While Senate Republicans are drafting their healthcare plan behind closed doors, they’ve given reporters a general idea of what might be in it.
The bill is shaping up to have a similar structure as the House’s bill, while more reflecting the principles of centrist Republicans in both chambers.
Senators are still hashing out the specifics, but here’s a look at where they appear to be headed.
As the ad hoc committee of 13 Republican senators rethinks the increasingly unpopular American Health Care Act, Congress and the administration face a more pressing question. Will they stabilize the individual insurance market for 2018?
Preliminary rate filings for next year suggest that some states are entering the first phases of the much-dreaded death spiral, where rising rates and declining enrollments feed on each other to climax in a collapsed market. Where last year it was mostly rural areas that suffered from a dearth of carriers offering exchange plans, major urban areas like Kansas City and Knoxville, Tenn., are now among the regions reporting no insurers interested in offering coverage.
Meanwhile, carriers are requesting double-digit rate hikes in many areas of the country. Increase requests as high as 50% have been reported.
Republicans blame the Affordable Care Act. But, in fact, blame rests squarely with the Trump administration and the Republican-controlled Congress, who’ve created tremendous uncertainty around the policies that make the ACA’s individual market work.
The biggest single problem is Congress’ failure to appropriate the $7 billion owed insurers for underwriting cost-sharing reductions for low-income plan purchasers. That affects about 7 million of the 13 million people who signed up for individual plans.
Last year, Congress also put a one-year hold on the surcharge on health insurance premiums that supports ACA subsidies. Without further action, the tax, which was slated to raise about $100 billion over the next decade, will go into effect in 2018.
From a budgetary perspective, the move is a wash. The increased tax collection will be offset by the increased subsidies given low-income people who buy plans. People who are unsubsidized—those most likely to be bitter opponents of Obamacare—will be hit dollar-for-dollar with the rate hike.
President Donald Trump also contributed to uncertainty over next year’s enrollment period. First, he halted media promotion of the 2017 open enrollment. Then, in February, he issued an executive order waiving the individual mandate, which is key to getting millions of younger, relatively healthy people into the individual market pool.
While Politico reported last month that the Internal Revenue Service didn’t carry out the president’s order this year, the atmospherics around these pronouncements will ensure that fewer people sign up for individual plans in 2018. Insurers are assuming they will be covering an older, sicker population, a surefire path to higher rates.
Last week, Bradley Wilson, CEO of Blue Cross and Blue Shield of North Carolina, dissected how these compounding uncertainties contributed to its request for a 22.9% rate hike. About half the increase came from the missing cost-sharing reduction subsidies; about a third from an expected increase in medical losses, driven by rising costs and a sicker pool; and the rest from the expected tax.
This Republican Congress and the administration could quickly solve these problems without sacrificing their political principles. The administration could signal it will enforce the mandate since it is still the law. Congress could appropriate the money for the cost-reduction subsidies. This would preserve the House’s lower court victory in its suit challenging the Obama administration’s lacking an appropriation.
And, in a nod to their goal of protecting people with pre-existing medical conditions, Congress could create a reinsurance program to cover the extraordinary expenses of high-cost patients in the individual market. Unlike state-run high-risk pools, which have never worked, a federally funded reinsurance program would preserve everyone’s access to health insurance in the individual market at affordable rates.
It’s up to Congress now. Insurers face a June 21 deadline for notifying HHS about participation in the exchanges, and final rates are due from states by Aug. 16; there’s not much time to act. We’ll soon find out if Trump and this Congress intend to deny millions of people access to affordable health insurance next year.
http://www.healthleadersmedia.com/health-plans/ahca-defeat-not-end-repeal-efforts-analysts-say
he American Health Care Act (AHCA) may have been scrapped, but that doesn’t mark the end of efforts to repeal the Affordable Care Act (ACA).
Instead, opponents will likely take a piecemeal approach to dismantling the ACA through administrative action, analysts said.
