A leading area of disagreement in a potential bill is the extent of insurance requirement flexibility for states.

Sept. 6—Key provisions of a short-term legislative stabilization package for the individual health insurance marketplaces drew bipartisan support at a Wednesday hearing, although some conflicts remain.

In the first of four hearings on market stabilization organized by Sen. Lamar Alexander (R-Tenn.), chairman of the Senate Health, Education, Labor and Pensions Committee, members of that panel broadly supported several provisions for inclusion in coming legislation.

First, senators from both parties urged support of an extension of cost-sharing reduction payments, which subsidize out-of-pocket expenses for many enrollees in the government-run marketplaces established by the Affordable Care Act (ACA).

Second, the establishment of a national reinsurance program by the federal government drew bipartisan support and was urged by state insurance commissioners who testified before the committee. The annual appropriation most commonly suggested for such a program was $15 billion.

A third area drawing broad support was greater flexibility for Section 1332 waivers, which were established by the ACA as a way for states to request that some ACA requirements be lifted for their local insurance markets.

“I’m hopeful that making some combination of continuing the cost sharing for a period of time—we can discuss what that time is—and significant changes in flexibility for states—probably in the form of amendments to Section 1332, since it’s already in the [ACA]—might provide a basis for action we take this month,” Alexander said.

He hopes Congress can pass a stabilization package by the end of the month, given that individual-market insurers are required to submit final premium rates by Sept. 20 and have them publicly posted by the end of September.

But even amid signs of agreement, success in advancing bipartisan legislation is not assured.

“We’re all aware threading this needle will not be easy,” said Sen. Patty Murray (D-Wash.), ranking member of the committee.

Conflicts Remain

A leading area of disagreement is the specific flexibility that a bill would allow on 1332 waivers. Republicans said states need the ability to lift more ACA coverage requirements to increase insurance options and draw more enrollees. Democrats countered that lifting too many ACA “guardrails” would reduce the quality of both plans sold on the ACA marketplaces and off-exchange plans.

Alexander outlined potential waiver changes that could draw bipartisan support, such as reducing the six-month waiting period that states typically endure while the Centers for Medicare & Medicaid Services examines their waiver request. Another change would allow governors or insurance commissioners to submit the waiver instead of waiting for the state legislature to approve an application, as is required under ACA rules.

Alexander also suggested that the federal government may offer funding for states to create such waivers, which can be costly to produce.

Lastly, he said, federal budget-neutrality requirements with respect to waiver provisions could be loosened to also include savings that the waiver may provide to the Medicaid program.

Such approaches would be “step one” before a broader package of marketplace changes that Congress could enact later, Alexander said.

The increased options with respect to 1332 waivers could greatly increase the number of states seeking them as markets nationwide experience dwindling competition and declining enrollments. The share of counties with only one insurer in the ACA marketplaces was 4 percent in 2016 before rising to 36 percent in 2017. For 2018, the share is projected to rise to 50 percent.

Sen. Christopher Murphy (D-Conn.) noted the increasing lack of competition leaves state insurance regulators unable to challenge steep rate increases due to fears that doing so could drive away a county’s last insurer.

So far, 23 states have begun the process of creating an application for a 1332 waiver, seven states have submitted applications, and two states have received approval for such waivers. 

One of the approved states, Alaska, used its waiver to waive the ACA’s single risk-pool requirement and to obtain pass-through federal funding based on expected savings from a reinsurance program. The reinsurance program will provide an estimated $51 million in federal savings, while the state provides 15 percent of the program’s $55 million cost, said Lori K. Wing-Heier, director of the Alaska Division of Insurance. The program was credited with reducing average planned plan rate increases from 42 percent to 7.3 percent for 2017.

But other states would struggle to fund a share of a reinsurance program, said Julie Mix McPeak, commissioner of the Tennessee Department of Commerce and Insurance.

Some Republicans pushed back on the notion that the federal government should fully fund a reinsurance program while facing a $20 trillion national debt.

Another key area of disagreement arose over how long the legislation should authorize the CSR payments. State insurance commissioners and Democrats urged at least two years of funding, but Republicans committed only to extending the payments through 2018.

 “If we don’t find a multiyear solution, we’ll just be back in this room in a few months trying to patch our systems again,” Murray said.

Another source of conflict was the Trump administration’s recent actions to curtail funding for navigators, who are trained to help enroll people in ACA plans.

Wing-Heier, of Alaska, said such professionals are needed in her state because many rural areas lack insurance brokers and agents to help people enroll in coverage. In contrast, John Doak, commissioner of the Oklahoma Department of Insurance, urged that enrollment activities be shifted to brokers and agents because the navigator program has never been audited and little is known about its effectiveness.

In response to the administration’s decision to reduce ACA enrollment advertising from about $100 million to $10 million, Teresa Miller, acting secretary of Human Services in Pennsylvania, said her state plans to launch its own outreach program.

Long-Term Plans

Senators and insurance commissioners appeared more divided over long-term changes to the marketplaces that could be enacted next year. However, they outlined a range of options that should be considered.

Among the highest-profile changes urged by some is allowing states to undertake much broader changes to their health insurance requirements than the ACA’s guardrails permit. Doak, of Oklahoma, said such changes are needed to stem the losses of enrollees in the off-exchange market because they are “forced to pay higher premiums for a policy they can’t afford to use.”

He supports a long-term approach such as that included in a bill sponsored by Sen. Bill Cassidy (R-La.), which would block-grant marketplace subsidy funding to states and allow them to determine the best approach to covering residents.

“What we really need is an innovative long-term solution that truly returns the power back to the states to implement ideas tailored to fit each state’s specific needs in health insurance,” Doak said.

Doak urged allowing the use of association health plans, allowing insurance to be purchased across state lines, expanding the permitted use of catastrophic plans, and expanding plan choices.  

Mike Kreidler, OD, Washington insurance commissioner, said his state was considering adding a public option for rural counties that lack competition.

Other individual-market flexibility could include exemptions for rural counties and those with no competition from the ACA’s so-called Cadillac tax on high-cost health plans, as a way to spur more entries, Wing-Heier said.

Sen. Susan Collins (R-Maine) urged the use of auto-enrollment to ensure that more young, healthy adults are added to the insurance market.

Drawing both praise and criticism was a recent proposal from a bipartisan group of governors that would allow individual-market shoppers living in counties with few options to purchase coverage through the Federal Employee Health Benefits Program, an insurance market for federal employees.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, September 06, 2017