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.

Modern Healthcare - - NEWS - By Har­ris Meyer

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.”

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