GOP Has Limited Options to Keep Health Exchanges Stable

Lawmakers are contemplating different policies to firm up the individual marketplace, but all have their downsides.

AP Photo/Andrew Harnik
Erin Durkin
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Erin Durkin
May 23, 2017, 8 p.m.

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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