What insurance market fixes can the GOP cram into an ACA repeal bill?
If Republicans pass insurance rule changes as part of repeal, insurance executives say that might significantly ease widespread concerns about market stability between the law’s repeal and its replacement.
Republicans risk crashing the individual insurance markets and causing 30 million Americans to lose coverage if they repeal the Affordable Care Act without immediately replacing it with a new system.
That’s the prevailing fear among policy experts. But it’s not what some prominent insurance industry leaders are saying. They think congressional Republicans are listening seriously to their proposals for stabilizing the markets during the process of repealing the law and subsequently crafting a replacement. And they expect some of those measures to be included in the expedited repeal bill that could pass as soon as next month.
Those discussions come as both the Senate and House approved a budget blueprint last week that would enable Republicans to rapidly wipe out most of the ACA on a party-line vote. It instructs key committees to draft repeal legislation by Jan. 27.
“I think they understand that on the runway to a replacement plan, they’ve got to seriously consider some of these things and come up with options on how to sustain the marketplace,” said Daniel Hilferty, CEO of Independence Blue Cross, who serves as board chairman of the Blue Cross Blue Shield Association and also sits on the executive committee of America’s Health Insurance Plans.
He and other insurance executives say the congressional Republicans they are talking to share their interest in strengthening the market by making coverage cheaper and attracting healthy, young customers to offset the costs of older members. Proposals they are discussing include rule changes allowing insurers to sell leaner plans and charge younger people less and older people more.
House Speaker Paul Ryan and other GOP leaders said last week they want to fold elements of their replacement plan into their repeal bill, which they aim to pass under budget reconciliation rules that enable them to avoid a Democratic filibuster in the Senate. That may include replacing the ACA’s requirement that nearly everyone buy insurance, with incentives for people to maintain continuous coverage, such as late-enrollment penalties and benefit waiting periods for those with coverage gaps.
If Republicans pass insurance rule changes as part of repeal, insurance executives say that might significantly ease widespread concerns about market stability between the law’s repeal and its replacement. And it might convince carriers to continue selling plans in the transition years of 2018 and 2019.
“There is a lot of very pos- itive discussion going on around the concept of what it will take to ensure stability,” said Karen Ignagni, CEO of EmblemHealth and former CEO of America’s Health Insurance Plans. “I think these kinds of provisions and concepts theoretically could be worked into a reconciliation discussion.”
Still, insurers remain uncertain if they will offer individual-market plans for 2018. They will have to file their offerings and rates by May unless the incoming Donald Trump administration grants a delay, which they may request. “It’s too soon to say for 2018
until we see what (the Republicans) are thinking about for the interim,” said Hilferty, whose company hasn’t made a decision yet.
One GOP lobbyist agreed that insurers are getting a positive reception from congressional Republicans, who are nervous about a market collapse occurring on their watch. “Despite all the doom and gloom from Democrats that repeal and delay is a terrible strategy, carriers have come up with constructive suggestions on how repeal and replace should be put together,” said Chris Condeluci, who served as a senior Senate GOP aide during the drafting of the ACA. “They realize they have an opportunity to fix the regulatory environment.”
In contrast, hospitals and physicians may be getting a less favorable hearing with their arguments that ACA repeal could leave them with lower payment rates and more uncompensated care. “Republicans will say, ‘You already agreed to reimbursement cuts under the ACA, we won’t help you out there,’ ” Condeluci added.
President-elect Trump said last week he wants Congress to pass a replacement bill at the same time it repeals the ACA. That would be difficult or impossible, however, if his party rapidly erases the law, because Republicans are far from agreement on any replacement package and will struggle to win enough Democratic votes in the Senate to pass substitute legislation. So quickly passing replacement elements as part of the expedited repeal bill could be politically attractive.
Some experts doubt the Congressional Budget Office and the Senate parliamentarian, Elizabeth McDonough, would count insurance regulatory changes as having a budgetary impact. Provisions deemed not to have a budget effect can be ruled extraneous under Senate rules and struck from a reconciliation bill. And Democrats are sure to object. “If they try to break the rules and turn the Senate into a banana republic, we will be very loud about that,” said Topher Spiro, a health policy expert at the liberal Center for American Progress.
But others think Republicans have a reasonable chance to get such policy measures scored as having a budgetary impact and pass them through reconciliation.
“They may have significant room to put these things into the reconciliation bill,” said Douglas Elmendorf, dean of Harvard’s Kennedy School of Government and former head of the Congressional Budget Office, who believes making such policy changes without a full legislative debate is a bad idea. “But it’s the parliamentarian’s decision.”
Replacing the individual mandate
with new continuous coverage rules is one key policy change Republicans are eyeing. Insurers warn that without a strong substitute for the mandate, younger and healthier consumers will drop insurance, costs and premiums will shoot up, and insurers will abandon the market in 2018. But carriers aren’t convinced the continuous coverage model would work better than the mandate.
“We will need something in place immediately,” said Ceci Connolly, CEO of the Alliance for Community Health Plans, which represents notfor-profit insurers. “But we’d need to spend time on the details of that.”
Elmendorf said it’s “possible” that putting a continuous coverage provision in the reconciliation bill “might fly” with the CBO because changing the individual mandate would have a significant effect on federal spending for premium subsidies. Others are skeptical.
Insurers also have asked lawmakers to appropriate money for payments to health plans to offset the ACA’s costsharing reductions for low-income exchange enrollees—which House Republicans have sued to block—and restore risk-protection payments to plans that sign up sicker people. Those proposals may be resisted by conservatives who have denounced such payments as insurance industry “bailouts.”
Insurers also may have a hard time convincing Republicans to preserve generous premium and cost-sharing subsidies to keep coverage and care affordable for low- and moderateincome Americans. “Subsidies may have had more to do with people participating than the threat of a mandate or penalty,” Connolly said.
They will get a far more enthusiastic response to their request to repeal the ACA’s premium tax and Cadillac tax on high-value employer health plans, which they say would reduce premiums. Killing the various ACA taxes and spending reductions could cause big problems later in financing adequate replacement coverage, however.
The CBO would score the reconciliation provisions on whether they have budgetary impact and would add to the deficit after 10 years, though many of these measures likely would phase out when the replacement plan took effect. Republicans then would have to persuade the parliamentarian that these regulatory changes have budgetary effects that are not “merely incidental” to the nonbudgetary elements and therefore are not extraneous to budget reconciliation.
But the Senate’s presiding officer, a Republican, would have final say and could overrule the parliamentarian. Experts questioned whether Senate Majority Leader Mitch McConnell would allow that. “Overruling the parliamentarian would be something with damaging long-term effects for the Senate, and I think Sen. McConnell will not try to do that,” Elmendorf predicted.
Insurance leaders caution, however, that they aren’t at the point of negotiating any deals. That’s at least partly because congressional Republicans remain divided on strategy and policy, while the incoming president has sent conflicting messages. They would like to see Republicans slow down and craft coherent transition and replacement plans.
“I’m encouraged by the number of Republicans in Congress who have spoken up about the need for a smooth transition period,” Connolly said. “But the ‘hurry, hurry, hurry’ message is not going to serve anyone well.”