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As Congress prepares to get back to business, the industry is holding its collective breath to see if healthcare reform will fall off the agenda. It’s pretty clear that rushing through repeal, replace or repair legislation or letting the Affordable Care Act fail isn’t the answer. In this special report, FierceHealthcare’s editors—experts on the business of healthcare—outline ways to fix the nation’s healthcare system.
https://morningconsult.com/2017/08/18/time-crunch-among-hurdles-bipartisan-senate-push-bolster-aca/
The leaders of a key Senate committee say they are cautiously optimistic about reaching a deal to shore up the Affordable Care Act’s individual marketplaces, but even with a bipartisan effort, it is far from certain whether they can hash out an agreement in time.
The Senate Health, Education, Labor and Pensions Committee leaders of both parties have set a self-imposed mid-September deadline for a bipartisan agreement. To keep lingering animosity from the Obamacare repeal fight from seeping into negotiations, Chairman Lamar Alexander has made clear that what he’s seeking is far from comprehensive.
The bill will have to be “small, bipartisan and balanced,” the Tennessee Republican said in a statement Wednesday.
Above all, Democrats want to make sure insurers continue to receive payments that help them cover out-of-pocket costs for some low-income patients. President Donald Trump has threatened to cut off the payments, and the administration has kept insurers on tenterhooks by making them only on a month-to-month basis.
Without the subsidies, known as cost-sharing reductions, some insurers warn they’ll be forced pull out of the ACA markets or hike premiums. The companies need certainty about payments at the latest by Sept. 27, the final deadline for them to decide whether to sell Obamacare plans in 2018.
If the committee can reach agreement next month, it would still be a challenge to get a bill through the full Senate and House before the key deadline for insurers. And Trump would still have to sign a bill into law that extends payments he is loath to continue.
The potential for chaos was highlighted this week when the nonpartisan Congressional Budget Office released a report estimating average premiums would rise 20 percent next year and the federal deficit would grow by $194 billion by 2026 if the administration stops paying.
While some conservative hard-liners want to cut off the CSRs, Alexander and other top Republicans have shown they’re willing to work with Democrats to have Congress extend the payments.
Sen. Patty Murray of Washington, the panel’s ranking Democrat, on Thursday called for quick action.
“People across the country are facing much higher premiums next year because of uncertainty driven by the Trump Administration, so I hope Republicans will join Democrats to act quickly to protect patients and families from paying more for care they need — and then continue working in a bipartisan way to make health care more affordable, accessible, and higher quality for all,” Murray said in a statement.
Democrats also want some sort of reinsurance program, an idea that has bipartisan support and would help insurers pay for their most expensive enrollees.
But in return for extending CSRs and including reinsurance, Republicans want to give states more authority over their health care systems, and Democrats could balk at some of their proposals.
Alexander has specifically pointed to changing the ACA’s 1332 waiver program, which allows states to opt out of key ACA regulations as long as it doesn’t lead to reduced coverage, skimpier benefits, more expensive insurance or a higher federal deficit.
In remarks to reporters earlier this month, Alexander noted a proposal that would eliminate all of those requirements besides increasing the federal deficit, in order to give states “more of an opportunity to approve insurance plans.” The plan, which was included in Senate Republicans’ health overhaul bill, would also bar the administration from rejecting a waiver as long as it doesn’t increase the federal deficit.
Democrats would likely oppose that proposal, wary of allowing states to undercut key Obamacare requirements without those other conditions in place.
Sen. Tim Kaine (D-Va.) said he’s interested in a proposal from Sens. Bill Cassidy (R-La.) and Susan Collins (R-Maine) to let states replace Obamacare’s most contentious provision — the mandate requiring people to purchase health insurance or pay a penalty — with a system that automatically enrolls individuals in low-cost coverage if they don’t do so on their own.
Backers of this approach argue it would offer comparable coverage to the individual mandate while being less intrusive, allowing people to opt out.
“I think that’s intriguing,” Kaine said earlier this month in a brief interview. “We ought to have that discussion, but you can’t blow the mandate without something to bring people into the program and do what insurance needs to do, which is to spread risk.”
But auto-enrollment has raised concerns among some liberal health care analysts, including over how to implement and administer such a system. The outstanding questions cast doubt on whether it could garner enough backing to be included in the stabilization bill.
THE CONGRESSIONAL Budget Office released on Tuesday yet another damning report on health care, this time highlighting the damage President Trump will do if he continues his Obamacare sabotage campaign. Over the next few weeks, during which the government and insurers must sort out what will happen to Obamacare insurance markets next year, everyone in the administration and every member of Congress must recognize that they have no more time to entertain repeal-and-replace fantasies. The fate of the health-insurance markets on which millions of people rely hangs on their willingness to accept reality.
