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ACA “Bare Counties”: Policy Options to Ensure Access Must Address Longer-Term Stability and Competition

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http://www.commonwealthfund.org/publications/blog/2017/sep/aca-bare-counties

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Continued uncertainty about federal funding for health plans is contributing to higher individual market premiums and insurer withdrawals in 2018. The danger that consumers in some regions wouldn’t have any coverage option next year seemed to subside when insurers in the affected states eventually agreed to broaden their participation. But with the September 27 deadline for deciding to participate in the Affordable Care Act (ACA) marketplaces fast approaching, Virginia officials announced an insurer withdrawal that may leave as many as 63 counties without coverage. At the same time, many more counties appear likely to have just one insurer offering marketplace coverage. The risk that any consumer might be without options for health coverage deserves the right response from policymakers.

Relief for Bare Counties?

The threat of counties without individual market insurers, known as “bare counties,” should be a real concern of policymakers. Even if consumers in all counties have a marketplace plan that gives them access to ACA subsidies, a single plan choice locks consumers into the plan that is available to them, not necessarily the one that best meets their needs. It also fails to foster competition on price and quality, and leaves state officials tasked with approving plans in a difficult position. Two proposals in the Senate would address bare counties, and although both might provide access to federal subsidies, each has significant side effects that are likely to negatively impact market stability and future plan choices.

The Health Care Options Act (S. 761), introduced earlier this year by Senator Lamar Alexander (R–Tenn.), would allow individuals who live in an area without a marketplace plan to qualify for premium tax credits — paid at year-end — to purchase coverage off of the marketplace, including coverage that doesn’t comply with ACA consumer protections. A second bill introduced by Senator Claire McCaskill (D–Mo.), the Health Care Options for All Act (S. 1201), would allow individuals living in a bare county to purchase coverage through the District of Columbia marketplace, where members of Congress and their staff obtain coverage.

By allowing tax credits to be used for coverage that does not meet ACA requirements, the Alexander bill will likely encourage insurers to sell skimpy policies and healthy individuals to enroll in them. Noncompliant policies would have far lower premiums than compliant ones, which, because of the ACA, cannot discriminate based on an individual’s health status. Consequently, insurers that choose to sell in the off-marketplace market likely will hike their premiums for comprehensive coverage to account for the likelihood of enrolling fewer and less healthy individuals. Indeed, they may find that offering such coverage is unsustainable, particularly given that they would still be able to capture healthy, subsidized enrollees through the sale of noncompliant plans.

In contrast, the McCaskill bill would allow consumers to continue to have access to the ACA’s upfront premium and out-of-pocket help and would limit federal financial help to marketplace plans that meet critical consumer protections. However, by requiring insurers selling in the District of Columbia’s small business marketplace to offer individual market coverage to out-of-state consumers, many of whom live in rural areas and are likely to be higher-cost individuals, the proposal may undermine premiums and plan choice for D.C.’s residents and small businesses.

Other potential solutions would offer help to residents of bare counties without the potential harm of the Senate proposals. For example, Congress could allow individuals living in bare counties to use ACA subsidies to buy into other comprehensive coverage — for example, the Federal Employees Health Benefits Program or Medicaid — to ensure access to ACA financial help without undermining market stability.

Policymakers also might consider requiring a fallback plan modeled on the approach taken in the Medicare prescription drug benefit. When that program was enacted, policymakers ensured adequate plan participation in the new market by designating a fallback plan that would provide coverage in any county with two or fewer plans. Such an approach would solve not only the bare counties problem but also would foster competition and ensure adequate plan participation.

Looking Forward

Policymakers looking to stabilize the market and avoid bare counties are right to start by ensuring that payments for cost-sharing reductions continue. Insurers have made clear that guaranteeing federal funding for cost-sharing reductions is a defining factor in their decision to participate in marketplaces next year. In the event there are counties without insurers, it is important that policymakers consider not just the immediate effects of potential policy fixes, but also their longer-term consequences for access to affordable, comprehensive coverage. Solutions for bare counties that allow individuals to use upfront assistance to buy a fallback plan that offers comprehensive coverage would help those individuals who are affected buy and maintain comprehensive coverage while insuring healthy and competitive markets for all.

Despite jitters, some health insurers start to prosper

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http://www.tampabay.com/news/business/1-inch-1-inch-of-body-type-1-inch-1-inch-of/2335280

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It has not been a market for the faint of heart.