The Trump administration is unlikely to renew its push to repeal and replace the ACA through a single bill like the AHCA, but may attempt to water down elements of healthcare reform through administrative actions designed to reduce federal subsidies and weaken health insurance exchanges.
The War Isn’t Over
“This is an enormous, significant defeat, but I don’t think the war on the ACA is over yet,” said Gerald Kominski, PhD, director of the UCLA Center for Health Policy Research.
“Of course, the White House can disrupt the Affordable Care Act by issuing regulations that destabilize the market and make it more difficult to renew [coverage] or enroll for the first time.”
In January, the Trump administration took actions along those lines when it cut federal funds designed to help state health exchanges advertise and reach consumers with notices about the annual deadline for open enrollment.
The Trump administration could attempt to reduce or eliminate federal subsidies and take other actions to weaken state and federal health insurance exchanges, said Micah Weinberg, president of the Bay Area Council Economic Institute.
“First, the Trump administration needs to decide whether they want to burn down the house we’re all living in through regulatory actions that will end the viability of the exchanges,” said Weinberg. “If they want to destroy the thing, they can. So the ACA is very much not out of the woods.”
Insurance commissioners are pulling out all the stops to keep insurers from leaving their states amid uncertainty over ObamaCare’s future.
They are offering insurers new, previously unheard of flexibilities to try to keep them in the market.
But the effort faces an uphill climb, given the Trump administration’s wobbling over whether it will continue federal payments that compensate insurers for subsidizing out-of-pocket costs for lower-income households. There’s also the question of whether Congress will repeal ObamaCare this year.
Insurers are skittish and pleading for certainty from Washington. They want assurances that they will continue to receive cost-sharing reduction payments from the federal government, which total about $7 billion this year.
But no such promise appears forthcoming, prompting insurance commissioners to try and hold things together with later filing deadlines for enrollment and new concessions to insurers.
“As a regulator, instead of being rigid on timelines, the type of pricing I’m going to want, I’m being more open about this,” said John Franchini, New Mexico’s insurance superintendent. “I’m trying to be more flexible to give them confidence that if things change, we as regulators will be flexible with them.”
The biggest fear of the insurance commissioners is having every carrier pull out of a market, leaving people with no ObamaCare plans to buy. It’s a situation that hasn’t happened before, but could happen this year.
In several states, such as California, companies can file two different sets of premium requests: one for the continuation of ObamaCare — such as cost-sharing reduction payments and the enforcement of the individual mandate — and one for if both are discontinued.
“Based on what we were hearing from insurers, we anticipated Trump rates would be double-digit increases over the past year,” California Insurance Commissioner Dave Jones said. “I wanted to give insurers the opportunity to file rates based on Trump.”
Insurers are facing imminent deadlines in many states to submit their preliminary premium requests and state whether they’ll stay in the market. They also face a June 21 deadline to tell the federal government whether they’ll participate in ObamaCare next year.
Researchers compared health insurers’ profitability in 2013 and 2014, the years before and after the introduction of the Affordable Care Act’s (ACA) insurance marketplaces. The median loss for insurers overall in both years was 4 percent. Insurers performed better in states that operated their own health insurance marketplaces than in states that used the federal marketplace, with the difference largely driven by medical loss ratios.
“Millions of newly covered beneficiaries presented insurers a golden business opportunity, but the new restrictions on medical underwriting meant that insurers faced uncertain actuarial risk in pricing their products.”
The ACA changed the dynamics of the individual health insurance market with rules intended to expand coverage and reforms to how individual insurance is priced and sold. In the years since the law went into effect, there have been concerns over insurers’ profitability, as some companies have sustained losses or left the market entirely. A Commonwealth Fund–supported study published in Medical Care Research and Review examined insurers’ key financial measures over two years (2013 and 2014) to assess profitability, identify factors driving financial performance, and compare performance in states that ran their own health insurance marketplace and those that used the federal marketplace.
