion and generous premium subsidies, it also put the individual market in chaos and on the verge of collapse.  Back in 2017 when the Obama Administration was passing the baton to the incoming Trump Administration, the nation’s individual health insurance markets were in crisis.  At that time, health insurance premiums had spiked and insurers were fleeing the market. While there were larger Congressional efforts and legal challenges being pursued to address the law’s shortfalls, there was immediate work to do to stabilize the insurance market and ensure that millions of Americans had access to insurance. We believed that the right policies could improve, but not completely solve, the operation of the law for everybody. We set to work doing just that.

From the beginning, the ACA has been a highly controversial law, so it’s not surprising that controversy has followed much of the work we’ve done to improve its administration. The Centers for Medicare & Medicaid Services’ (CMS’s) efforts were consistently mischaracterized by some in the media and in academia as intentional efforts to “sabotage” the law, in spite of mounds of evidence that the actions CMS took were improving the market and bringing it back from the brink of disaster. After four years in office, it’s time to set the record straight on CMS’s successful effort to stabilize the individual insurance market, increase competition, and make what was once a floundering insurance market work for as many people as possible.

Trump Administration Inherited an Individual Market in Crisis

While it took several years for the market to fully reflect the impact of the introduction of the ACA in 2014—including the rollout of the ACA and a series of additional implementation actions—by 2017 things had come to a head. Insurance premiums had spiked across the country.  In states using, premiums for a benchmark plan had more than doubled since 2013, the year before the ACA’s main regulations took effect.[1]  In some states, including Alabama, Arizona, and Oklahoma, premiums more than tripled over this time.[2]

Insurers had lost approximately $20 billion from 2014 to 2016, and many began to be seriously alarmed.[3] Massive insurer losses set into motion a series of forces that threatened the viability of the market. For the fledgling Exchanges and the ACA’s single risk pools to work, they needed large numbers of younger, healthier enrollees to sign up and continue to stay enrolled. But the failed initial rollout of the Exchanges had the effect of deterring those same younger, healthier Americans from signing up for coverage. This put the market on treacherous footing as the risk pool became older and sicker. In response, many insurers decided to abandon the market altogether, eroding competitive pressure to keep premiums low.

With insurers leaving the market, states and regulators were left with no choice but to accept remaining insurers’ large premium increases. Often there was only a single issuer consumers could choose. The percent of counties with only a single issuer available had already increased from 6 percent in 2016 to 31 percent in 2017, with even more issuers declaring their intent to leave in 2018.[4]  This meant that on day one, we were presented with the prospect of entire counties and even entire states bare of any issuers for 2018.

Rising premiums and declining issuer participation began impacting enrollment sooner than is often appreciated.  While every state increased individual market enrollment growth in 2015, ten states saw declines in 2016, and declining enrollment grew to 44 states in 2017.[5]  Most of this decline occurred among unsubsidized people who did not receive premium tax credits. In just one year, from 2016 to 2017, unsubsidized enrollment plummeted by 20 percent nationally.[6]  The data show a clear link between affordability and enrollment as states with the largest enrollment declines tended to also have the largest premium increases.[7]

The data also show that many of these people leaving the market also appear to be going uninsured.  In 2017, data from the U.S Census Bureau show that the uninsured rate began to tick up, and that most of the increase in the uninsured since 2016 occurred among people who do not qualify for subsidies.  In fact, people who earn more than 400 percent of the federal poverty level represent 59 percent of the increase in the number of uninsured from 2016 to 2019.[8] We began sounding the alarm early on.[9] Many of the initial and ongoing steps we took, including granting state reinsurance waivers, were aimed at providing relief to these middle-class Americans.

The ACA promised to protect people with pre-existing conditions. But while the goal is admirable, the promise rings hollow for people with a pre-existing condition who can’t afford coverage on the individual market.

How the ACA Undermined the Market

The severe disruption the individual market experienced moving into 2017 was almost entirely tied to the implementation of the law.  Actuaries have identified a number of ACA requirements that contribute to higher premiums, including the closure of state high risk pools, premium rating requirements, mandated benefits, insurance taxes, and the Exchange user fee.[10] The ACA also included policies to offset these negative premium impacts by encouraging healthy people to enroll, including premium subsidies and the individual mandate, but these policies never delivered the necessary enrollment.[11]

Certain decisions on how to implement the ACA also led to higher premiums.  Most visibly, research suggests that the initial failure to launch[12] may have contributed to long-term impacts on premiums.[13]  The decision to allow people to keep plans that did not comply with the ACA’s requirements likely kept healthier people out of the market who would have contributed to a healthier and less expensive risk pool.[14]  Loose enrollment policies that allowed people to game the system by waiting until they were sick to enroll further undermined the risk pool and forced insurers to compensate for the increase in sick people by increasing premiums across the board. 

