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Congress Races The Clock In Quest To Bring Stability To Individual Insurance Market

(Illustration created with Getty Images)

Congress is running out of time if members want to come up with legislation to stabilize the individual insurance market.

While Republicans and Democrats still feud over the fate of the Affordable Care Act, a bipartisan group of senators and House members has been working since last summer on measures to keep prices from rising out of control and undermining the individual market where people who don’t get insurance through work or the government buy policies.

They hope to attach a package of fixes to what should be the year’s final temporary spending bill, due in late March.

The lawmakers are up against not just the legislative clock, but also the insurance companies’ timeline. Insurers have until summer to decide if they want to continue to sell policies in the ACA marketplaces, but many start making preliminary decisions as early as April.

In the absence of congressional action, insurers say premiums will go up in 2019 due to the uncertainty — raising costs for consumers and the government.

It is by no means clear whether any package could gain the votes needed in the House and Senate. Most Republicans are loathe to be seen “fixing” Obamacare, although opinion polls clearly show they will be blamed for problems with the law going forward.

The bipartisanship extends beyond Capitol Hill. Last week five governors (three Democrats, one Republican and one Independent) released a blueprint for a health system overhaul that includes several of the stabilization ideas under consideration in Congress.

About 18 million people buy their own policies, both inside and outside the ACA insurance marketplaces.

Lawmakers are looking at two primary fixes, although they could be combined.

One, pushed by Sens. Susan Collins (R-Maine) and Bill Nelson (D-Fla.), is called “reinsurance.” It is a way to guarantee the insurance companies do not face large losses. The idea is that if insurers don’t have to worry about covering the expenses for their highest-cost patients, they can keep premiums lower for everyone.

The ACA actually had a temporary reinsurance program from 2014 to 2016. It was intended to help insurers get started in a market where sick people were able to buy their own insurance for the first time. Prior to the law, most insurers did not cover many people with preexisting health conditions. If they did, it was at an extremely high cost.

Since the federal program ended, several states, including Minnesota and Alaska, have adopted, with some success, their own reinsurance programs in an attempt to hold premiums down.

The other proposal, negotiated by Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.), would guarantee insurers federal reimbursement for so-called cost-sharing reduction subsidies. Those are discounts that the ACA requires insurers to provide to their lower-income enrollees to help reduce their deductibles and other out-of-pocket costs. President Donald Trump cut off federal reimbursement of those payments in October.

Senate Majority Leader Mitch McConnell (R-Ky.) pledged to Collins in exchange for her vote on the GOP tax plan in December that he would support bringing both bills to the floor for debate.

That has not happened, although in a statement, Collins said she is “continuing to have productive discussions” with Senate and House leaders about both bills.

Meanwhile, a lot has changed, including new questions about whether the fixes would work.

For starters, state insurance regulators managed to find a workaround for Trump’s sudden cancellation of the federal cost-sharing payments. Most states allowed insurers to offset the loss of these funds by increasing the premiums for the “silver” level plans that determine how much help enrollees get to pay those premiums. So the increases end up being paid by the federal government anyway, through higher premium subsidies. The result is that most people who get government help pay the same (or, in some cases, less), while insurers are effectively being paid back for the discounts, albeit through a different mechanism.

That means, however, if the cost-sharing reduction payments were reinstated for 2018, as the original legislation called for, insurers would have to give the excess money back to the government.

Analysts agree that would only add to the confusion.

Restoring the federal payments for this year, said Joseph Antos of the conservative American Enterprise Institute, “does not lower premiums this year, so it does absolutely no good to the average person.”

Some advocates have suggested that Congress should guarantee the payments for 2019 and 2020. But Antos said that “also makes no sense, because the insurers would then think ‘Are we going to go through this again?’”  They might raise premiums even more to make up for the uncertainty.

Antos  — and many other analysts — agree that restoring or creating a new reinsurance program would likely do more to control premium increases.

Reinsurance “will protect premiums for the people who are actually most subject to them,” said Sherry Glied, a former Obama administration health official now at New York University. She was referring to those in the individual market who do not get government help and have been footing large premium increases for the past several years. That’s because having protection against the largest bills would allow insurers to lower premiums across the board.

Then there are the political considerations.

Many Republicans in Congress have called the cost-sharing reduction payments in particular a “bailout” to the insurance industry, and are resistant to reinstate the payments.

Republicans seem more amenable to the idea of reinsurance, because they consider it a type of “high risk pool,” which they have been pushing for years. House Speaker Paul Ryan said at an event in Wisconsin in January that “I think there might be a bipartisan opportunity there to get risk pools, risk mechanisms.”

But Republicans have made clear they want something in return for what could be considered a “fix” to the health law they despise.

Health and Human Services Secretary Alex Azar was careful to say in a meeting with reporters last week that the Trump administration has no formal position yet on the stabilization efforts.  But, he said, “I think it would need to be part of an entire set of reforms there that we would want to see.” That would likely include more flexibility for states to opt out of some of the health law’s coverage requirements.

The delay has made Democrats more demanding, too. The repeal of the ACA’s penalties next year for people who don’t have insurance has changed the situation dramatically, said Sen. Murray.

“As I have made clear, the bipartisan bill I originally agreed on with Chairman Alexander will not make up for this latest round of Republican health care sabotage,” she said in a statement. “In fact, there are changes that now need to be made to our bill to ensure it meets its intended goals of keeping premiums down and stabilizing markets.”

But while Congress decides if it will take action, insurers are warning that doing nothing will lead to still higher premiums.

Premium rates for a “benchmark” silver plan could rise by 27 percent in 2019, the Blue Cross Blue Shield Association said earlier this month.

Congressional action on reinsurance and cost-sharing, the association predicted, would help push premium rates 17 percent below this year’s levels.

“Health plans are looking for certainty in the market,” said Justine Handelman, senior vice president in the association’s policy shop.

Ideally, Congress would include the funding in measures adopted in February or March, said Handelman, who spoke with reporters during a briefing at the association’s Washington, D.C., headquarters: “Most plans are filing premium rates by April.”

Kaiser Health News senior correspondent Julie Appleby contributed to this story.

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