The Trump administration has shown some flexibility. The Department of Health and Human Services last week offered insurers an extra few weeks to file rates for next year. Earlier, Alaska got $323 million in federal money to backstop its individual insurance market in a reinsurance arrangement that could drive down premiums and serve as a model for stabilizing insurance markets across the nation. Though Mr. Trump has repeatedly vowed to let Obamacare collapse, these moves show willingness to bolster, not undermine, the insurance markets that Obamacare created.
Yet the administration has stoked more uncertainty than it has allayed, leaving the health system in peril. The White House has been deciding month-to-month whether to keep important subsidy payments flowing to insurance companies — payments that were simply assumed during the Obama administration. Without these payments, insurers would have to jack up premiums or leave Obamacare markets next year. The CBO estimated Tuesday that average premiums would jump by 20 percent next year if the Trump administration pulled them. Moreover, because of how the payments interact with other elements of the health-care system, the government would end up losing money — $194 billion over a decade.
Though it would be irrational to subvert the health-care system and the budget, Mr. Trump has repeatedly threatened to do so. His officials also have taken steps in that direction, pulling advertisements meant to encourage people to enroll in health insurance, cutting programs that helped people sign up, railing about Obamacare’s “victims” and generally insisting, against the facts, that the law is a disaster. The administration’s moves to weaken the individual mandate, which requires all Americans to carry health coverage and underpins the Obamacare system, have led insurers to contemplate increasing premiums or leaving the system.
The president wanted and failed to overhaul Obamacare. That does not excuse him from faithfully executing the law. Unless Mr. Trump wants to be blamed for health-care chaos, the administration’s mixed messages must stop. Mr. Trump should commit to keeping the subsidies going permanently, to enforcing the individual mandate and to working with Congress on a bipartisan bill that would bolster insurance markets.
The broad strokes are clear: Democrats would ensure that subsidy payments are made permanent and Republicans would get more flexibility for states in administering Obamacare. More money should also go into reinsurance programs like Alaska’s. Though such a bill might come too late to hold down 2018 premiums, serious legislative activity could persuade insurers to stay in the market, riding out next year with the promise of a more stable situation in 2019.
All of this would be easier if the administration would commit to a strategy of stewardship, not sabotage.
Covered California’s board made several multimillion-dollar decisions Thursday, all addressing one unsettling theme: uncertainty.
Over and over, board members blamed “uncertainty” at the federal level for interfering with their ability to finalize premiums for 2018 and prepare consumers for open enrollment, which begins Nov. 1.
In response to that uncertainty, the board agreed to delay a critical decision on 2018 rate hikes, boost Covered California’s marketing budget by more than $5 million and allow its participating insurers to make higher profits in the future — under certain circumstances.
“The lack of clarity and direction at the federal level continues to be a challenge,” said Covered California Executive Director Peter Lee. “While we are doing our best to manage a difficult situation, we hope Congress and the administration will provide clear guidance on how [they intend] to stabilize the individual insurance market.”
One of the most pressing questions facing Covered California and other Obamacare exchanges across the country is whether President Donald Trump will continue to fund critical subsidies that help reduce many consumers’ out-of-pocket expenses.
The White House announced this week it would fund those so-called cost-sharing reduction payments this month but did not say whether it would continue to do so after that.
Covered California is seeking a long-term commitment to fund the subsidies, which are available only to consumers whose incomes are low enough to qualify and who purchase silver-level plans, the second-least expensive among the exchange’s four tiers of coverage. The subsidies reduce what they pay for medical expenses such as copayments and deductibles.
Earlier this month, the exchange announced proposed average statewide rate hikes of 12.5 percent for 2018. It also floated an additional average surcharge of 12.4 percent on silver plans if the federal government does not commit to making the payments.
Covered California was supposed to decide by the end of this month whether to apply the surcharge next year. But on Thursday, its board announced it will push the deadline to Sept. 30.
“Our hope is that by changing the deadline to allow Congress to act, we will not have to deal with the … surcharge,” Lee said.
The surcharge would vary by region and plan, ranging from 8 percent to 27 percent — on top of the regular annual premium increases, Lee said.
Covered California consumers who receive tax credits to reduce their monthly premiums would not bear the full brunt of the increase, however, because those credits would also rise.
Delaying the decision until the end of September doesn’t leave much time for Covered California — its health plans — to finalize rates and prepare consumers to renew their health plans or shop for new ones, said Diana Dooley, board chair and secretary of the state Health and Human Services Agency.