Supporters of the Affordable Care Act achieved a major victory this past week when, thanks to cajoling and arm-twisting by state regulators, the last “bare” county in the United States — in rural Ohio — found an insurer willing to sell health coverage through the law’s marketplace there. So despite earlier indications that insurance companies would stop offering coverage under the law in large parts of the country, insurers have now agreed to sell policies everywhere.

But a moment of truth still looms for the industry in the coming weeks under the law known as Obamacare. Companies must set their final plans and premiums by late September, even as the Trump administration continues to threaten to cut off billions of dollars in government subsidies promised by the legislation. Insurers are also awaiting Senate hearings set to start Sept. 6 for a hint of what steps, if any, lawmakers may take to stabilize the market.

With congressional Republicans’ yearslong quest to dismantle the Affordable Care Act dead for now, the fate of the landmark law depends in large part on the health of the insurance marketplaces and the ability of insurers to make a viable business out of selling coverage to individuals. When the law passed seven years ago, insurers saw a potential bonanza: tens of millions of brand-new paying customers, many backed by generous government subsidies and required by the new law to have health coverage. Now, about four years after the law’s marketplaces opened for business, most of the industry’s biggest players have pulled out.

Yet the continuing churn among insurers and the anxiety pervading the industry have obscured an encouraging fact: Many of the remaining companies have sharply narrowed their losses, analysts say, and some are even beginning to prosper.

“Outside of the noise,” the surviving companies “are seeing a path forward in this marketplace,” said Deep Banerjee, an analyst with Standard & Poor’s who has examined the financial results of more than two dozen Blue Cross insurers.

“It is still a new market,” he added, “and everyone is adjusting to it.”

The healthier business outlook has been achieved at a big cost to consumers. To stanch their losses, many companies raised their prices substantially for this year while narrowing their networks of providers to hold down costs.

In some cases, companies will seek even higher rates for 2018; the lone insurer left in Iowa is asking for a nearly 60 percent increase, on average.

Among the insurers now making money in the individual market and expanding is Centene, a for-profit company. Some of the Blue Cross insurers, including Health Care Service Corp., which operates plans in multiple states, including Texas and Illinois, and Independence Blue Cross, which has 300,000 customers in Pennsylvania and New Jersey, began to turn a profit in the market this year.

Oscar Health, a venture capital-backed insurance startup, lost roughly $200 million last year but, sensing a more promising future, plans to enter three more states and expand in California and Texas.

Centene made use of its experience, including setting up networks of hospitals and doctors that care for Medicaid patients, to sell coverage. The company now insures about 1.1 million people in the individual market.

“For 2018, we intend to grow this profitable segment of our business,” Michael Neidorff, the company’s chief executive, told investors last month.

Five tough decisions for the GOP on healthcare

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Five tough decisions for the GOP on healthcare

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Republicans have left Washington for the August recess with healthcare decisions hanging overhead, many of which must be addressed by the end of September.

Here are five decisions looming for the GOP.

  1. Should there be one more effort at ObamaCare repeal?

While the GOP attempt at repealing ObamaCare has stalled for now, some in the party are not giving up.

“This ain’t over by a long shot … we won’t rest until we end the ObamaCare nightmare once and for all,” Vice President Pence said at the Tennessee GOP 2017 Statesmen’s Dinner Thursday, according to a pool report.

Yet Republicans are running out of time to take action, as the legislative vehicle they were using to gut the health law and avoid a Democratic filibuster expires at the end of September.

Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.) are pushing a new plan to redirect money currently spent on providing coverage through ObamaCare and instead give it to states to spend as they choose.

They have been meeting with White House officials, who are also pushing Congress not to give up on repeal.

“I hope that our leadership will pay attention to this effort because the idea of leaving ObamaCare without a replacement is pretty naive,” Graham said this week.

Still, Senate GOP leadership has largely signaled they are moving on from repeal for now, with the legislative session in September likely to be dominated by work on funding the government and raising the debt ceiling.

And there are so far no signs that any of the three GOP “no” votes who sunk repeal, Sens. Lisa Murkowski (Alaska), Susan Collins (Maine), or John McCain (Ariz.), are changing their minds.

However, Graham said he is working with conservative Sens. Mike Lee (R-Utah) and Ted Cruz (R-Texas) to try to incorporate their ideas on repealing ObamaCare regulations into the plan.

And Majority Leader Mitch McConnell (R-Ky.) left the door open to bringing repeal back in some form, noting the fast-track procedure being used to avoid a filibuster had not expired.

“There’s still an opportunity to do that,” he said.

  1. Should we work with Democrats?

Lawmakers are ramping up bipartisan talks on the next steps for healthcare legislation, some more enthusiastically than others.

