The much anticipated market stability bill was released on Tuesday by Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA). It was formally introduced on Thursday with 22 bipartisan co-sponsors—11 Republicans and 11 Democrats—and would temporarily fund the ACA’s cost sharing reduction (CSR) program, provide for greater flexibility for Section 1332 waivers, as well as establish a new “copper-level” plan and provide for additional federal funding on enrollment outreach. NAHU supports this package and sent a letter of support to the bill sponsors as well as a statement calling on Congress to fund the CSR program.
The legislation’s introduction follows months of discussions between Alexander and Murray and was jump-started following President Trump’s announcement last Thursday that the CSRs would no longer be funded. The CSRs help offset out-of-pocket expenses for silver-tiered plans purchased through the marketplaces, for households with incomes up to 250% of the federal poverty level. The subsidies are paid indirectly, as insurers reduce their costs for eligible consumers and in return receive monthly payments from the federal government to make up the difference, estimated to be as much as $175 billion over 10 years. The CSR subsidies are separate from the ACA’s larger advanced premium tax credits.
Failure to fund the CSR program is projected to have dramatic consequences for taxpayers according to a Congressional Budget Office (CBO) report released in August. The report revealed that not making the CSR payments would cost the federal government an additional $194 billion over 10 years, increase insurance rates by 20% and lead to more counties without any insurers participating on the marketplace. The CBO projects that the rate increases would be due to insurers compensating for the lost revenue while being statutorily obligated to provide the CSR offsets for eligible enrollees. The increased premiums would then lead the federal government to pay more in advanced premium tax credit subsidies (APTCs), which would result in the net increase in cost to the federal government.
The legislation would restore the CSR funding for the remainder of 2017 and continue it through 2019. The funding is deliberately not being made permanent as a means to encourage Congress to advance more comprehensive healthcare reform proposals over the next two years, although if that doesn’t happen it would be possible to again extend appropriations. It is also unlikely that permanent funding of the program would have been amenable to enough Republicans for it to be passed through either chamber. Alexander and Murray agreed to the compromise of funding the program for two years in order to prevent insurers pulling out of the markets, dramatic premium increases by as much as 30% that could occur by a lack of the funding, as well as to ensure that eligible enrollees would continue to receive the CSR benefits.
The other major component of the legislation is to create additional flexibility within the ACA Section 1332 waiver program that allows states to waive certain requirements of the ACA as long as certain conditions are met. States are permitted to opt-out of the federal individual and employer mandates, marketplaces and subsidies, essential health benefits, and qualified health plan (QHP) certifications. In exchange for this, the state program must cover at least as many people as under the ACA, the coverage must be at least as comprehensive and affordable, and it may not increase the federal deficit. A state may not waive the guarantee-issue provisions. The program officially took effect on January 1, and it has gained increasing interest as states consider changes to improve their health markets in the immediate-term and beyond more comprehensive federal reforms that have been debated in Congress.
This section of the proposal would maintain the core protections related to affordability, coverage, and comprehensiveness in the waiver program, but would greatly streamline the process for states applying for waivers. The legislation would shorten the federal administrative review period, allow governors to approve state waiver applications rather than requiring state legislatures to pass a law, and expedite review for states in emergency circumstances, as well as those with waiver proposals that have already been approved for other states. It would also modify the affordability guardrail to allow states to propose innovative value-based insurance designs and would make the waivers assessed for budget neutrality over the life of the waiver rather than on a yearly basis.
Another component of the legislation would effectively establish a “copper plan” by expanding eligibility for catastrophic coverage to individuals over the age of 30. The concept of a plan with a 50% actuarial value is intended to encourage younger, healthier consumers to enroll while maintaining a single risk pool so that those with serious medical needs aren’t priced out. It has been introduced as legislation in previous years, with former Senator Mark Begich (D-AK) being among the more vocal supporters of this idea. He along with current Senators Heidi Heitkamp (D-ND), Angus King (I-ME), Joe Manchin (D-WV) and Mark Warner (D-VA), and former Senator Mary Landrieu (D-LA) introduced the Expanded Consumer Choice Act in 2014 that would provide this level of coverage to help encourage healthier consumers to sign up for plans with lower premiums but higher cost-sharing.
