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Democratic Committee Leaders Question Secretary Azar About Damning Internal Memo from CMS Administrator

Jun 14, 2019
Press Release
Newly Unveiled Memo Shows Verma Makes Several Recommendations Against Adoption of ACA Policy Proposals the Administration Has Adopted or Is Considering, Citing Coverage Losses & Price Increases for Consumers

Energy and Commerce Chairman Frank Pallone, Jr. (D-NJ), Ways and Means Chairman Richard E. Neal (D-MA), and Education and Labor Chairman Bobby Scott (D-VA) sent a letter to Health and Human Services (HHS) Secretary Alex Azar raising questions over a newly unveiled memo that includes internal analysis on the harmful impacts of Trump Administration policy changes to the Affordable Care Act (ACA).  

According to the August 2018 memo from Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma to Secretary Azar, several changes to the ACA that the Trump Administration has either already adopted or is actively considering would result in substantial health insurance coverage losses and increased costs for consumers.

In the internal memo, Administrator Verma recommends against adoption of key Trump Administration policy proposals including an end to “silver loading,” terminating automatic re-enrollment for consumers in the ACA Marketplace, and changes to the premium indexing methodology that would reduce advance premium tax credits for consumers, citing coverage losses and price increases for consumers.  According to CMS’s internal analysis, these three actions would result in 1.1 million individuals losing coverage, “further premium increases, and market disruption.” The memo also found that these actions could, “potentially [result] in bare counties or states with no subsidized coverage available in 2019 and future plan years.”

“We call upon the Administration not to finalize these proposed policies, which the Administration itself admitted would cause chaos in the individual market,” the Democratic Committee Chairmen wrote to Secretary Azar.  “The fact that the Trump Administration would finalize policies despite these serious warnings from CMS is deeply troubling, and it appears to be part of the Administration’s continuing efforts to sabotage the individual market, undermine the ACA, hinder consumers’ access to comprehensive health care coverage, and weaken protections for people with preexisting conditions.” 

In her memo, Administrator Verma makes several recommendations against adoption of policy proposals that the Trump Administration has either already adopted or is actively considering for future adoption.

  • The memo recommended against ending the practice of “silver-loading,” stating that ending the policy would result in “substantial premium increases for consumers as well as confusion over plan selection and benefit designs,” and that “issuers may withdraw from the market,” and “consumers may drop coverage altogether.” 
  • The memo found that if automatic re-enrollment was terminated, “consumers will likely lose coverage and become uninsured.”  It includes an analysis by the CMS Office of the Actuary (OACT) showing that ending automatic re-enrollment would cause 200,000 enrollees to lose coverage in 2020 and 100,000 consumers to lose coverage in each subsequent year.  The memo recommended against changes to the automatic re-enrollment process.
  • The memo also recommends against moving forward with the proposed changes to the premium indexing methodology, noting that implementing the policy under consideration will “cause coverage losses, further premium increases, and market disruption.” The memorandum describes the changes to the indexing methodology as “flawed,” and concludes that the policy will result “in a larger increase in enrollee contributions to premiums.” 

As part of their inquiry, the Democratic Committee leaders are requesting documents and answers to a series of questions, including:

  • An unredacted version of the August 2018 memo;
  • Any and all analyses, including actuarial, economic, and fiscal analyses conducted by the Trump Administration to determine the impact of the proposed health care policy changes on consumers;
  • An explanation on why HHS decided to finalize changes to the premium indexing methodology despite recommendations not to move forward with the policies in the August 2018 memo; and,
  • A list of which of the policies discussed in the memo are still under consideration for implementation by HHS.

Letter to Secretary Azar HERE.

Internal CMS Memo HERE.