Sen. Mike Rounds (R-S.D.) said that following the failure of the Senate GOP’s ObamaCare repeal vote, Democrats have been more willing to talk with Republicans about ways to fix the law.

“Both sides are moving a little bit more to the middle,” Rounds said. “The discussions I’m having have been positive with Democrats, saying ‘look we are open to these changes, we will listen, we will work with you.’”

Sen. Roy Blunt (R-Mo.), a member of the GOP leadership, told The Hill he still wants to repeal ObamaCare “and start over, but that doesn’t mean an effort to hold up the collapsing structure in the short term isn’t the right thing to do.”

Both the Senate’s Health and Finance committees plan to hold bipartisan hearings in September when lawmakers return from recess.

Sen. Lamar Alexander (R-Tenn.) — the chairman of the Health, Education, Labor and Pensions Committee — said the goal is for the panel to craft a bipartisan, short-term proposal by mid-September, as insurers must sign contracts saying they’ll sell plans on the federal exchange by the end of that month.

Finance Committee Chairman Orrin Hatch (R-Utah) did not suggest the panel would produce legislation, but said there was bipartisan interest in a hearing.

“We’ve also heard a lot of demands from members of the committee for a healthcare hearing. I intend to do that as well shortly after the recess,” Hatch said Thursday.

But it’s not clear that the renewed interest in bipartisanship will yield legislation.

Alexander’s committee runs the ideological gamut from conservative Sen. Rand Paul (R-Ky) to progressive Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.).

Getting everyone behind a bill could prove a tall order, especially as some Republicans like Paul are committed to repealing ObamaCare, not repairing it.

  1. Should we back legislation to make key payments to insurers?

Insurers are desperate to know whether they’re going to continue to receive critical ObamaCare payments from the federal government.

President Trump has threatened to halt the payments, which compensate insurers for subsidizing out-of-pockets costs for certain healthcare consumers.

But Congress could take the matter out of his hands by authorizing the payments the administration has been making on a monthly basis, which total about $7 billion for fiscal 2017.

Even if Trump doesn’t halt the cost-sharing reduction payments, a yearlong appropriation from Congress would give insurers certainty that they’ll continue to receive the funds.

Republicans are divided on what to do.

Many say the ObamaCare marketplaces need to be stabilized and are open to funding the payments. Alexander took the first concrete step forward to do so, saying that any stabilization package his committee produces should fund the payments.

But conservatives are vehemently opposed.

“I think it is a mistake to simply go forward with bailouts for big insurance companies,” Cruz said. “For whatever reason, the Democrats’ central priority seems to be providing billions of dollars in subsidies and bailouts to giant insurance companies.”

  1. What’s to be done with CHIP?

Time is of the essence for Congress to reauthorize the Children’s Health Insurance Program (CHIP). Funding is set to expire Sept. 30.

CHIP has historically had bipartisan support, and the Senate Finance Committee announced on Thursday it would hold a post-recess hearing on CHIP.

Congress last reauthorized the CHIP program in 2015 as part of a broader health package.

However, for Republicans still searching for a way to pass provisions of their failed ObamaCare repeal legislation, the authorizing legislation may be a tempting vehicle.

If CHIP funding expires, states will be forced to make difficult decisions about coverage. Millions of families would have to find other sources of insurance for their children at a time of uncertainty around the stability, availability and affordability of other types of coverage.

  1. What’s to be done with ‘bare’ counties?

Insurance commissioners have a big fear: That the ObamaCare health marketplaces will open for business, but people in some areas won’t have any plans to choose from.

This scenario has never happened before, but as of Friday, 17 counties have zero insurers committed to their exchange, according to Kaiser Family Foundation.

The deadline to participate is looming. Insurers sign contracts with the federal government at the end of September, saying they’ll offer plans on the ObamaCare exchanges.

If the Senate Health Committee is able to meet its goal — hammering out a bipartisan short-term stabilization bill by mid-September — then that could help prevent more insurers from fleeing the marketplaces.

And behind the scenes, insurance commissioners have been offeringinsurers previously unheard of flexibilities to keep or entice them into the marketplaces.

Congress is aware of the situation, and has proposed several other solutions.

One bill from Tennessee’s Republican senators, Bob Corker and Alexander, would let people use their ObamaCare subsidies to purchase plans off the exchange — that is, if they live in a “bare county” without any ObamaCare plans to buy.

A counter bill from Sen. Claire McCaskill (D-Mo.) would allow those in bare counties to buy coverage on Washington, D.C.’s exchange, where Congress members and their staff purchase insurance.