Hill Republicans who hope to stabilize the individual health insurance marketplace are finding their options are limited—and the choices they do have may not go down well with conservatives.
State insurance commissioners and companies are pressing lawmakers to guarantee the payments of the Affordable Care Act’s cost-sharing-reduction subsidies—which help lower-income people afford out-of-pocket costs—or else risk substantial rate hikes or insurers dropping out.
Unless there’s an overhaul of the entire system, lawmakers can’t really work around funding the cost-sharing-reduction payments, said Chris Sloan, senior manager at Avalere Health.
“In the short term, funding the cost-sharing-reduction subsidies is key to stability,” said Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation. “Some kind of reinsurance program could also begin as early as next year, like under the [American Health Care Act’s] stability fund, though it is getting late in the year to put that in place in time.”
Republican Sen. John Hoeven said lawmakers are discussing “something like” the cost-sharing subsidies as part of transition policies. “We’re talking about figuring how we do that so that insurance companies don’t all vacate the exchanges and leave people without an option while we’re transitioning to a new plan,” Hoeven said.
The payments are the subject of a lawsuit that House Republicans brought against the Obama administration arguing that the subsidies were paid without an appropriation from Congress. A district judge sided with the lawmakers, and the administration appealed. On Monday, the Trump White House asked for another delay in the court case, leaving the door open for continuing the payments.
But leaving the court case unresolved and funding not assured could mean turmoil for the exchanges. The National Association of Insurance Commissioners has said that even if carriers decide to participate, uncertainty about this funding could add a 15-20 percent load to the rates.
For any areas left without insurance options on the exchanges, Sens. Lamar Alexander and Bob Corker of Tennessee have developed a proposal to allow people to use their subsidies off the exchanges.
But Corker told National Journal the bill would be only a “stopgap if nothing else were to occur.”
“If everything failed and there was no solution for those people who found themselves in places where there were no exchange plans … I would think it would be something that could become pretty popular,” said Corker.
Insurers have also said that enforcing the individual mandate is important for shoring up the marketplace. But maintaining this mechanism could be a challenge for Republicans, as it is one of the most hated parts of Obamacare.
Morning Consult reported that Senate Finance Committee Chairman Orrin Hatch said he wouldn’t be opposed to delaying the repeal of the individual mandate. He told National Journal: “I don’t think I’ve come out that definitively, but I’m looking at it.”
But Sloan said this would not likely be a short-term solution. “It’s a very poor vehicle for stabilization. … From an economics perspective, the individual mandate is the stick that pushes people into the market, but in practice this particular mandate just doesn’t work,” he said.
Caroline Pearson, senior vice president of policy and strategy at Avalere Health, said keeping the individual mandate could have a lot to do with improving the Congressional Budget Office score. The initial score of the American Health Care Act estimated that 14 million more would be uninsured in 2018, mostly due to the repeal of the individual mandate. (A CBO score of the revised bill is due to be released Wednesday.)
Meanwhile, moderate GOP Sen. Susan Collins said that she and Sen. Bill Cassidy are looking at their own proposal to shore up the individual marketplace.
“One idea that Senator Cassidy and I are exploring is: In those states that took the Medicaid expansion, could you combine the expansion population with the individual market, which would give you a broader pool, and would that help stabilize the markets?” said Collins. “We’re still looking at that. We don’t know the answer to it.”
Sen. Mike Rounds said such a change would take time. “Remember, no matter what we do, this has got to be looking at a goal of a probably somewhere between late 2019 and 2020 time period, simply because it takes that long for the market to start to rebuild again,” Rounds said.
Levitt said the effectiveness of this idea would depend on the details.
“With the AHCA’s tax credits, which don’t scale by income, there’s no way most Medicaid beneficiaries would afford individual market plans,” Levitt said. “… Significantly enhanced tax credits for low-income people, plus cost-sharing subsidies, could make coverage more affordable for low-income people now covered under Medicaid and potentially provide some stability.”
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