Can Congress heal what's ailing Obamacare?
When it comes to Obamacare, repeal and replace is giving way to the big fix as lawmakers on both sides of the aisle turn their attention to stabilizing the insurance marketplace and improve health care for everyone.
On Monday, about 40 House lawmakers of both parties announced a list of proposals for doing just that. The group calls itself the Problem Solvers Caucus.
On Tuesday, Sen. Lamar Alexander, R.-Tennessee, chairman of the Senate Health, Education, Labor and Pensions Committee said the panel would begin hearings to stabilize and strengthen the individual insurance market. He urged President Donald Trump to continue to support the exchanges through September.
Meanwhile, Senator Bernie Sanders, I-Vermont, continues his crusade advocating Medicare for all and plans to introduce his long-delayed legislation soon.
Don't laugh. The "single-payer" idea has gotten a boost in recent weeks from the repeal-and-replace failures and from a good look at both the successes and failures of Obamacare, said L. Randall Wray, senior scholar at the Levy Institute of Economics of Bard College.
"If government subsidies and out-of-pocket spending continue to rise as insurers intensify efforts to deny submitted claims and/or withdraw from the 'marketplaces,' a political reaction is inevitable," Wray wrote in a recent report.
But will any of this come in time to stop Obamacare from imploding right now?
President Trump has threatened to end federal cost-sharing subsidies (or as he puts it, bailouts for insurance companies), designed to help low-income people pay for out-of-pocket medical costs. Without those subsidies, insurers that remain in the exchanges will likely have to increase premiums by an estimated average of 20 percent above already planned increases, according to the Kaiser Family Foundation.
The deadline for finalizing rates is Aug. 16, and commitments to participate in the exchanges are due Sept. 27, explained Sabrina Corlette, research professor at the Georgetown University Health Policy Institute. "I applaud the bipartisan efforts in the Senate and House, but there's not a lot of time to take up and pass something," Corlette said.
Much as a short-term fix is needed, it's also imperative that lawmakers from both parties come to the table for long-term solutions as well. To that end, let's take a closer look at three of the most important flashpoints the House caucus laid out in its recent announcement and the debate surrounding them.
A mandatory appropriation for the cost-sharing reduction payments. This would help eliminate the uncertainty haunting this issue and avoid the much-talked-about Obamacare implosion. "That would go a long way to shoring up the marketplace," Corlette said. But she pointed out that the appropriation needs to be mandatory as opposed to something that Congress reviews annually. "An annual appropriation fight could cause too much uncertainty," she explained.
A state stability fund. This is essentially reinsurance or a version of the risk pools that existed before the Affordable Care Act. Stability funds were part of both the failed House and Senate health insurance bills, and they were part of the Affordable Care Act until 2016, a year that saw big premium increases on the exchanges. Basically, this reinsurance helps insurers pay for super-high-cost patients whose treatments can run millions per year or even per month.
"We now understand that a relatively small percentage of patients drive the overall cost of the markets," explained Joel Ario, a previous director of the Department of Health and Human Services and now managing director of consulting firm Manatt Health. "To have all of those costs spread against the 5 percent or 6 percent of the population that buys in the independent market doesn't work."
Stability funds can help keep a standard pool of insured people with standard rates, he added.
How much money needs to be set aside for these funds and how they're structured will be the crux of the debate, predicted Corlette. In addition, health insurance advocates warn that separating high-cost patients into another group can lead to problems for people with preexisting conditions. In the pre-ACA risk pools, for instance, sick patients paid much more for insurance, if they could get it at all.
Technical changes for state innovation waivers and health care compacts. Here, the caucus is focusing on clearer guidelines for section 1332 of the health law, which deals with state innovation waivers, and section 1333, which allows states to enter into Health Care Choice Compacts that can sell insurance across state lines.
The latter would allow state regulators and insurers in a certain region to band together to apply the same regulations, making it possible to sell insurance across state lines. So far, most state regulators haven't been very keen on the idea. "The juice isn't worth the squeeze," said Corlette. It remains to be seen if changes made to this section would encourage more cross-state activity and what that would mean for consumers.
Section 1332 concerning state waivers is more dynamic. "Waivers -- that's where the discussions will lie," said Ario. This may open the door for debate about essential health benefits, protection for people with preexisiting conditions, lifetime caps on out-of-pocket payments and all of the other ACA-mandated benefits and provisions that could be changed or eliminated with a state waiver.
Under current law, states are allowed such waivers if they can prove that their policies are at least equally comprehensive to an ACA policy. "That's a very hard test for states to meet because of the guardrails provided in the current health law," Corlette said. "My guess is including this in the caucus plan is a response to state complaints about the constraints they are feeling."