But the board doesn’t want to raise silver plan rates prematurely, in case Congress acts next month to fund the cost-sharing subsidies on a more durable basis, she said.
If Congress doesn’t act until the very end of September, “that will put extraordinary pressure on our system,” she said.
Charles Bacchi, president and CEO of the California Association of Health Plans, said 1.2 million renewal packets will have to be dispatched to enrollees on a very tight timeline.
“It is going to be a heavy lift, but the plans will work to do the best we can under difficult circumstances,” he said.
The board also agreed to modify its contracts with participating insurers to allow them to make higher profits in 2019, 2020 and 2021 if they lose money next year as a result of continued uncertainty or changes in existing federal policy.
For example, one way insurers could lose money is if the federal government stops enforcing the Obamacare requirement to have health insurance, known as the individual mandate, Covered California said.
The change also requires plans that reap increased profits next year — again, because of uncertainty or changes in federal policy — to lower their premiums over the next one to three years.
Lee explained that Covered California’s insurers usually make a profit of about 1 to 3 percent annually. But, for example, if one should lose money next year, its profit margin could grow to 6 to 8 percent in the subsequent three years, he said.
Any profit increase would be decided on a case-by-case basis and depend on the amount of the loss, he said.
The contract amendment would not change any laws or violate any rules, such as the Medical Loss Ratio provision of the Affordable Care Act, Lee said. That provision requires most insurance companies that cover individuals and small businesses to spend at least 80 percent of their premium dollars on medical care and the remaining 20 percent on administration, marketing and profit.
Consumer advocates testified Thursday that they were initially skeptical of the change, but they now hope it will save consumers money in the long run.
“We like the idea that it is balanced and if [there is profit], it could go to reducing premiums,” said Doreena Wong, project director at Asian Americans Advancing Justice, a Los Angeles-based civil rights group.
In another move tied to the uncertainty over federal policy, the board agreed to increase its marketing budget by $5.3 million, bringing the total to $111.5 million for 2017-18. The additional money will pay for more radio and television spots, and more direct mail to consumers.
Some of the advertising will target Covered California enrollees who are losing their Anthem Blue Cross plan next year.
Anthem will exit the individual market in 16 of the state’s 19 pricing regions, which will force 153,000 enrollees to find new plans. Anthem cited uncertainty and market instability for its pullout.
“This open enrollment is going to be our most challenging since year one,” Lee said.
If Congress abandons efforts to repeal and replace the Affordable Care Act (ACA), President Trump has said he would “let Obamacare fail.” This Q&A examines what could happen if the Affordable Care Act, also called “Obamacare,” remains the law and what it might mean to let Obamacare fail.
The Affordable Care Act was a major piece of legislation that affects virtually all payers in the U.S. health system, including Medicaid, Medicare, employer-sponsored insurance, and coverage people buy on their own. One of the biggest changes under the health reform law was the expansion of the Medicaid program, which now covers nearly 75 million people, about 14 million of whom are signed up under the expansion. Most Americans, including most Republicans, believe the Medicaid program is working well.
When people talk about the idea of the ACA failing, they are usually referring to the exchange markets, also called Marketplaces. These markets, which first opened in 2014, are part of the broader individual insurance market where just 5-7% of the U.S. population gets their insurance. People who get insurance from other sources like their work or Medicaid are not directly affected by what happens in the individual insurance market.
The exchange markets have not been without problems: There have been some notable exits by insurance companies and premium increases going into 2017, and in the early years of the exchanges, insurers were losing money. The structure of the ACA’s premium subsidies – which rise along with premiums and cap what consumers have to pay for a benchmark plans a percentage of their income – prevents the market from deteriorating into a “death spiral.” However, premiums could become unaffordable in some parts of the country for people with incomes in excess of 400% of the poverty level, who are ineligible for premium assistance.
Insurer participation in this market has received a great deal of attention, as about 1 in 3 counties – primarily rural areas – have only one insurer on exchange. Rural counties have historically had limited competition even before the ACA, but data now available because of the Affordable Care Act brings the urban/rural divide into sharper focus. On average at the state level, competition in the individual market has been relatively stable – neither improving nor worsening.
Premiums in the reformed individual market started out relatively low and remained low in the first few years – about 12% lower than the Congressional Budget Office had projected as of 2016 –before increasing more rapidly in 2017. Most (83%) of the 12 million people buying their own coverage on the exchange receive subsidies and therefore are not as affected by the premium increases, but many of the approximately 9 million people buying off-exchange may have difficulty affording coverage, despite having higher incomes. As might be expected, after taking into account financial assistance and protections for people with pre-existing conditions, some people ended up paying more and others paying less than they did before the ACA. Our early polling in this market found that people in this market were nearly evenly split between paying more and paying less. About 3 millionpeople who remain uninsured are not eligible for assistance or employer coverage and many of them may be going without coverage due to costs.