The authors conclude that the ACA’s implementation in 2014 “did not substantially disrupt the individual market among existing insurers of credible size.” However, they noted differences, largely driven by medical loss ratios, between states that operated their own marketplaces and those using the federal marketplace. Factors that likely contributed to higher profitability include:
By focusing on the more manageable of these factors, like expanding outreach and enrollment efforts or improving actuarial projections, states might be able to improve the financial outlook for insurers participating in the marketplaces, the authors say.
The authors used two data sets maintained by the Center for Consumer Information and Insurance Oversight, based on mandatory reporting by all regulated health insurers. The final sample included 144 insurers with a total of 7.8 million members. The authors looked at medical loss ratios, administrative costs, and operating profit.
The median insurer reported losses of 4 percent in the individual market in both 2013 and 2014, suggesting that the ACA did not substantially disrupt the individual market among established insurers.
President Trump is pressuring Congress to sink parts of the Affordable Care Act. But now that the first attempt at a GOP health-care overhaul has failed, he must decide whether to throw the law a line.
The White House and Republican lawmakers are facing key decisions that could either improve the insurance marketplaces established by the ACA next year or prompt insurers to further hike rates or withdraw from those marketplaces entirely. Republicans had hoped to protect those with marketplace coverage while lawmakers replaced Obamacare.
But with that effort hitting a wall, Trump and his health-care decision-makers are in a bind: They can either let the current system fail and risk raising the ire of 11 million Americans who use the marketplaces, or help stabilize Obamacare and potentially make it harder for Republicans in Congress to abandon the law itself.
“It’s an awkward political environment, there’s no question about it,” said Lanhee Chen, a health-policy expert and former adviser to 2012 presidential candidate Mitt Romney.
Republican objections to the ACA naturally lead them away from assisting it, but the party now bears some responsibility for what happens to it, Chen added.
“The reality of this is Republicans will face some political repercussions for what happens to Obamacare,” he said.
Trump and other Republicans have long predicted a so-called death spiral for the state-based marketplaces set up under President Obama’s signature domestic achievement. Trump has often tweeted and said on the campaign trail that the law will “die of its own weight.” He shrugged off the recent failure of the GOP health-care bill by saying the law is “exploding” anyway.
“The best thing we can do, politically speaking, is let Obamacare explode,” Trump said in the Oval Office last month. “It’s exploding right now.”
The dire predictions have partially come true: Although some state marketplaces offered multiple plan options and only modest premium raises last year, many others provided only one plan choice and double-digit premium hikes. Next year’s outlook is still unclear, but it’s unlikely the marketplaces will suddenly attract a better mix of healthy enrollees to help lower costs.
If the marketplaces further deteriorate, Republicans may take the fall, surveys show. A recent Kaiser Family Foundation poll found that a majority of Americans will now blame Republicans, not Democrats, for marketplace problems, because the GOP spent the past seven years promising to fix and replace the system.
That reality is forcing Republicans, including Trump, to seriously consider a half-dozen actions that could help improve — or at least sustain — the marketplaces where Americans without employer-sponsored plans buy coverage.
“Looking at next year, if we imagine that the marketplace right now is, say, a C-minus, there are several things that need to be done to just preserve it at its C-minus level,” said Mike Adelberg, who under Obama directed the Center for Consumer Information and Insurance Oversight established at the Department of Health and Human Services.
There is a list of actions the administration must decide whether to take to keep the marketplaces humming, most of them through regulatory actions at the Health and Human Services Department or through the Internal Revenue Service.
The actions center on three programs: cost-sharing reductions, reinsurance and risk corridors. Cost-sharing refers to government subsidies to low-income Americans to help them pay for insurance. Trump threatened recently to let such subsidies lapse, but Democrats say they will shut down the government as part of the spending negotiations next week if the president follows through.
Administration officials and lawmakers are still deciding how to handle the issue. A White House spokesman said only that “no decisions have been made at this time.”
Reinsurance and risk corridors are two programs set up under the ACA to redistribute funds from insurers with healthier enrollees to insurers with sicker, more expensive customers.
The marketplaces could also be hurt or helped depending on whether the IRS enforces the ACA’s individual mandate to buy coverage and whether the administration enforces new, tighter rules around enrollment.