Finally, the legislation also includes $106 million directed to states for consumer outreach efforts during the open enrollment periods in 2018 and 2019, paid for through existing user fee funds. This funding is intended to restore cuts made by the Trump administration under former Health and Humans Services Secretary Tom Price, which drastically slashed outreach budgets ahead of the 2018 plan year. If a state does not use its allocation of this funding, the federal government would then be required to spend that funding on enrollment efforts specifically for that state. The federal government would also be required to extensively report on how they are implementing open enrollment over the next two years.
The legislation has been met with a mixed response. President Trump’s messaging has been among the most mixed, initially saying last week that he would not support the Alexander-Murray bill and repeating that sentiment on Tuesday saying he would not support any proposal that would continue paying the insurers. However, minutes later in the same news conference, he said that their proposal was a “very good solution” and that “we either have the votes or we are very close to having the votes. And we will get the votes for having, really, the potential of having great health care in our country.” Less than an hour later, President Trump returned to saying he would not support a fix to the ACA that would be equivalent to a bailout of insurers. And the next day, he said he supported the bipartisan process but not the CSR funding.
On the other end of Pennsylvania Avenue, House Speaker Paul Ryan was among the first to announce his opposition to the plan, stating through a spokesperson that he “does not see anything that changes his view that the Senate should keep its focus on repeal and replace of Obamacare.” Meanwhile, House Freedom Caucus Chairman Mark Meadows (R-NC) called the proposal a “good start,” and applauded their efforts. The Freedom Caucus is comprised of the most conservative members of the Republican Party and has long sought more state flexibility in healthcare. They had derailed initial attempts in the House’s reconciliation efforts before agreeing to a compromise effort that provided significant state flexibility that was ultimately passed in May. Their support could be pivotal in advancing the market stability package.
The bill itself was introduced with bipartisan support in the Senate. In addition to the lead sponsors—a top Republican and top Democrat—there were an equal number of Republicans and Democrats joining as original co-sponsors, and represented nearly every cross-section of both parties. Republican co-sponsors were: Alexander, Richard Burr (NC), Bill Cassidy (LA), Susan Collins (ME), Bob Corker (TN), Joni Ernst (IA), Lindsey Graham (SC), Chuck Grassley (IA), Johnny Isakson (GA), John McCain (AZ), Lisa Murkowski (AK) and Mike Rounds (ID). Democratic co-sponsors were: Murray, Tammy Baldwin (WI), Tom Carper (DE), Joe Donnelly (IN), Al Franken (MN), Maggie Hassan (NH), Heidi Heitkamp (ND), Angus King (ME), Amy Klobuchar (MN), Joe Manchin (WV), Claire McCaskill (MO) and Jeanne Shaheen (NH).
The bill will need a quick turnaround to be fully effective for the 2018 plan year, although it is looking increasingly likely that it will not pass prior to the end of the year. If any legislation is passed by both chambers and signed into law by President Trump, it is more likely that consumers would receive a rebate from their insurers, similar to the medical loss ratio rebates, rather than insurers simply reducing premiums. One possibility is for the legislation to be attached to another larger piece of legislation, such as the reauthorization of the Children’s Health Insurance Program or a federal spending bill that is due by mid-December.
The legislation still has to win over enough support for passage and address opposition from both parties. Democrats have been weary of loosening ACA restrictions and Republicans have been opposed to any ACA fix. Alexander has responded to criticism by stating that the bill’s language is specifically designed for the benefit of consumers. Alexander said that in regards to the president’s statements that “He and I 100 percent agree on not bailing out insurance companies.” Alexander further said that he welcomes the administration’s ideas on how to make the legislation stronger. And if Alexander is able to garner enough bipartisan support for passage in both chambers, the administration would be under major pressure to enact it into law.