Today, Wednesday September 6th marks the first of four scheduled Senate Health, Education, Labor and Pension (HELP) Committee hearings during the month of September, intended to swiftly shape a bipartisan bill to stabilize the Affordable Care Act’s (ACA) Individual markets. As discussed in our last blog post, the GOP spent nearly the entire summer session unsuccessfully attempting to repeal and replace the ACA, and are now in charge of leading the effort across party lines to steady the ACA markets for 2018. Senate Majority Leader McConnell (R-Kentucky) quickly pivoted towards bipartisanship following the defeat of the “skinny repeal” effort, but questions abound as to whether a bipartisan bill can be drafted, passed and signed within the next three weeks – or if conversation will quickly dissolve into partisan bickering, creating more uncertainty in the ACA individual markets for 2018 and beyond.
Given all the complexity, what will these next few weeks look like for health care reform?
Here are some tell-tale signs to look for during this week’s hearings that will signal whether Congress is on the road towards a stop-gap for the ACA in 2018:
Cost-Sharing Reduction Payments
Democrats and Republicans may be able to find common ground around the extension of Cost-Sharing Reduction (CSR) payments – monthly payments made to insurers to balance the cost of providing discount insurance plans to Americans who earn up to 200% of the federal poverty limit. Senate HELP Chairman Lamar Alexander (R-Tennessee) has clearly expressed interest in having the cost-sharing reduction payments approved “in a bipartisan way.” However, there is already some tension surrounding the prospects of an extension, as Senator Alexander supports approval of CSR payments for one year while his counterpart and Ranking Member on the Senate HELP Committee, Senator Patty Murray (D-Washington), has indicated her support for two years of CSR payment approval. Should the HELP committee be able to find an agreement on how long CSR funding will last, it will likely be linked to policy agreement on the granting of additional “state flexibility” in the administration of ACA markets.
While CSR payment extension will likely be the foundation of any bipartisan agreement, many Republican Senators will see extending the payments as a step in the direction of solidifying the ACA and will seek some compromises from Democrats in the form of “state flexibility” in how the ACA is administered and how states approve ACA health plans. Currently, individual states have ACA flexibility in the form of 1332 waivers, known as “innovation waivers.” These waivers are approved individually by the Department of Health and Human Services, and contain specific guidelines or “guardrails” that must be met before consideration – no increased costs or reduction in the number of people who will receive coverage. Republican Senators will be aiming to lower the procedural requirements of 1332 waivers to allow states more freedom in administering the ACA, which they can couch as a short-term stabilization effort to the ACA and claim a small victory in rolling back some Obamacare regulations.
Cost-Sharing Reduction Payments and State Flexibility via 1332 waivers will be two feature bargaining chips in September, but given the narrow path to go from bill to law, a host of sweeteners could be thrown in to make the stabilization package palatable to both Republicans and Democrats:
Beyond CSR payments and “state flexibility”, common ground for bipartisan agreements becomes thin. That said, reinsurance, which is a program that covers medical costs for sicker enrollees without significantly raising the cost of premiums for healthier enrollees, has gained some limited support. A temporary reinsurance program was implemented under the ACA and paid out a total of $20 billion between 2014 and 2016 to provide stability for the exchanges. Democrats will be in favor of reviving this program, and can point to states like Alaska and Minnesota as prime examples of successful state-run reinsurance programs that pay high-cost claims to keep them out of the insurance risk pool and help keep premiums down. Republicans may be wary of bringing an ACA regulation “back from the dead”, but could also fit under the “state flexibility” umbrella, providing states the leeway to implement a reinsurance program that is contoured to their needs similar to the way the Trump Administration approved Alaska’s 1332 “innovation waiver” to establish its own reinsurance program.
Health Savings Account Expansion
Republicans made Health Savings Accounts (HSA) a common health care talking point during the 2016 election season, and tweaks to HSA rules may help Republicans stomach a two-year extension of CSRs. HSAs are linked to high-deductible insurance plans, and with few exceptions, enrollees with HSAs are not allowed to use those funds to pay monthly premiums. Enrollees are also limited in how much money can be put into an HSA – no more than $3,400 for individuals in 2017. Republicans may look to expand this amount and/or permit account holders to pay their premiums with HSA dollars to prove to voters back home that they are making some headway in addressing health care costs.
Congress faces an uphill battle on many fronts in September. The same bill will need to have enough components for Republicans to claim it is part of their larger plan to ultimately repeal and replace the ACA, while still allowing Democrats to say it’s an important first step towards maintaining the ACA. The federal budget and the debt-ceiling need to be addressed by the end of the month, along with the extension of Children’s Health Insurance Program (often referred to as CHIP), not to mention some sort of support to help Texas recover from the devastation of Hurricane Harvey. Obamacare remains politically volatile, tensions amongst Republicans over their collective failure to repeal and replace the ACA this summer may still be lingering and the threat of a veto from President Trump is very real. All of this creates a narrow road for passage of a bipartisan ACA stabilization package and sets the stage for September to be the ACA’s “make it or break it” moment, at the very least, for 2018.
We will continue tracking along and will be sure to share our thoughts as themes emerge. For a more in-depth analysis of how impending legislation could affect your organization or market, contact us at firstname.lastname@example.org.
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