Death By 1,000 Cuts: How Republicans Can Still Alter Your Coverage
The Affordable Care Act’s worst enemies are now in charge of the vast range of health coverage it created. They’re also discussing changes that could affect a wider net of employment-based policies and Medicare coverage for seniors.
Republicans failed last month in their first attempt to repeal and replace the ACA. But President Donald Trump vows the effort will continue. Even if Congress does nothing, Trump has suggested he might sit by and “let Obamacare explode.”
In California, which has extended coverage to more than 5 million residents under the ACA, fear of losing those gains is a big part of the reason why many of the state’s political leaders, consumer advocates and labor unions are pushing plans for universal health care.
Nationwide, health insurance for the 20 million people who benefited from the ACA’s expanded coverage is especially at risk. But they’re not the only ones potentially affected. Here’s how what’s going on in Washington might touch you.
A 3-year-old lawsuit threatens many plans.
A suit by the Republican-led House challenges some subsidies supporting private plans sold to individuals and families through the ACA’s online marketplaces, also called exchanges. It has already gained one court victory. By many accounts, it would wreck the market if successful, stranding up to 12 million without coverage.
“It’s the single-biggest problem facing the exchanges,” said Rachel Sachs, a health law professor at Washington University in St. Louis. “That would make insurers not only exit tomorrow but also not want to offer plans in 2018.”
The litigation involves lesser-known ACA subsidies that reduce out-of-pocket costs such as copayments and deductibles for lower-income consumers. These are different from the law’s income-linked tax credits, which help pay for premiums.
Filed in 2014, when Barack Obama was president, the suit could backfire by politically harming the Republicans now in charge. House leaders have delayed the litigation and said they won’t drop the lawsuit but will continue the subsidies while it gets considered. The administration has not said how it plans to handle the lawsuit.
Policy confusion undermines coverage.
Even if Congress doesn’t repeal the ACA, the continuing battle makes insurance companies think twice about offering marketplace policies for next year. The less clarity carriers have about subsidies and whether the administration will promote 2018 enrollment, the likelier they are to bail or jack up premiums to cover themselves.
Preserving the subsidies, which limit out-of-pocket costs for lower-income consumers, “is essential,” said Kevin Lewis, CEO of Community Health Options, a nonprofit Maine insurer. “Markets don’t like uncertainty. The ‘sword of Damocles’ hanging over our collective heads is unsettling, to say the least.”
Democrats say Republicans are sabotaging Obamacare.
Shortly after taking power, Trump officials yanked advertising designed to maximize enrollment in marketplace plans just before a Jan. 31 deadline. It was partly restored after an outcry.
Then the administration said it would scrap an Obama-regime plan of rejecting tax returnsfrom individuals who decline to say whether they had health insurance — weakening the requirement to be covered.
Trump aide Kellyanne Conway suggested in January the administration might entirely stop enforcing that requirement — the part of the law most hated by Republicans. If officials persist with that message, plans could attract even fewer of the young and healthy members whose premiums are needed to support the ill. That would cause more rising premiums and insurer exits.
http://www.latimes.com/opinion/la-ol-trump-obamacare-exchanges-20170215-story.html
With the drive to “repeal and replace” Obamacare losing steam, the Trump administration quietly moved to shore up a key feature of the healthcare law this week: the state exchanges where people shop for non-group coverage. And to its credit, Trump’s Department of Health and Human Services zeroed in on some of the factors that have led a handful of major insurers to leave the exchanges.
But before you praise (or condemn) Trump for coming to Obamacare’s rescue, consider this: Another arm of the new administration has taken a step that could undo much of the work the department is trying to do, and leave the exchanges no better off — and possibly in worse shape — than they are today.
The real threat to the exchanges’ health remains the specter of Congress enacting a law that repeals all or part of Obamacare in two or three years. Planting such a legislative time bomb would have an immediate impact, sending the market for non-group insurance policies quickly into chaos, according to analysts from both sides of the political spectrum. As John Rother of the pro-Obamacare National Coalition on Health Care put it, “[N]o market stabilization effort can succeed if policymakers disrupt existing coverage arrangements rather than improving on them.”