Our recent analysis of first quarter 2017 insurer financial results finds that the market is not showing signs of collapse. Rather, insurers are on track to be profitable and the market appears to be stabilizing in the country overall. In other words, those premium increases going into 2017 may have been enough to make the market stable without discouraging too many healthy people from signing up. However, there are still markets – particularly rural ones – that are fragile.
Despite signs that the individual insurance market is generally stabilizing on its own, certain administrative actions could cause the market to destabilize again. Actions the Administration might take that would weaken the market include:
The individual mandate is the Obamacare requirement that most people either have insurance or pay a penalty. The purpose of it is to get young and healthy people into the market to bring down average costs. If there are not enough young and healthy people signing up, insurers have to raise premiums. If the administration signals it will either stop enforcement of the individual mandate or give broad exemptions, insurers will respond by raising premiums or exiting the market. The Congressional Budget Office (CBO) estimates that without the individual mandate, premiums in the individual insurance market could rise by 20%.
The individual market is often a transitional source of insurance when life circumstances change. People who are temporality unemployed, in school, or early retirees make up a substantial share of the individual market. Additionally, people in this market often experience income volatility and may cycle between Medicaid and subsidized exchange coverage. Those who are sick will be most likely to seek insurance coverage on their own when they go through a change in life circumstances, but outreach and consumer assistance programs – particularly those targeted at young and healthy individuals – can help balance out the risk pool and bring down average costs.
This coming open enrollment period (November 1 – December 15, 2017) is shorter than previous periods and may require more outreach to get people signed up before the deadline. This will also be the first enrollment period run from start to finish by the Trump administration and it is not yet clear how much outreach the administration will take on. Toward the end of the last open enrollment period, the Trump administration cut marketing and more recently has used outreach funds for messages critical of the health care law.
Under the Affordable Care Act, insurers are required to offer low-deductible plans to low-income people (58% of marketplace enrollees benefit from these cost-sharing subsidies). For the lowest-income enrollees, these subsidies can bring down the deductible from a few thousand dollars to a couple hundred dollars (Figure 2 below). Providing these higher-value plans to low-income enrollees costs insurers more money (an estimated $10 billion dollars in 2018), so under the ACA the federal government reimburses insurers in the form of a cost-sharing subsidy payment. However, these payments are the subject of a lawsuit and the Administration has signaled they might stop making payments.
If these payments stop, we estimate that insurers would need to raise rates on silver-level plans – which are the only plans where consumers can access cost-sharing reductions – by 19 percent, with states that did not expand Medicaid (primarily red states) facing higher premium increases (Figure 3 below). Lower-income marketplace enrollees receiving premium subsidies would be protected from premium increases because subsidies would rise as well. However, higher-income enrollees not receiving premium subsidies would face higher premiums if insurers expect cost-sharing subsidy payments to end.
The combined effect of these policy changes (not enforcing the individual mandate and defunding cost-sharing subsidies) could cause some insurers to raise premiums on some plans by as much as 40 percentage points higher than they otherwise would. Because premium subsidies increase as premiums rise, administrative actions that cause premiums to rise can also cause taxpayer costs to increase. For example, we estimate that ending cost-sharing subsidy payments could increase net federal costs by about $2.3 billion per year.
Insurers have already submitted their preliminary premiums for the upcoming calendar year to state regulators. Since there has not been clarity on these issues, some insurers are already assuming that the Trump Administration or Congress may take an action that would destabilize the market. Some companies have either significantly raised premiums for next year, scaled back their footprints, or made plans to exit the exchange or individual market all together. Insurers are still negotiating rates for 2018, so if they do not get clarity soon, premiums could go up even more or more insurers could leave.
Again, these premium increases would only affect people who buy their own insurance (particularly middle-income or upper-middle-income people who buy their own insurance without a subsidy to offset the costs), and this group does not make up a large share of the American public. Nonetheless, more insurer exits or large premium increases on the exchange markets could be seen as Obamacare failing. It is worth noting, though, that a majority (64 percent) of the public – including 53 percent of Republicans – say that because President Trump and Republicans in Congress are now in control of the government, they are responsible for any problems with the ACA moving forward.