Further, the structure of the ACA’s premium tax credit encourages premium inflation because the size of the subsidy is linked to the overall cost of the health plan.  Any increase in premiums for subsidized enrollees is fully paid by increases in tax credits, which substantially reduces insurers’ incentives to control premium growth.

CMS’s Successful Strategy

Faced with this crisis market, we had our work cut out for us to improve implementation policies, lower premiums, and bring issuers back to the market. We made doing so a top priority from the beginning. In less than three months on the job, we finalized the Market Stabilization Rule.[15]   This rule marked the launch of a series of strategies aimed squarely at increasing choice and reducing cost in the insurance market.  Four years later, its name became a reality.

Encouraging Continuous Coverage

To stabilize the market, CMS first moved to tighten the rules governing enrollment periods to encourage people in the market to maintain continuous coverage. It’s always important that people maintain health coverage continuously, without any gaps, to protect their health and personal finances in the event of any unforeseen medical incident. But in the ACA’s single risk pool, continuous coverage is crucial, because it ensures that people are contributing monthly premiums when they are healthy to maintain a stable and affordable risk pool. 

As recognized by Congress in the ACA, enrollment periods—including the annual open enrollment period (OEP) and year round special enrollment periods (SEPs)—play an important role in maintaining a stable and affordable individual health insurance market.  If enrollment were not tightly limited to these enrollment periods, the operation of the ACA’s guaranteed issue and community rating requirements would allow people to wait to enroll in coverage until they either got sick or needed routine medical care, which has the unintended impact of insurers having to increase premiums to compensate for the sicker populations. 

To ensure that enrollment periods served their intended purpose, the Market Stabilization Rule required certain people to submit documents to verify their eligibility for certain Special Enrollment Periods (SEPs).  Unlike the annual Open Enrollment Period that is open to everyone, SEPs are intended only for people who experience special life circumstances—like the birth of a child, marriage or a job loss—during the plan year and need to make a change in their coverage or enroll in coverage. But severe lack of oversight had allowed people to enroll in coverage who did not experience any of these qualifying life events, causing insurers to raise their premiums and further destabilize the market. 

In addition to addressing SEP rules, the Market Stabilization Rule shortened the annual OEP to align with Medicare Advantage open enrollment and the employer market, encouraging people to enroll before the beginning of the year. While the media and others claimed this was an act of sabotage, it was the exact opposite. Rather, the goal was to shift the OEP to start and end prior to the start of the coverage year, so all consumers would have a full year of coverage and insurers would have a more predictable risk pool, contributing to market stability. And despite the ongoing, baseless claims that the Trump Administration “slashed” the OEP to keep people out of coverage, this change was actually made by the Obama Administration, not the Trump Administration. The Market Stabilization Rule only moved the effective date of the previous administration’s change to one year earlier, from 2019 to 2018. In shortening the OEP, the Obama-era CMS stated that they believed that, “as the Exchanges grow and mature, a month-and-a-half open enrollment period provides sufficient time for consumers to enroll in or change [Qualified Health Plans] for the upcoming coverage year.”[16] This highly salient fact remains stubbornly absent from virtually all the media coverage of this issue.

Critics were quick to claim these reasonable, commonsense changes were unnecessary and hurt the market by making it more difficult to enroll. However, research strongly suggests people were in fact gaming the enrollment process.  CMS’ own data show people who are enrolled part of the year incur higher average claims costs than those enrolled the full year, a factor we account for in the risk adjustment program.   Among part-year enrollees, one study concludes short-term, urgent health needs drive enrollment more for SEP enrollees than others.[17]  Another study finds enrollees who used SEPs in 2015 and 2016 at a large national insurer incurred 69 to 114 percent higher inpatient costs than members who enrolled through the OEP.[18]  Moreover, they tended to be younger.  All these facts strongly suggest loose SEP enrollment policies were allowing people to use SEPs to time enrollment and game the system, thus harming the risk pool. 

CMS understood tighter SEP verification policies imposed a new responsibility on individuals enrolling through SEPs, and that’s why we took appropriate steps to ensure it worked smoothly for consumers.  Our review shows the new verification process is continuing to successfully meet the needs of consumers seeking SEPs.  Among people who submitted verification documents, response times to verify enrollment averaged 1 to 3 days, and over 90 percent were able to successfully verify their enrollment.[19]

In addition to addressing enrollment periods, the Market Stabilization Rule also allowed insurers to require individuals to pay back past due premiums before enrolling into a plan with the same issuer the following year.  This change successfully discouraged people from dropping and then re-enrolling in coverage, and taking advantage of the law’s three-month grace period.

