Funding for Navigators Cut – Good News for Short Term Plans?

Health Insurance

August 6, 2018

The Trump administration announced in mid-July that it would reduce funding for navigators this fall and encourage them to guide enrollees toward short term healthcare policies. Navigators were implemented as part of the ACA to help consumers purchase products in the public exchange. Nonprofit organizations received federal grants to hire people that helped guide enrollees through the process.

Funding Reduction

The Centers for Medicare and Medicaid Services (CMS) said that funding for navigators would drop from $36 million last year to just $10 million for the open enrollment period scheduled to begin November 1. This funding is significantly lower than the $63 million the program was awarded in 2017. In defense of the funding reduction, CMS Administrator Seema Verma suggested that the navigator program needs to evolve to meet today’s needs and that the need for them has diminished over time.

Short Term Health Plans

In addition to the reduction in funding, a pilot point system will be implemented this year that rewards navigators for promoting short term and association health plans. CMS is requesting that navigators provide moderate-income people who are not eligible for ACA tax credits with information about other, less expensive coverage. The belief is that many moderate-income consumers may not be aware of short term plans since these plans don’t meet the minimum standards of Obamacare. Navigators will still be unable to provide referrals to specific agents, brokers or insurance companies. Health insurance agents who collect commissions from health insurance companies are not permitted to be navigators, but life insurance or other types of agents may apply to be navigators under the new rules.

The Trump administration is hoping to push short term health insurance as an attractive and cheaper alternative to major medical insurance that complies with the healthcare law. For younger, healthy consumers, these plans can provide adequate coverage during times of transition – and they cost a lot less than the robust plans on ACA exchanges. They do not have to meet the essential health benefits requirement and may deny coverage based on pre-existing conditions. Before this policy change, navigators were not permitted to suggest non-ACA compliant plans.

Impact on Medicaid and CHIP

There are concerns that this change may have an impact on enrollment in Medicaid and the Children’s Health Insurance Program (CHIP). Many consumers who use navigators find they are qualified for Medicaid or CHIP. A reduction in the number of navigators may result in fewer people finding they are eligible for such assistance and lower enrollment in those programs. Navigators often assist people with language barriers, special needs or complicated situations that make it difficult for them to qualify for government assistance. These types of consumers could now be pushed in the direction of short term or association plans when they may actually qualify for different types of aid.

Tying Funding to Success

The Trump administration is also tying grant funding for navigators to their success at getting consumers to sign up for coverage. However, in states that operate their own exchange programs, CMS is limiting how many navigators are available. Each state will have just one navigator. Grant funding for that navigator will be based on how successful the navigator was at getting consumers insured while also meeting other performance goals. Each state will receive a minimum of $100,000 in grant funding for navigator programs.

Opponents of the CMS changes say that it will further weaken the already struggling ACA. They also believe it will make it more difficult for Americans to obtain not only affordable health insurance but also adequate health insurance.

CMS estimates that navigators were responsible for enrolling less than 1 percent of healthcare consumers in 2018 despite $36 million in funding. By contrast, brokers and agents helped 42 percent of consumers pick a plan on the exchanges last year. Even during 2017, when the program received $63 million in funding, navigators were responsible for enrolling less than one percent. Research from the CMS indicates that each enrollee handled by a navigator costs the federal government at least $400.