Following some announcements of 2018 exits by major insurers, there are some counties at risk of having no insurer on the exchange next year. This would be a first; thus far, all counties have had at least one insurer on the exchange. As negotiations between insurers and state regulators are still underway, there is still time for other insurers to come in and fill these gaps. Thus far, in most cases, a new or expanding insurer has already moved in to cover counties once thought to be “bare.” However, administrative actions that destabilize the market could encourage more insurers to exit.
If no exchange insurer ultimately moves in to some of these counties, people buying their own insurance will not be able to get subsidies and would have to pay full price for insurance. Paying for unsubsidized insurance would be particularly difficult for low-income and older adults living in high-cost areas like many rural parts of the country. Our subsidy calculator can show the difference in cost. For example, in Knox County Ohio, a low-income 60-year-old could get a silver plan for $83 per month but would have to pay $775 per month if he bought that plan without a subsidy, plus he would have a higher deductible because he would no longer benefit from cost sharing subsidies that are only available on the exchange. That same person would also qualify for a free ($0 premium) bronze plan if he buys on exchange, but off-exchange without a subsidy he would have to pay more than $600 per month for a similar plan. People shopping for coverage off-exchange in a county left without an exchange insurer – particularly lower income or older exchange shoppers – may not be able to afford any option and may drop their coverage.
If the market becomes destabilized, and particularly if the individual mandate is not enforced, insurers may decide to exit the off-exchange market as well. This would mean that people in these counties who would otherwise buy their own insurance may not have any option even if they could afford to pay full price.
Although the individual health insurance market is stabilizing on average, insurer financial performance varies and some companies in some states are still struggling. Additionally, some insurers have already decided to increase premiums significantly or exit the market in 2018 on the assumption that the Trump Administration or Congress will take actions that destabilize the market. Although there are many ideas on both the left and the right for how to improve these markets, there are not many options that have bipartisan support.
One possible policy response that could receive bipartisan support would be to reestablish a reinsuranceprogram. Reinsurance programs provide funds to insurers that enroll high-cost (sicker) individuals and can work to lower premiums. The Affordable Care Act included a reinsurance program but it was temporary and phased out in 2016. Republicans in Congress and the Administration have also signaled a willingness to establish reinsurance programs: Both the House and Senate repeal bills included stability funds for reinsurance and Health and Human Services Secretary Price has supported Alaska’s request for a waiver to support its reinsurance program. Though such a program could receive bipartisan support, it would require additional funds (for example, taxing insurers in other markets).
Additional state flexibility to address local challenges in implementing the health care law may also receive some bipartisan support. The challenge of attracting insurers to rural areas or certain states, for example, may warrant state-specific solutions – either as part of the ACA’s waiver program or by Congress giving states additional flexibility.
CBO: ObamaCare premiums could rise 20 percent if Trump ends payments
Insurance companies would raise premium prices about 20 percent for ObamaCare plans if President Trump ends key payments to insurers, according to the Congressional Budget Office (CBO).
At the request of House Democratic leadership, CBO estimated what would happen if the payments to insurers ended after December. It found that halting payments would increase the federal deficit by $194 billion through 2026.
Many people would be cushioned from the impact of the increases because federal tax credits rise automatically when premiums do.
If the payments ended, some carriers would withdraw from ObamaCare and about 5 percent of people would live in an area without any options on the exchanges in 2018, according to CBO. But by 2020, CBO estimates more insurers would participate again, so that most areas would be covered.
The number of people without insurance would be slightly higher next year but a little lower in 2020, according to the analysis.
Cost-sharing reduction payments are made to insurers, compensating them for discounting out-of-pocket costs for certain enrollees.
Insurers have been pleading for certainty from the administration on whether they’ll continue to receive the payments, which total about $7 billion for fiscal 2017.
The administration has been making these payments on a monthly basis. But Trump has threatened to halt the funds, calling the money “bailouts” for insurance companies.
The issue has also been caught up in court, and if Trump decides to stop appealing a court ruling against the administration, CSR payments could stop. The deadline for another update is coming up quick — Aug. 20. The case has been on hold for months and could be delayed again.
Additionally, the Senate Health Committee will hold hearings on a bipartisan, short-term stabilization measure the first week of September. The goal, according to Chairman Lamar Alexander (R-Tenn.), is to craft a bill by mid-September that includes funding the payments to insurers.
But insurers are bumping up against major deadlines.
Last week, the administration extended the deadline for carriers to finalize how much their premiums will cost on HealthCare.gov. That date is now Sept. 5, and insurers sign contracts locking them into selling plans Sept. 27.
If insurers don’t know if CSRs will be funded, they could exit the marketplaces, health experts warn. That could possibly lead to some areas have no insurers selling plans on their exchanges.