Improving Exchange Operations and Efficiency

The considerable operational issues with the initial rollout and ongoing glitches revealed a number of opportunities to improve the Exchange. CMS’ team of career civil servants had done an outstanding job of righting and putting it on more solid footing than it had been in 2013, but much work was needed to improve the consumer experience and reduce the overall costs of running the Exchange to help lower premiums for enrollees and taxpayers.  

We made substantial investments to upgrade the system’s IT infrastructure and functionality.  While a number of key changes were made, this effort involved two major upgrades which started with moving much of the infrastructure to a cloud-based environment.  Moving to the cloud brought the Exchange closer to industry standards, which had been operating in the cloud for years. It also created a more stable environment and helped ensure the system had the flexibility to scale the computing power and bandwidth necessary to accommodate the surge of traffic that occurs during the OEP.  Moving to the cloud also reduced costs.

The second major IT upgrade involved rolling out a new streamlined application which allows consumers to enroll more quickly and with fewer potentially confusing and unnecessary questions that had deterred some younger and healthier people from enrolling. Quicker enrollment also helps agents and brokers process more clients in a single day, addressing one of their chief complaints and reasons for not participating.  

These efforts contributed to a nearly flawless experience during the 2021 OEP.  Despite high volume in the final days, both and the call center operated without a hitch. Less than five hours of planned maintenance was used over the entire OEP compared to nearly 54 hours over similar time period during the 2017 OEP (i.e., November 1, 2016 to December 15, 2016).  An online waiting room didn’t need to be deployed at all compared to 56 hours during the 2017 OEP.  This meant consumers were able to shop for and pick a plan with little interruption throughout the entire enrollment period.  Indeed, was available for enrollment for 99.6 percent of the entire OEP, compared with 90.0 percent during the 2017 OEP.  Also, for the fourth straight year in a row, the consumer satisfaction rate at the Call Center remained high, averaging over 90 percent throughout the entire OEP over all four years.

On top of reducing costs through IT upgrades, we also reduced costs by targeting advertising and outreach spending to more cost-effective, high-impact activities, such as digital media, email, and text messages.  While this was again derided by the media and others, this approach is consistent with the government’s promotional spending and overall approach on Medicare Part D and Medicare Advantage (MA), which targets over 63 million seniors—a much larger group than the Exchange target group.  

The Obama Administration had substantially increased advertising and outreach to $101 million from $54 million in 2016 and $49 million in 2015. While advertising and outreach is important, as the Exchanges mature, the expectation should be that insurers, agents and brokers, community groups, and the private sector would advertise open enrollment and volunteers assist with enrollment rather than taxpayers or enrollees.   This is consistent with MA open enrollment and we sought to draw on the successes and best practices of MA and bring them to Exchange operations.  Aligning spending to Medicare levels reduced advertising spending from $101 million to $10 million and navigator spending from $63 million to $10 million.

Notwithstanding the controversy these spending reductions stirred up, they were well justified.  While some spending on advertising is needed, it’s not the government’s role to be an advertising agency for massive private insurance companies. More importantly, prior spending levels failed to deliver effective enrollment results.  Navigator spending proved particularly wasteful.  The Exchange spent $63 million on navigators for the 2017 OEP and they enrolled just 83,495 people—less than a half a percent of total enrollment.[20] Several navigators spent well in excess of a thousand dollars per enrollment. One received $461,870 in grant funding and enrolled only 23 people, which adds up to $20,081 per enrollment.[21]  

Advertising spending was equally ineffective.  When the Obama administration contracted with external public relations firms and increased spending from $54 million for the 2016 OEP to $101 million for the 2017 OEP, plan selections during the 2017 OEP actually dropped by 4 percent.  Recent research shows no statistically significant relationship between federal advertising spending and enrollment on the Exchanges from 2015 to 2018.[22] In the end, enrollment remained steady in every year we administered the OEP using more modest, targeted, and effective spending on outreach and advertising. 

By improving operational efficiency and reducing wasteful spending, CMS has been able to reduce spending on the Exchange by almost $400 million.

These savings were redirected to lower premiums for consumers as CMS lowered the user fee on issuers.  CMS lowered the user fee from 3.5 percent to 3.0 percent for the 2020 plan year and finalized regulations to further reduce the fee to 2.25 percent for the 2022 plan year.[23] These reductions provide direct premium relief because insurers must pass fee reductions directly to consumers in the form of lower premiums. 

