Clash over deregulation could thwart bipartisan efforts to stabilize insurance
There’s near-universal recognition that something needs to be done to shore up the shaky individual insurance market. But fledgling efforts to build consensus may not be enough to bridge an ideological divide.
Republicans and Democrats coalescing around the idea of taking action generally agree that certain measures are needed to curb premium increases and keep insurers and healthier customers from fleeing in 2018. They say Congress should at least temporarily fund payments to insurers for cost-sharing reductions for lower-income exchange plan members and establish a new reinsurance program to protect insurers from the cost of signing up sicker peo- ple. Democrats seek long-term CSR funding while Republicans are talking about extending it for just a year or two.
There’s possible consensus on other provisions, such as repealing the Affordable Care Act’s employer mandate and its 2.3% excise tax on medical-device sales.
But Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-Tenn.), who has scheduled committee hearings early next month on how to stabilize the market, wants to go further. He supports letting everyone buy very high-deductible catastrophic plans, erasing the ACA’s age cap of 30. That could conceivably win support from some Senate Democrats who offered a bill in 2014 to let insurers sell cheaper “copper” plans, with a lower actuarial value than bronze plans. Alexander also might try to revive a bill he introduced with his Tennessee GOP Senate colleague Bob Corker earlier this year to help consumers in counties where no exchange plans are being offered. The bill would let them use ACA premium tax credits to buy plans sold outside the exchanges, including plans that do not comply with ACA coverage rules.
Major insurance groups last month opposed a Senate GOP proposal to allow plans that don’t comply with ACA rules. They’d prefer a bill focusing on funding the cost-sharing reduction payments and creating a new reinsurance program, and they want the Trump administration to publicly commit to enforcing the ACA’s individual mandate.
“If you give flexibility to the states, you either get coverage gaps or fragmentation of the risk pool,” said Chet Burrell, CEO of CareFirst, a Blue Cross and Blue Shield plan in Maryland. “It might be the basis of a political deal but it’s not helpful to solve the problem.”
Another brewing flash point is Section 1332 of the ACA, which lets HHS grant states waivers to establish their own customized coverage systems. Alexander, as well a bipartisan group of House lawmakers called the Problem Solvers Caucus, proposed expanding the waivers to let states do away with such ACA requirements as minimum essential health benefits.
“My sense is there’s a willingness to expand state flexibility on 1332 waivers; it’s got a lot of potential,” said Tom Daschle, a former Democratic Senate majority leader who’s now a healthcare lobbyist at Baker Donelson.
The key is how to give states greater flexibility without increasing federal spending, said G. William Hoagland, senior vice president of the Bipartisan Policy Center and a former senior Senate GOP staffer. One possibility is letting states apply for broad waivers that let them use the ACA’s federal coverage subsidies to combine their exchange and Medicaid markets, creating a more streamlined, cost-effective system for both enrollees and health plans.
Despite the looming policy clashes, some observers see a narrow window for a compromise deal on a market stabilization bill, especially since some Democrats in the past have signaled openness to letting insurers sell cheaper, skinnier plans.
“I think the Democrats in the end probably do swallow some things they don’t like to get things they do like,” CareFirst’s Burrell said. “I would put the chances of some deal at 50-50.”
The odds would rise if President Donald Trump carried out his threat to unilaterally end cost-sharing reduction payments to insurers or halt enforcement of the ACA’s individual mandate, either of which could trigger a market meltdown.
Then, political observers say, panicked senators of both parties might overcome their policy differences and agree to pass a stabilization package restoring the CSR payments. They could attach it to a must-pass bill such as legislation raising the federal debt ceiling or reauthorizing funding for the Children’s Health Insurance Program.
But no one is betting their life savings on that happening, particularly because more conservative House Republicans may balk at doing anything to rescue Obamacare.
“My sense is there’s a willingness to expand state flexibility on 1332 waivers; it’s got a lot of potential.”
Tom Daschle, a former Democratic Senate majority leader who’s now a healthcare lobbyist at Baker Donelson.