If the Trump administration stops funding cost-sharing reduction payments, silver-plan premiums on the Affordable Care Act exchanges will rise considerably and the federal deficit will increase, the Congressional Budget Office said Tuesday.
Officially, the administration remains undecided about how long it will continue making CSR payments, which are at the center of a federal court case that challenges their legality. Many insurers have had to factor this uncertainty into their preliminary rate filings.
To map out the consequences of one possible move by the administration, the CBO examined what would happen if federal officials announced at the end of August that they would continue CSR payments through the end of the year but discontinue them after that.
That policy would result in silver-plan premiums rising by an average of 20% in 2018 and 25% by 2020, the CBO estimates. Because tax credits rise in tandem with premiums, most eligible enrollees would not pay higher rates than they would if CSR payments continued—though the report also notes that overall, “the share of people facing slight increases would be higher during the next two years.”
Since more people would likely receive premium tax credits and in greater amounts, the CBO predicts that ending CSR payments would raise the federal deficit by $6 billion in 2018, $21 billion in 2020 and $26 billion in 2026.
The CBO also predicts that ending CSR payments would cause some insurers to exit the individual marketplaces, leaving about 5% of people living in areas that have no ACA exchange insurer in 2018. However, the agency predicts that more insurers would likely return to the exchanges in 2020 after having adjusted to the new policy.
Overall, the number of uninsured people would be slightly higher in 2018 but slightly lower starting in 2020 under the scenario the CBO examined, per the report.
Whether lawmakers are done with efforts to repeal the ACA or not, some important changes for healthcare could be on the horizon.
At least one part of the healthcare industry is still looking to Washington D.C. after the flurry of activity last month, if only for one action. In addition to the highly public failure to pass major healthcare legislation before leaving town for a month, Congress and President Donald Trump also left the Affordable Care Act (ACA) exchange markets in a dangerous flux by not taking action on the cost-sharing reduction (CSR) payments for insurers.
It’s not clear whether Congress will continue to take up Republican healthcare legislation to repeal the ACA when it returns. Even within the party, senators are singing different tunes, while President Donald Trump continues to pressure lawmakers to get an ACA repeal bill on his desk. A bipartisan group with members from both chambers has a few ideas, but the majority of lawmakers appear ready to move on. Regardless, they will still have to take up reauthorization of the Children’s Health Insurance Program (CHIP) in September, potential reigniting some debates around the ACA.
If GOP leaders do declare ACA repeal off the table for this year, its opponents will look to the executive branch for efforts to weaken the law and its effects. Here’s what to look out for.
Payers have been begging for assurance that CSRs will continue to be paid, but the White House and Congress have so far refused. The result has been many payers pulling out of the exchange markets or reducing their footprints, as well as premium hikes of 30% or more. Just last week, Anthem announced it is pulling out of the Nevada and Virginia exchange markets and reducing its participation in Georgia.
Not paying the CSRs would increase federal spending, because the higher premiums will require higher premium subsidies for the 84% in the exchanges who qualify for help. That’s not to mention the 30,000 or more who would have no insurance options.
Trump hasn’t been shy about his plan to halt any efforts that stabilize the exchange markets (like CSRs) in an effort to sabotage the ACA and force unwilling Democrats to cooperate on a repeal bill. Others in the GOP, however, have been reluctant to hurt constituents with such an overtly political play.
America’s Health Insurance Plans has said it is imperative the CSRs are funded. “These benefits are essential to making coverage and care affordable for American families who receive them,” the organization said. “Clarity and commitment to this funding is needed to eliminate confusion and anxiety for consumers.”
It may soon be too late for CSR payments to matter for next year. Payers must sign their contracts with HealthCare.gov by Sept. 21. The CMS and some states have tried to give insurers more flexibility because of the uncertainty by pushing back rate filing deadlines. Connecticut said it will allow payers to refile their rates if the CSR payments are eliminated, and California allowed them to file two sets of rates, one of which assumes no CSRs.
Trump’s threat to “let Obamacare implode” may go beyond refusing to shore up the exchange markets. His administration has already pulled advertising and promotion of the exchanges, and is being investigated by the Government Accountability Office for pushing the GOP healthcare bills in official HHS communication channels. Immediately after his inauguration, Trump signed a wide-ranging executive order instructing federal agencies to “exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay any provision or requirement” of the ACA that imposes a fiscal or regulatory burden.
No major changes have resulted from the order so far, but it could be used to roll back benefit requirements for preventive care, contraception and mental health services.
HHS Secretary Tom Price could also make changes that weaken the ACA’s individual mandate. Repealing the mandate would mean 15 million fewer Americans would have coverage by 2026 and result in premium increases of about 20%, according to the Congressional Budget Office. Watering down the requirement instead of ditching it completely would have less drastic results, but there would still be an impact.