Bringing Insurers Back to the Market

In the spring of 2017, the possibility of counties with no insurer available—leaving no coverage options for thousands of people across the country—was very real.  Bringing insurers back to the market and retaining the insurers in the market quickly became our top priority.  After we worked with states and insurers to solve the immediate crisis of bare counties, we continued to pursue a robust strategy to bring more insurers to the market to increase competition.  

Competition is the engine that drives companies to deliver better quality and lower prices in any market, and the market for health insurance is no different.  Multiple studies show how more competitive health insurance markets offer lower premiums and more types of health plans to available.[24]  For instance, one study found Exchange premiums were 50 percent higher, on average, in rating areas with a monopolist insurer compared to those with more than two insurers.[25] 

A key part of our strategy involved a targeted outreach plan to bring insurers back into the individual health insurance market.  Including insurers, this plan involved substantial outreach to state departments of insurance.  Over time, in response to these efforts, four major private insurers—Cigna, Anthem, Wellmark, and Molina—returned to the Marketplace, with other insurers following suit.  United Healthcare has also recently returned to the Marketplace and expanded from four to 11 states in plan year  2021.[26] 

Overall, as a result of this outreach and CMS’s broader efforts to stabilize insurance markets, issuer participation has increased across the country for three straight years.  The percentage of counties in American with just one issuer dropped from 50 percent in 2018 to 36 percent in 2019 to 24 percent in 2020 and now rests at 9 percent.[27] 

Providing States Flexibility to Address Market Challenges

The U.S. Constitution establishes specific lines of authority between states and the federal government, based in part on the view that states are often in a better position to legislate and regulate on matters affecting their residents.  With respect to health care markets, as a practical matter, states generally have a much better sense of local dynamics, which usually allows them to solve local problems with local solutions in a way distant bureaucrats in Washington could never replicate. 

Recent experience bears this out. When severe problems arose in health insurance markets across the country in 2014, it became clear that one-size-fits all national solutions weren’t working to address problems in state markets unique to those states.  That’s why providing states flexibility to address their unique market challenges became a key part of our strategy.

Prior to the ACA, states had been the primary regulators of health insurance.  The ACA, however, transformed the regulation of private health coverage. For the first time, it applied a comprehensive federal regulatory framework for regulating private health coverage. But while it created national standards at the federal level, the ACA continued to rely on states to play a leading role in overseeing and supporting the private health insurance market.  The ACA continues to lean on states as the primary enforcers of the new federal requirements and ensures they retain authority to continue regulating health insurance. For example, the law depends first on states to establish Exchanges, and gives them flexibility to waive certain ACA requirements.  It’s under this legal framework that we worked to ensure state lawmakers and regulators had flexibility to address challenges in their markets.

We started the process of returning key oversight authority back to states in the first Market Stabilization Rule on key issues, including network adequacy determinations, adjustments to Essential Health Benefits benchmark plans, certification of qualified health plans, actuarial value rules, risk adjustment transfers, the parameters of the medical loss ratio program, and the operation and establishment of Exchanges, including the functions of the small business health options program (SHOP).

As previously noted, the ACA also gives states flexibility to waive certain ACA requirements under section 1332 of the law and to implement their own state plans to solve problems and improve the health care system.  However, guidance issued under the previous Administration in 2015 unnecessarily straightjacketed states’ ability to waive these requirements to address their unique markets.[28] As a result, very few states had come forward with any innovative new strategies for improving their health care markets, and all but one of the state waivers had been for states to create their own reinsurance programs. While these reinsurance waivers offer an important tool to reduce premiums (as explained later), they really represent only a small sliver of what is possible under a waiver.  Therefore, we issued new guidance in 2018 to give states the flexibility the law intended.[29] 

The revised guidance opened up a number of new opportunities.  For instance, states can consider options to create and implement a new subsidy structure that changes the distribution of subsidy funds compared to the current federal premium tax credit structure.  A state may design a subsidy structure, that addresses the “subsidy cliff”, creates incentives to control premium growth, or any other design that better meets the unique needs of its population. States can also develop more innovative and cost-effective ways to cover people with expensive health conditions.

Using 1332 waivers, CMS approved 15 state reinsurance waivers, all of which drove insurance premiums down.  Reinsurance funds people with high claims costs and, therefore, remove these costs from the individual market risk pool. By removing these costs, reinsurance lowers premiums for everyone in the market. Premium savings ranged from 4 percent in Rhode Island to 40 percent in Maryland.[30] To spur further innovation, we also issued series of waiver concepts to illustrate how states might take further advantage of the flexibilities available under section 1332 of the ACA.[31]

This extension of state flexibility did nothing to reduce the ACA’s protections for people with preexisting conditions, and all approved waivers underwent review from independent actuaries to ensure that they would not reduce the number of people covered or lead to less comprehensive coverage.