A core problem for the exchanges, which serve people not covered by a large employer’s group health plan, is that the people shopping there are running up larger healthcare bills than insurers expected. That’s resulted in losses for many insurers, persuading some to withdraw from the market and others to jack up premiums sharply.
Some critics argue that these trends are signs of Obamacare’s impending doom; the law’s supporters say they’re just growing pains, and there’s still plenty of evidence that the exchanges are sustainable (albeit with some adjustments). California’s experience is a case in point — its exchange, Covered California, still offers shoppers two or more options in every region, and its premium increases have been modest compared to the rest of the country’s.
Unlike some of the other major for-profit health insurers, Centene has no plans to consider exiting the Affordable Care Act exchanges in 2018.
“I’m not backing off at all,” CEO Michael Neidorff said during the company’s fourth-quarter earnings call Tuesday. In recent discussions with the company’s board members, he said, “everybody is of one mind; you maintain business as usual.”
Recently, the CEOs of Anthem and Cigna both indicated they are still deciding whether to participate on the exchanges in 2018. Aetna, meanwhile, does not plan to re-enter any markets in 2018 after pulling out of many in 2017.
As of Dec. 31, Centene served about 540,000 exchange members, in line with its expectations, and it anticipates having a little more than 1 million paid members in 2017. Indications are that the demographics of these members will be consistent with years past, with 90% of them subsidy-eligible and most on silver-tier plans, Neidorff said.
While Centene is folding an “extra level of conservativism” into its expectations for its exchange products to guard against any uncertainty, it continues to expect that line of business to be profitable this year, he added.
Another ACA provision, Medicaid expansion, has also proved profitable for Centene. At the end of 2016, it had 1,080,500 members in Medicaid expansion programs in 10 states, compared to 449,000 members at the end of 2015, according to the company’s earnings statement.
America’s Health Insurance Plans CEO Marilyn Tavenner testifies during Wednesday’s Senate hearing on the state of the individual marketplaces.
Expert witnesses warned lawmakers during a Senate hearing Wednesday that if they fail to ensure a stable transition while repealing and replacing the Affordable Care Act, they risk worsening the already unstable individual marketplaces.
“Insurance markets do not respond well to uncertainty,” Julie McPeak, Tennessee’s commissioner of commerce and insurance and president-elect of the National Association of Insurance Commissioners, testified at hearing held by the Senate Health, Education, Labor and Pensions Committee. “As you consider ACA reforms, it’s critical to remain transparent and to minimize surprises in our insurance system.”
For his part, Committee Chairman Sen. Lamar Alexander, R-Tenn., asked McPeak how quickly Congress needs to act in order to shore up the marketplaces enough for insurers to feel comfortable participating in 2018.
“I think you need to provide some indication to plans as quickly as possible, but March would be extremely helpful,” McPeak said, noting that insurance carriers have to file their rates by early spring. Janet Trautwein, CEO of the National Association of Health Underwriters, agreed, saying action is needed by late March at the latest.
“Right now, plans are trying to price for ‘18, and the uncertainty around cost-sharing subsidies and the tax credits would cause them to hesitate to price because we need to understand what the funding support is going to be, because that affects premiums,” America’s Health Insurance Plans President and CEO Marilyn Tavenner added.
Thus, she pointed to suggestions AHIP has previously made public, such as making full reinsurance payments for 2016, and continuing to provide premium subsidies and cost-sharing reductions through at least 2018. “Absence of this funding would further deteriorate an already unstable market and hurt the millions of consumers who depend on these programs for their coverage,” Tavenner said.
But that isn’t enough to ensure a stable and workable transition away from the ACA, Tavenner noted. Other necessary steps include recalibrating premium subsidies to encourage more young people to participate, federal risk pool funding and continuous coverage incentives.
HENRY KOTULA 