Governors Urge Senate to Shore Up Federal Insurance Subsidies

WASHINGTON (CN) – President Donald Trump’s threats to cut off insurance subsidies prompted bipartisan pushback Thursday as five governors warned Congress about the danger of continued instability.

“Some may say the only way to ensure legislative action on cost and realize real reform is total collapse,” Tennessee Gov. Bill Haslam said. “I don’t subscribe to that line of thinking. I think every governor here and those back at home believe we can move to stabilize the market now while we work to take on the issue of health care costs.”

Haslam, who is Republican, addressed the Senate Health, Education, Labor and Pensions Committee this morning as part of a bipartisan effort to stabilize the nation’s insurance exchanges — creations of the bruised and battered, but still in force, federal health care law.

Insurers must file their 2018 rates by Sept. 20, but ongoing uncertainty has caused some of them to flee the markets or suggest higher premium pricing.

In recent weeks the Trump administration has compounded industry concerns wrought by congressional repeal-and-replace efforts by threatening to end key insurers subsidies.

Provisions of the Patient Protection and Affordable Care Act, the cost-sharing reduction subsidies are what allow insurers to offer discounted plans to lower income Americans.

President Trump has called them bailouts for insurance companies, but those payments reduce out-of-pocket expenses for Americans who earn between 100 and 250 percent of the federal poverty level and buy their plans on the PPACA’s federal and state marketplaces.

After the Senate failed to pass a bill to repeal and replace the Affordable Care Act, President Trump suggested that Republicans should let the markets collapse and then work on a new bill.

Haslam cautioned against this approach. Noting that 80 percent of Tennessee counties have only one insurer, the Republican governor said that any delay in immediately stabilizing the markets would collapse them.

Though insurers continue to collect the subsidies on a monthly basis, Trump has repeatedly threatened to end them.

Sen. Lamar Alexander, who chairs the Senate HELP Committee, told the assembled lawmakers Thursday that Trump should not be criticized for making those threats.

Indeed a federal judge in Washington found the payments unconstitutional, he noted, because Congress had authorized them without appropriating funding.

“What we would like to do,” Alexander said, “is clear that up by appropriating the money for a period of time. And then if the president didn’t do it, that would be another question.”  

Colorado Gov. John Hickenlooper meanwhile proposed a plan with Gov. John Kasich, R-Ohio, and six other governors last week that would ensure cost-sharing subsidies for two years, and give states more flexibility in seeking 1332 state innovation waivers, which get their name from a section of the Affordable Care Act.

Utah Gov. Gary Herbert meanwhile noted that his state is still waiting on word about a waiver request they made in August 2016.

“We just need to streamline the process,” he said.

Gov. Charlie Baker, a fellow Republican from Massachusetts, echoed this point, saying that needless administrative tasks chew up enormous amounts of time.

Baker also pointed to a federal requirement to underscore the need for more flexibility. Essential health benefit standards under the PPACA require pediatric dental coverage, but he said Massachusetts is still struggling in this area despite good-faith efforts.

“There can be more than one efficient and effective way that states can ensure children covered by individual or small group plans are assured access to pediatric dental care,” Baker said.

Dental insurance carriers had already been providing coverage successfully in the state, he noted.

“It is critical that health plans provide coverage for the care that keeps people healthy, but federal mandates should leverage common sense market practices and provide states with flexibility to match local requirements to local needs,” he said.

The Hickenlooper-Kasich plan also calls on Congress to create a $15 billion stability fund and continue federal efforts to promote enrollment, which broadens the risk pools and helps drive premium costs down.

The plan also calls for the government to spur competition in the marketplaces with tax incentives that would encourage insurers to return to markets with only a single carrier.

In addition to Hickenlooper, the committee heard from Montana Gov. Steve Bullock. Both men are Democrats.

Thursday’s hearing marks the second of four scheduled for the next two weeks by Sen. Alexander, R-Tenn., and Sen. Patty Murray, D-Wash.

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