The guidance also did not eliminate protections for individuals with pre-existing conditions by allowing short-term, limited-duration insurance (STLDI) plans to count as “health insurance coverage,” which does not include the ACA’s pre-existing condition protections. While it’s true the guidance allows states to pursue more affordable coverage options under a waiver, such as catastrophic plans and STLDI, the critics ignore the plain fact that the state must still meet the guardrails established by the law guaranteeing access to coverage that is overall as affordable and as comprehensive for people as it would have been without the waiver.  That means the ACA’s pre-existing condition requirements that protect access to coverage in the individual market remain just as strong with the waiver as they were without it.

At the end of the day, we recognized states were in a far better position to address problems in their local health insurance markets so we gave them more flexibility. Though COVID-19 may have stalled state efforts to develop waivers, states have still responded with creative solutions that address their own market needs, and we hope such flexibility will be allowed to continue in the future.

Opening New Enrollment Pathways

The Exchanges’ early struggles highlighted the weakness of relying on a single, government-run pathway to enroll in QHPs.  With just one way for people to shop for coverage, the Exchange’s enrollment problems were felt by every consumer seeking a QHP. Not only that, consumers were only allowed to have one shopping and enrollment experience, limited to what the government approves and creates. Consumers wouldn’t tolerate such restrictive limitations when buying any other product, so why should they in health insurance? Therefore, we went to work building partnerships with the private sector to open new enrollment pathways to continuously improve the consumer enrollment experience while at the same time guaranteeing strong consumer protections.

In the rush to roll out Exchanges in 2014, which promised consumers a “no wrong door” approach, federal and state governments instead adopted a “no other door” approach, forcing enrollment in QHPs to come exclusively through the Exchanges.  This approach substantially limited the private sector’s traditional role in helping consumers shop for and enroll in health insurance coverage.  Even using the original, clunky process allowing consumers to buy subsidized coverage from traditional outlets like licensed agents and brokers, these partners needed to work through the cumbersome “double re-direct” process that forced them to ship the user off of their own website to and then (if they were lucky) send the consumer back to their website to complete the enrollment. It was confusing for everyone involved, and enrollment through these channels predictably suffered as a result.

Moreover, Exchanges duplicate services, including online enrollment services, already provided by web brokers and traditional health insurance agents and brokers.  Despite offering the exact same service, the way the prior administration accounted for the cost of these services under the medical loss ratio (MLR) delivered a massive competitive edge to Exchanges, to the detriment of agents and brokers.  Under the MLR, the cost of Exchange services was counted toward premiums, making it easier for them to meet the MLR requirement, while the cost of agent and broker commissions is counted toward administrative costs, making it harder to meet the MLR requirement. 

All of this worked to crowd out private sector enrollment options, harming consumers.  When the ACA passed, the technology infrastructure to shop for health coverage online was just emerging, but there were already tools for people to compare and enroll in coverage with just a few clicks. While the introduction of the ACA’s Exchanges provided a one-stop shop for consumers to enroll in subsidized coverage, it substantially deterred any further investment in IT infrastructure for private sector online enrollments. This almost certainly limited future QHP enrollments and contributed to the ACA falling far short of the enrollment projections the CBO had forecasted.[32]  Moreover, it likely weakened the risk pool because fewer agents and brokers were selling QHPs to otherwise healthy people who could improve the risk pool, but who believed they had less need for health insurance. 

Understanding the power of the private sector to drive enrollments, CMS established Enhanced Direct Enrollment (EDE) which allows CMS to partner with the private sector to allow consumers to apply and shop for a QHP directly through an approved QHP issuer or web broker website.  EDE leverages information exchange standards known as application programming interfaces (APIs), which allow an EDE partner to create their own user-facing application and access Exchange services to obtain an eligibility determination for the consumer without the cumbersome need to be redirected to  This allows private sector partners to take more ownership over the enrollment process, giving them substantially more incentive to improve the process, deliver a better consumer experience, attract more enrollees, and improve the risk pool.

CMS launched EDE mid-way through the 2019 OEP and it became fully available during the 2020 OEP.  In the recently closed 2021 OEP, the EDE platform more than doubled the number of plan selections from the prior OEP, increasing from 521,000 to 1,130,000 million plan selections.[33]  Therefore, in just its second full year of deployment, EDE already accounted for nearly 20 percent of plan selections. 