Price could create more exemptions for the mandate or attempt to force the Internal Revenue Service to stop enforcing it. Either of these actions would add turmoil to the exchanges markets and undermine the efforts of the ACA.
Those watching health legislation in Congress are eyeing CHIP reauthorization as a possible vehicle for changes to the ACA. Lawmakers will be hesitant, though, as CHIP is a successful program with bipartisan support.
The program, which turned 20 years old this past weekend, covered nearly 9 million children in fiscal 2016. CHIP coverage is more affordable than employer-sponsored or marketplace coverage, while children covered under CHIP are more likely to have a usual source of care and regularly attend well-child visits, according to the Medicaid and CHIP Payment and Access Commission, which recommends Congress extend CHIP funding through 2022.
The commission estimates more than a million children would lose coverage if CHIP loses funding.
A bipartisan group of about 40 members of the House is proposing some relatively small changes to the ACA that have received support from both sides of the aisle in the past. The plan is to put them in a bill that would also immediately fund the CSRs.
Their suggestions include exempting smaller businesses from the employer mandate, a fund states can go to for help covering people with high care costs and more flexibility and guidance for states looking to apply for ACA waivers. Another possible measure is repeal of the medical device tax.
Their proposal is to change the employer mandate by having it apply only to businesses with 500 or more employees, instead of the current requirement for businesses with 50 or more workers. Analysis from the Urban Instituteand Rand Corporation has shown the employer mandate has little effect on the number of people who have coverage, partly because nearly all businesses with at least 50 employees offered coverage even before the mandate went into effect.
The ACA has always given states the option of applying for a waiver that allows them to eschew essential health benefits and other requirements — as long as they can prove their plans will cover the same number of people with coverage that is just as comprehensive and affordable. HHS under President Barack Obama was careful in ensuring that state proposals met those guidelines, but current HHS Secretary Tom Price has said he wants to encourage more waivers and will be less strict with approvals of those waivers and Medicaid demonstration waivers.
With this in mind, some recent proposals have included aspects that would have previously been rejected. Last week, Maine applied for a Medicaid demonstration waiver that includes work requirements and asset testing. Those measures are likely to restrict access to coverage for people with low incomes.
Many of the options available for Congress and the executive branch could roil the industry, but some bipartisan options could provide much needed clarity. Summer is usually pretty quiet in Washington D.C., but this year has not been business as usual. Healthcare leaders would be wise to be ready for new developments with the ACA and beyond.
CBO to release analysis of ending key ObamaCare insurer payments
The nonpartisan Congressional Budget Office (CBO) will release an analysis next week detailing the effects of ending key ObamaCare insurer payments.
The CBO announced Friday the score would be released next week.
President Trump has threatened to cancel the payments, known as cost-sharing reductions, which reimburse insurers for giving discounted deductibles and copays to low-income people.
The administration has made the payments on a month-to-month basis but insurers have pleaded for long-term certainty.
The reimbursements total $7 billion for fiscal 2017, and regardless of whether the administration pays them, insurers would still be on the hook to offer these discounts to enrollees — they just wouldn’t be reimbursed for doing so.
Uncertainty over the future of the payments has contributed to insurers exiting the healthcare exchanges and proposed premium increases for 2018. More insurers might leave or increase premiums if the payments aren’t continued.
The Senate Health Committee will hold bipartisan hearings in September on ways to stabilize and strengthen the individual market.
The goal is to craft a bipartisan, short-term proposal by mid-September, which could include funding the payments.
Congress is on vacation, but state insurance commissioners have no time off. They have spent the past three days debating what to do if President Trump stops subsidies paid to insurance companies on behalf of millions of low-income people.
For administration officials and many in Congress, the subsidies are a political and legal issue in a fight over the future of the Affordable Care Act. But for state officials, gathered here at the summer meeting of the National Association of Insurance Commissioners, the subsidies are a more immediate, practical concern.
The insurance commissioners are frustrated with the gridlock in Washington, which they say threatens coverage for consumers and the solvency of some insurers. Without the payments, they say, consumers will face higher premiums in 2018, and more insurers will pull back from the individual insurance market.
Mr. Trump has repeatedly threatened to cut off the payments, which reimburse insurers for reducing the deductibles, co-payments and other out-of-pocket costs for low-income people.
If the government continues providing funds for the subsidies, insurers will have “a small profit,” said Craig Wright, the chief actuary at the Florida Office of Insurance Regulation. “If the subsidies are not funded, carriers would face the prospect of large financial losses, which could increase the risk to their solvency.”
