CMS actuary undermines Verma: Short-term plans lead to higher premiums, steeper enrollment drops

Health insurance forms
Seema Verma has claimed that expansion of short-term plans will have little impact on the marketplace, but figures from the CMS actuary are far different. (Getty/vinnstock)

Medicare head Seema Verma has claimed that an expansion of short-term health plans wouldn't have much of an impact on exchange enrollment, premiums or spending, but a study from her own agency, says that's not true.

The Centers for Medicare & Medicaid Services (CMS) said in the February proposed rule that a change in the time duration of short-term health plans would only move 100,000 to 200,000 people from the ACA marketplace to such plans. 

Verma also said in a press call during the rule's release in February that movement out of the exchanges would "have virtually no impact on the individual market premiums." She cited "independent actuaries" as the basis of the estimate that 200,000 people would leave the exchanges.

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However, a report (PDF) by Medicare's own chief actuary, Paul Spitalnic, whose independence is legally protected, found that 1.8 million would elect short-term coverage, with almost half, about 800,000, coming from the marketplace. That projection is at least four times higher than Verma's estimate. Additionally, 600,000 would leave the marketplace starting next year. 

The report also said premiums would increase by more than 3% above baseline increases in the first year alone and climb to 6% by 2022.

RELATED: Healthcare industry lambastes Trump administration's short-term health plan proposal

As a result, federal spending would increase by about $39 billion over the next 10 years due to increased tax credits, far higher than the administration's estimate of between $96 million and $168 million per year. 

Spitalnic confirmed to FierceHealthcare that the original estimates in the proposed rule were not prepared by CMS' Office of the Actuary.

As expected, nonindependent estimates of the total impact of the proposed expansion have varied wildly. For example, the left-leaning Urban Institute pinned the number of people who would leave the market at about 2.5 million, with premium increases at about 16.6%. 

RELATED: AARP warns Trump's short-term insurance plans will hit older Americans hardest

However, even after Spitalnic's report was released April 4, Verma repeatedly stated that the impact wouldn't be great, most recently at a Washington Post-sponsored event on May 14.

"Actuarial studies show that the impact is not that high," she said at the event. 

The CMS has not yet responded to FierceHealthcare's request regarding where the "independent actuary" reports came from, or why the agency decided not to use its own independently protected actuary.