A deeper look at the enrollment data suggests EDE is performing exactly as predicted.  The platform is attracting a larger percentage of new enrollees who are so important to market stability, and it’s also driving more returning consumers to actively shop to ensure they are continuing to get the coverage that’s best for them.[34]  In addition, EDE is helping to “smooth” enrollment traffic during the OEP, as agents and brokers have shifted enrollments to earlier in the OEP, reducing the number of consumers rushing to enroll in the final days and helping to ensure the Exchange website isn’t overwhelmed.[35]

In the 2022 Payment Notice, CMS finalized a policy to allow states to move from to private sector enrollment partners to take full advantage of private sector incentives to maximize enrollment and remove any barriers that may have been crowding out the private sector.[36] This is very similar to the flexibility that was recently granted to Georgia as part of their overall 1332 waiver, but now allows a state to do so outside a waiver.[37] 

Critics expressed strong opposition to these efforts to shift enrollment to private sector pathways.  Opponents contended it does not follow the statute, claiming the statute actually requires the Exchange to sell coverage and process enrollments.  However, the plain text of the statute requires no such thing, and the spirit of the statute continues to entrust states with important decisions on how to govern Exchanges and their insurance markets effectively.[38] 

Opponents also claim EDE, in general, puts consumers at risk because the private sector might have incentives to steer people to less comprehensive health coverage, like STLDI plans.  As we noted before, the EDE platform includes substantial consumer protections and this includes restrictions on websites displaying QHPs alongside non-QHPs.  To the extent EDE or any other policy presents legitimate consumer protection concerns, states are generally best positioned to work through them. Indeed, our experience approving Georgia’s waiver revealed how states take great care in making these important decisions on behalf of their citizens. 

Increasing Alternative Coverage Options

The final element of our overall strategy comes from the recognition that that some people are not being well served by the traditional individual health insurance market as well as traditional employer-sponsored health plans.  To expand coverage options for these people, CMS, in collaboration with the Departments of Labor and the Treasury issued two rules expanding the availability of STLDI plans and giving employers the option to offer their employees an individual coverage health reimbursement arrangement (HRA).

The unfortunate truth is that there are broad swaths of America where people who do not qualify for premium subsidies cannot access affordable individual health insurance. All of the preceding strategies aim to improve affordability in this market, and premiums have dropped on for three consecutive years.  Nonetheless, there are still people who literally cannot access affordable coverage on the individual market. 

For a 60 year old couple living in Hannibal, Missouri who make $70,000 a year, the lowest cost silver plan on the Exchange costs $37,000 in 2020—over half their income.  A recent report by CMS compared the 20 percent of counties with the highest premiums cost to the 20 percent of counties with the lowest premiums costs. On average, in the highest cost counties, the lowest cost silver plan would cost a 60-year-old earning just too much to qualify for subsidies 35 percent of their income compared to 19 percent in the lowest cost counties.[39] 

STLDI have existed for decades and are primarily designed to fill gaps in coverage that may occur when an individual is transitioning from one plan to another (e.g., individuals in-between jobs) or where no affordable alternative is available.  Regulations have been in place for nearly two decades defining STLDI as coverage with a contract term of less than 12 months. Nevertheless, the Obama administration finalized regulations in December 2016 that reduced the contract term to less than 3 months.[40]  This severely limited access to STLDI plans.  A key part of the rationale for reducing the term of the contract was that healthier people would be targeted for this type of coverage and not join the individual market risk pool, and, as a result, harm the risk pool.[41] But no evidence was provided to show this was actually a problem. 

We reversed course and finalized regulations that reverted to the traditional definition with an improvement to reflect how federal law treats the maximum duration of transitional COBRA coverage.[42]  Specifically, we extended the maximum initial contract term to less than 12 months and, in addition, we permitted renewal of coverage under a policy for up to 36 months.  Because these plans are not for everyone, we increased transparency requirements to ensure that consumers are informed about the plans’ limitations. 

According to a Congressional Budget Office analysis, these plans can be as much as 60 percent lower than premiums for the lowest-cost bronze plan for healthy individuals who are ineligible for premium tax credits.[43]  This action helped provide immediate relief by providing access to affordable health insurance options to some people who otherwise had literally no other option. 

Critics may have been content to limit affordable coverage options for these people; we were not.  To date, none of their dire predictions have come to pass.  STLDI plans generally provide affordable options to people who would have never enrolled in the individual market risk pool in the first place, meaning no harm has been done to the market. 

