Tag Archives: Invisible Risk Sharing Program

Revised ACA Repeal-and-Replace Bill Likely to Increase the Uninsured Rate and Health Insurance Costs for Many

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http://www.commonwealthfund.org/publications/blog/2017/apr/amendment-aca-repeal-and-replace-bill

News outlets report that House Republicans are close to agreeing on an amended version of the American Health Care Act (AHCA), their proposed repeal and replacement of the Affordable Care Act (ACA). The all-important legislative language for the revised bill is not yet available, nor are Congressional Budget Office (CBO) projections of its effects on coverage and the budget, so any analyses are necessarily tentative.

Nevertheless, the summaries leaked to the media offer insight on the amended bill. If accurate, those summaries suggest that the revised AHCA will significantly increase the numbers of uninsured Americans, raise the cost of insurance for many of the nation’s most vulnerable citizens, and, as originally proposed in the AHCA, cut and reconfigure the Medicaid program. The new amendment specifically allows states to weaken consumer protections by, for example, permitting insurers to charge people with preexisting conditions higher premiums.

What the Amendment Leaves in Place

The amended proposed bill does little to change many provisions of the original AHCA including:

The CBO estimated in March that the combined effects of these provisions would increase the number of people without health insurance by 24 million by 2026. Older Americans would be particularly hard hit by the bill, experiencing much higher premiums relative to the ACA and the greatest coverage losses.

What the Amendment Changes

The amendment offers states the option to apply for waivers to reduce ACA consumer protections that have enabled people with health problems to buy private health insurance. States could waive the ban on charging people with preexisting conditions higher premiums, as long as states set up high-risk pools for people with conditions like cancer or heart disease who could no longer afford coverage. States could also change the ACA’s required minimum package of health benefits for health plans sold in the individual and small-group markets.

Despite the fact the federal ban on preexisting condition exclusions would remain under the AHCA, as Tim Jost points out, insurers could reach the same end by not covering services like chemotherapy that sick people need, or by charging very high premiums for individuals with expensive, preexisting problems. In addition, waiving the ACA’s essential benefit requirement could weaken other consumer protections like bans on lifetime and annual benefit limits and caps on out-of-pocket costs.

While states that allowed higher premiums for people with health problems would be required to use a high-risk pool under the amendment, prior research has found that such pools operated by states before the ACA were expensive both for states and for people enrolled in them, and covered only a small fraction of the individuals who would have benefited. An amendment proposed earlier in the month would provide federal funds for a so-called “invisible risk-sharing” program, a hybrid between a high-risk pool and reinsurance for high claims costs, but the allocated funding would likely need to be much higher to have an impact on costs.

The number of states that would apply for these waivers is unknown, but it seems reasonable to expect that many states with governors and legislatures that have opposed the ACA would do so. For a substantial part of the country, therefore, the amendment could seriously undermine the ACA’s protections for people with preexisting health conditions.

 

Invisible Risk Sharing Program

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Too little, too late

Image result for invisible law

In their latest amendment to the American Health Care Act, House Republicans have created something called an “invisible risk sharing program.” The amendment is befuddling. The invisible program is a minor tweak that won’t improve the AHCA’s dismal coverage numbers. It’s not even really a program. If there’s any prospect at all of salvaging Republican-style repeal and replace, this newest amendment isn’t it.

The statutory text is spare. It appropriates $15 billion over nine years—or $1.67 billion each year—and tells the Secretary of Health and Human Services to use the money “to provide payments to health insurers with respect to claims for eligible individuals for the purpose of lowering premiums for health insurance coverage offered in the individual market.” The Secretary can supplement that funding with any money from the AHCA’s high-risk pools that states don’t find a way to use.

Beyond that, however, the statute tells us next to nothing about how the program is supposed to work. Hilariously, a section of the statute titled “Details of Program” contains no details. It says, for example, that the program should include “[a] definition for eligible individuals,” but leaves the defining up to HHS. So too with “[t]he identification of health conditions” that, if an eligible person has them, would qualify her insurer for extra payments.

Oh, and the program is supposed to be in place in time for the 2018 plan year.

Read generously, this newest amendment tells HHS to create a kind of reinsurance program for insurers who enroll high-cost individuals. The statute doesn’t use the word “reinsurance,” maybe because Republicans have spent years railing against the risk corridor and reinsurance programs as insurer bailouts. But if those were bailouts, then this is too.

Judging from the title, the program is supposed to look something like the proposal pioneered by Maine and described in this Health Affairs post. But Republicans are delusional to think that the Secretary can establish and implement a complex reinsurance-style program in time for the 2018 plan year. Insurers that want to participate on the exchanges have to submit bids to HHS by June 21. Even if the AHCA passed tomorrow—which it won’t—there’s no chance that Secretary Price could ramp it up in time.

Nor does the amendment explain how the new program is supposed to interact with the ACA’s risk adjustment program, which the AHCA leaves in place. The point of risk adjustment is to equalize risk across insurers: those with healthier-than-average enrollees have to pay into a central kitty, and those with sicker-than-average enrollees get some of that money. But if insurers get “invisible” risk sharing money for high-cost individuals, should they get less in risk adjustment money? The amendment doesn’t say.

In any event, the money is too insubstantial to make much of a difference. Sure, $1.67 billion per year sounds like a lot of money. But $1.67 billion is chump change compared to the subsidy reductions that are contemplated under the AHCA. It’s like using a band-aid to treat a gunshot wound.