“It could be very damaging,” Mr. Wright said. “Our market wouldn’t recover.”
With no guidance or clarity from the Trump administration, state officials are agonizing over what to do. Many expressed a sense of urgency, saying they needed to make decisions soon on rates to be charged in 2018.
Trump administration officials were invited to speak to state insurance regulators and were listed in the program for at least one public session, but they did not show up at that event to provide the promised update on federal policy.
“Most of us are hoping and praying that this gets resolved,” said David Shea, a health actuary at the Virginia Bureau of Insurance. “But that’s not the case right now.”
Without the federal subsidies, insurers would need to get the money — estimated at $7 billion to $10 billion next year — from another source. And that means higher premiums, state officials said.
The officials here are wrestling with several questions: How much should premiums be increased? Who should pay the higher premiums? Is there any way to minimize the effect on low-income people? Is it better to assume that the cost-sharing subsidy payments will or will not be made in 2018? What happens if state officials guess wrong?
State officials said they would allow insurers to impose a surcharge on premiums if the federal government cuts off funds for the cost-sharing subsidies.
Paul Lombardo, a health actuary at the Connecticut Insurance Department, said officials there might direct insurers to spread the cost across all of their health plans, both on and off the insurance exchange created under the Affordable Care Act.
By contrast, Florida has asked insurers to load all of the extra cost into the prices charged for midlevel “silver plans” sold on the exchange. The federal government would then absorb almost all of the cost through another subsidy program, which provides tax credits to help low-income people pay premiums, Mr. Wright said. The tax credits generally increase when premiums rise.
J. P. Wieske, the deputy insurance commissioner in Wisconsin, said that two companies, Anthem and Molina Healthcare, were leaving the state’s marketplace in 2018 and that two others, Humana and UnitedHealth, exited in previous years. As a result, he said, more people will be enrolled in smaller local health plans that could be more affected by a termination of federal subsidy payments.
“Carriers left in the Wisconsin market are smaller, local plans,” Mr. Wieske said. “Particular carriers could have huge surges in population, going from 7 or 8 percent of their business in the individual market to 30 or 40 percent. If that’s the case, if it’s 30 or 40 percent of their business in the individual market, that’s obviously a gargantuan risk.”
The risks for consumers are also high, Mr. Wieske said. “Consumers,” he said, “could be stuck in a zombie plan, an insurer that is essentially no longer able to do business in the worst-case scenario, or consumers may have to move to another insurer with different health care providers.”
Officials in many states must decide this month on insurance rates for next year.
“We are holding off making those decisions until the very last possible minute,” said Julie Mix McPeak, the Tennessee insurance commissioner. “In doing so, we are really making it difficult for consumers who need information about open enrollment — who’s participating in the market and what the rates might be. We don’t know the answers to any of those questions.”
The uncertainty stems not only from the White House and Congress, but also from federal courts.
House Republicans challenged the cost-sharing payments in a lawsuit in 2014. A federal judge ruled last year that the Obama administration had been illegally making the payments, in the absence of a law explicitly providing money for the purpose. The case is pending before the United States Court of Appeals for the District of Columbia Circuit, which has held it “in abeyance” at the request of House Republicans and the Trump administration.
The administration has been providing funds for cost-sharing subsidies month to month, with no commitment to pay for the remainder of this year, much less for 2018.
“I am very fearful that we’ll have insurers make a decision to leave markets as a result of the uncertainty,” said Ms. McPeak, who is the president-elect of the National Association of Insurance Commissioners. “It’s somewhat inequitable to ask insurers to sign a contract that binds them but may not bind the federal government.”
The Affordable Care Act requires an annual review of health insurance rate increases, and states are taking different approaches.
Nebraska initially told insurers to file 2018 rates on the assumption that the cost-sharing subsidies would continue. But “because of the confusion in Washington,” said Martin W. Swanson of the Nebraska Insurance Department, the state later told insurers to assume that they would not receive the subsidy payments.
Mike Chaney, the Mississippi insurance commissioner, and Allen W. Kerr, the Arkansas insurance commissioner, said they had instructed companies to assume that they would receive the cost-sharing subsidies next year. Michigan has told insurers to submit two sets of rates, one with the subsidies and one without.
Michael F. Consedine, the chief executive of the National Association of Insurance Commissioners, said that without a firm commitment of federal funds for the cost-sharing subsidies, “we have grave concerns about the long-term viability of the individual health insurance market in a number of states.”
“We need some step right away,” Mr. Consedine said, “either by action of Congress or by direction of the administration, to ensure that Americans continue to have access to coverage.”
HENRY KOTULA 