In addition to expanding access to STLDI, CMS also worked with the Departments of Labor and the Treasury to finalize regulations to expand access to a new type of employer-sponsored health plan, an individual coverage HRA.[44]  These individual coverage HRAs give employers the opportunity to provide employees pre-tax dollars to buy coverage on the individual market, which is often referred to as a defined contribution health plan. 

Many businesses struggle with the high cost of health care and the complex bureaucracy required to administer a traditional group health plan.  An individual coverage HRA relieves employers of the complex task of deciding on and maintaining a health plan while at the same time helping their employees finance health care with pre-tax dollars.  This increases employees’ choice and portability of coverage.  Moreover, we estimate this new option will introduce 11 million new people to the individual market.[45]  Importantly, the rule included significant safeguards to help ensure these new people entering the individual market will strengthen the risk pool.    


As we pass the baton to the incoming Biden administration, we take comfort that they are inheriting an individual market that is more stable, more responsive to consumers, and more affordable than the market we inherited in 2017.  From the beginning, we took our responsibility to faithfully and effectively shepherd this law with the utmost seriousness—no matter how deep-seated the law’s flaws were and remain. The evidence is overwhelming and undeniable: we left the individual market better than we found it. 

Seema Verma is the former Administrator at the Centers for Medicare & Medicaid Services. Randy Pate is a former Deputy Administrator at the Centers for Medicare & Medicaid Services and Director of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare & Medicaid Services. Peter Nelson is a former Senior Advisor to the Administrator at the Centers for Medicare & Medicaid Services. 

This article originally appeared at on January 20, 2021 and is archived at

[1] U.S. Department of Health & Human Services, Individual Market Premium Changes: 2013 – 2017, May 23, 2017, available at

[2] Id.

[3] Oliver Wyman, Stabilizing the Individual Health Insurance Market, August 23, 2017 (finding “[u]nderwriting losses in the individual market increased significantly in 2014 relative to 2013, and have remained high through 2016”), available at

[4] Centers for Medicare & Medicaid Services, Putting Patients First: The Centers for Medicare & Medicaid Sevices’ Record of Accomplishment from 2017-2020, available at

[5] Centers for Medicare & Medicaid Services, Trends in Subsidized and Unsubsidized Individual Health Insurance Market Enrollment, July 2, 2018, available at

[6] Id.

[7] Centers for Medicare & Medicaid Services, Summary Report on Permanent Risk Adjustment Transfers for the 2017 Benefit Year, July 9, 2018 (“While the magnitude of the increase varied significantly across states, those with larger increases in average premiums tended to experience larger declines in enrollment in 2017”), available at

[8] Centers for Medicare & Medicaid Services, The Unsubsidized Uninsured: The Impact of Premium Affordability on Insurance Coverage, January 2021, available at

[9] Press Release, “CMS issues final rule to increase choices and encourage stability in health insurance market for 2018,” Centers for Medicare & Medicaid Services, April 13, 2017 (reporting statistics showing enrollment declines, fewer issuers, and states with double digit premium increases).

[10] Oliver Wyman, Stabilizing the Individual Health Insurance Market, August 23, 2017 (identifying ACA factors that contributed to an estimated 54 percent increase in premiums from 2013 to 2015), available at; American Academy of Actuaries, “How Will Premiums Change Under the ACA?”, May 2013, available at; and Milliman, Comprehensive Assessment of ACA Factors That Will Affect Individual Premiums in 2014, April 25, 2013.

[11] See American Academy of Actuaries, An Evaluation of the Individual Health Insurance Market and Implications of Potential Changes,  January 2017 (“Lower-than-expected marketplace enrollment has been accompanied by concerns that the risk profile of enrollees was worse than many insurers expected.”), available at

[12] Office of the Inspector General, U.S. Department of Health & Human Services, Case Study of CMS Management of the Federal Marketplace, February 2016, available at

[13] See Amanda Kowalski, “The Early Impact of the Affordable Care Act State-by-State,” National Bureau of Economic Research Working Paper 20597,  October 2014, available at; and Florian Scheuer and Kent Smetters, “Could a website really have doomed the health exchanges? Multiple equilibria, initial conditions and the construction of the fine,” National Bureau of Economic Research Working Paper 19835, January 2014, available at

[14] Evan Saltzman and Christine Eibner, Evaluating the “Keep Your Health Plan Fix”: Implications for the Affordable Care Act Compared to Legislative Alternatives, RAND Research Reports, 2014, available at

[15] 82 Fed. Reg. 18346, Patient Protection and Affordable Care Act; Market Stabilization, Apr. 18, 2017, available at

