Senate Eyes Compromise in Insurance-Subsidy Battle

WASHINGTON (CN) – Members of the Senate Health Committee inched toward a bipartisan compromise Tuesday for insurers whose subsidies are on shaky ground as lawmakers battle over the future of health care.

“Despite our partisan differences, our two hearings last week demonstrated a real hunger by many senators on both sides of the aisle to come to a result,” said Sen. Lamar Alexander, who chairs the Senate Committee on Health, Education, Labor and Pensions.

The committee’s hearing this morning marked its third of a four-part series ahead of the Sept. 20 deadline for insurers to file their 2018 individual exchange rates with the Department of Health and Human Services — part of the decision whether to participate in the individual markets next year.

With some insurers already jumping ship because uncertainty about the future of the Patient Protection and Affordable Care Act, lawmakers on the HELP Committee hope to vote on a bill by the end of this week intended to stabilize the individual markets.

A Tennessee Republican, Alexander said his party and the Democrats are aligned on several key themes, including congressional approval of cost-sharing reduction payments.

A subsidy that President Donald Trump has explicitly threatened to cut, these cost-sharing payments compensate insurers for offering discounted plans to lower-income Americans, reducing their out-of-pocket cost of deductibles, co-payments and coinsurance.

Of the five types of health care coverage available in the marketplace, all named for precious metals, the senators also want to expand the availability of a lowest-tier plan, copper.

The last point of agreement so far is giving states more flexibility on 1332 state innovation waivers, named for a section of the Affordable Care Act that allows for variation in how states implement key provisions of the law.

Several smaller details, however, are still holding up the bill in committee. Alexander said the two sides only agree in full on expanding copper plans, which could attract more people into the markets and spread risk out across insurance pools. The plans would cover less of the out-of-pocket costs in exchange for significantly cheaper premiums. 

In terms of the cost-sharing payments, Alexander wants the federal government to continue making them through 2018, but Democrats would like to see funding for those payments extended for several years.

Alexander’s Democratic counterpart, Sen. Patty Murray of Washington, said doing the bare minimum on that issue is unacceptable.

Bernard Tyson, CEO and chairman of the Kaiser Foundation Hospitals and Health Plan, bolstered Murray’s assertion on the cost-sharing payments. In his testimony to the committee Tuesday, Tyson said cutting off the payments after 2018 would be a “mistake.”

He urged the committee to continue them for at least three years, and suggested that they consider making the payments more permanent to lure insurers back into the markets.

“I can tell you with certainty that many will get back into the market,” Tyson told the committee, adding that he has personally received this assurance after speaking with the CEOs of other health insurance providers.

Another potential sticking point for Democrats revolves around greater flexibility for states in how they implement the 1332 waivers, which is the primary ask for Republicans as they move forward in crafting a bill.

Murray expressed a willingness to seriously listen to ideas about state flexibility but said Democrats will draw a line if that means eroding some of the ACA’s “guardrails,” including mandatory coverage for people with pre-existing conditions, the prohibition on annual or lifetime limits on health benefits, and allowing children to stay on their parents’ plans until the age of 26.

“I want to emphasize that,” Murray said, “because Democrats will reject any effort to this discussion if it erodes the guard rails and protections that so many patients and families rely on.”

Alexander disputed that these provisions are even at issue. What he wants to zero in on are the “severe restrictions” he said states face on benefit design under the 1332 waivers.

The rules on what types of health insurance can be offered are too rigid to allow anything other than existing ACA plans, Alexander said, which underscores a need for more flexibility around benefit design.

Other solutions are necessary to relieve the administrative burden of waiver applications that Alexander said are too cumbersome, inflexible and expensive. Of 23 states to start the application process, Hawaii and Alaska are the only two to have succeeded so far.

Once a 1332 application is approved — as happened in Alaska, which used the waiver to create a state reinsurance — Alexander said other states should be allowed to submit “copycat” applications that are quickly approved.

Allison Leigh O’Toole, CEO of Minnesota’s health insurance marketplace MNSure, called attention to the plight of states in this arena during the hearing. 

The state could reduce premiums by about 20 percent through a reinsurance program, which helps alleviate the financial strain of the highest-cost patients, O’Toole said. But state-funded reinsurance programs are unsustainable in the long-run, and reduced premiums in Minnesota are dependent on approval of the state’s 1332 waiver for a reinsurance program, which hasn’t been approve yet, she said.

“If our waiver is not granted in the next few days, Minnesotans will be paying substantially higher premiums next year,” O’Toole told the committee. “That’s not speculation, that’s fact.”

Tammy Tomczyk, an actuary from Wisconsin who helps calculate insurance risks and premiums, echoed Alexander’s call for more speed in the approval process, which she tied directly to surging premiums. Parting ways with Murray, however, Tomczyk said 2015 Department of Health and Human Services guidance that requires compliance with the so-called guardrails each year should be loosened to allow states using 1332 waivers to meet guardrail requirements over time – during the life of a waiver – rather than on a yearly basis.

Doing that could help the waivers be immediately effective in the states that get them, she said.

The committee will hold one final hearing on Thursday, when it will hear from other stakeholders about how to stabilize the individual markets.

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