[16] 81 Fed. Reg. 12204, Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2017, Mar. 8, 2016, p. 12273, available at available at

[17] Stan Dorn, et al., “New Risk-Adjustment Policies Reduce But Do Not Eliminate Special Enrollment Period Underpayment,” Health Affairs, February 2018, available at

[18] Laura F. Garabedian, et al., “Costs Are Higher For Marketplace Members Who Enroll During Special Enrollment Periods Compared With Open Enrollment,” Health Affairs, August 2019, available at

[19] Centers for Medicare & Medicaid Services, The Exchange Trends Report, July 2, 2018, available at

[20] Centers for Medicare & Medicaid Services, Navigator Funding and Enrollment Data, PY 2016-2020, available at

[21] Id.

[22] Paul R. Shafer, et al., Competing Public and Private Television Advertising Campaigns and Marketplace Enrollment for 2015 to 2018, The Russell Sage Foundation Journal of the Social Sciences, July 2020, available at

[23] Patient Protection and Affordable Care Act: Benefit and Payment Parameters for 2022; Updates to State Innovation Waiver Implementing Regulations, available at

[24] Maria Polyakova, et al., ACA Marketplace Premiums and Competition Among Hospitals and Physician Practices, The American Journal of Managed Care, Vol 24, No. 1, 2018, available at; Jane M. Zhu, et al., “Association Between Number of Insurers and Premium Rates in the Affordable Care Act Marketplace,” JAMA Internal Medicine, November 2017, available at; and Leemore Dafny, et al., “More Insurers Lower Premiums: Evidence from Initial Pricing in the Health Insurance,” American Journal of Health Economics, Winter 2015, available at

[25] Jessica Van Parys, “ACA Marketplace Premiums Grew More Rapidly In Areas With Monopoly Insurers Than In  Areas With More Competition,” Health Affairs, Vol. 37, No. 8, 2018, available at

[26] Centers for Medicare & Medicaid Services, Putting Patients First: The Centers for Medicare & Medicaid Sevices’ Record of Accomplishment from 2017-2020, available at

[27] Id.

[28] 80 Fed. Reg. 78131, Waivers for State Innovation, Dec. 16, 2015, available at

[29] 83 Fed. Reg. 53575, State Relief and Empowerment Waivers, Oct. 24, 2018, available at  See Patient Protection and Affordable Care Act: Benefit and Payment Parameters for 2022; Updates to State Innovation Waiver Implementing Regulations (providing a comprehensive discussion of the CMS and the Department of the Treasury’s “view that the framework outlined in 2018 Guidance is based upon a sound interpretation of section 1332 and its requirements for approval of a section 1332 waiver.”), available at 

[30] Centers for Medicare & Medicaid Services, Putting Patients First: The Centers for Medicare & Medicaid Sevices’ Record of Accomplishment from 2017-2020, available at

[31] Centers for Medicare & Medicaid Services, Section 1332 State Relief and Empowerment Waiver Concepts: Discussion Paper, November 29, 2018, available at

[32] See The White House, “CBO’s Failed Obamacare Enrollment Projections,” June 30, 2017, available at

[33] Center for Consumer Information & Insurance Oversight, Centers for Medicare & Medicaid Services, Impact of Enhanced Direct Enrollment During the Open Enrollment Period for 2021 Coverage, CCIIO Data Brief Series, January 2021, available at

[34] Id.

[35] Id.

[36] Patient Protection and Affordable Care Act: Benefit and Payment Parameters for 2022; Updates to State Innovation Waiver Implementing Regulations, available at

[37] Letter from CMS Administrator Seema Verma to Gov. Brian Kemp, November 1, 2020, available at

[38] Id. (concluding “that the Exchange DE option is consistent with the language, spirit, and intent of PPACA and its

implementing regulations.”)

[39] Centers for Medicare & Medicaid Services, Affordability in the Marketplaces remains an issue for Moderate Income Americans, January 2021, available at

[40] 81 Fed. Reg. 75316, Excepted Benefits; Lifetime and Annual Limits; and Short-Term, Limited-Duration Insurance, Oct. 31, 2016, available at

[41] Id.

[42] 83 Fed. Reg. 38212, Short-Term, Limited-Duration Insurance, Aug. 3, 2018, available at

[43] Congressional Budget Office, How CBO and JCT Analyzed Coverage Effects of New Rules for Association Health Plans and Short-Term Plans, January 2019, available at  

[44] 84 Fed. Reg. 28888, Health Reimbursement Arrangements and Other Account-Based Group Health Plans, June 20, 2019, available at

[45] Id.