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Sen. Lamar Alexander (R-TN) has teamed up with Sen. Susan Collins (R-ME) to offer a bill to — in their words — “stabilize individual market premiums.” It comes at a moment when there is a lot of uncertainty around how much marketplace health plans will cost in 2019 — and just a few months before insurance plans will be setting those premiums.
The plan arguably signals Congress is moving away from a stabilization plan that could pass with Democratic votes and toward a more typical, partisan Obamacare agenda from each side.
For example, Sen. Patty Murray (D-WA) — who has spent months working with Sen. Alexander on Obamacare stabilization — said in a statement that she was “disappointed that Republicans are rallying behind a new partisan bill that includes a last-minute, harmful restriction on abortion coverage for private insurance companies instead of working with Democrats to wrap up what have been bipartisan efforts to reduce health care costs.”
But before we get into the politics, let’s get into what this new Alexander-Collins package actually does. Here’s are the key points (with a big thanks to David Anderson at Duke, whose analysis helped me wade through the legislative text):
Fund the cost-sharing reduction subsidies for the next four years. This is arguably the biggest deal: bringing back a key source of Affordable Care Act funding that the Trump administration cut off last fall. For those who need a refresher, the cost-sharing reduction subsidies help offset co-payments and co-insurance for low-income Obamacare patients. The Trump administration said it would no longer pay these subsidies last fall — and insurance plans swiftly responded by raising their premiums, another way to bring in the missing revenue.
This has the knock-on effect of actually lowering insurance premiums for many low and middle-income Obamacare enrollees because premium subsidies also went up, to match the increased premiums (I explained this more thoroughly in a past edition of VoxCare, which you can read here).
Weirdly, restoring the subsidies could actually make health insurance more expensive for some Obamacare enrollees. Insurance plans — who were very opposed to ending these payments — are also a bit nervous about the possibility of them coming back. A new report from the Robert Wood Johnson Foundation, out earlier today, finds that insurers are worried that “proposed federal legislation to restore cost-sharing reduction funding could result in significant disruption and sticker shock for consumers receiving premium tax credits.”
In other words: Insurance plans and their regulators did a really good job reacting to the end of this particular funding source in Obamacare. They arguably found a way to structure insurance premiums to save many enrollees money. Now that they’ve adjusted to the post-CSR world that they feared, they are worried that another round of change may do more harm than good.
Billions in reinsurance funding. Reinsurance funding essentially shores up insurance plans that end up with the highest-cost patients — a safety net that is meant to make insurance plans more comfortable participating in a relatively new, and relatively rocky, individual market. The Alexander-Collins bill includes $5 billion in reinsurance for 2018 and $10 billion for 2019 through 2021. Larry Levitt, a health policy expert at the Kaiser Family Foundation, argues that this funding is actually more important for the ACA’s stability than bringing back the cost-sharing reduction dollars.
Create a new class of “copper” health insurance plans. The Affordable Care Act has long allowed young adults to enroll in catastrophic health insurance plans, which offer skimpy coverage at a lower premium. Up until now, only those under 30 are eligible to enroll in these less-robust options. But the Alexander-Collins plan would open these plans to everyone, as a new class of “copper” plans available to everyone (called copper to add them to the Obamacare’s scheme of metal levels, which currently includes bronze, silver, gold, and platinum).
This is actually an idea that has gotten some buy-in from moderate Democrats. It has shown up, for example, in legislation previously introduced by Sens. Alexander and Murray.
Governors could apply for Obamacare waivers without the support of their state legislatures. This provision of Alexander-Collins looks to reform Obamacare’s so-called “innovation waivers,” or, if you’re a nerd, you might know them as 1332 waivers. These waivers are meant to allow states to test out different ways to expand coverage, so long as they get to as many people as Obamacare would — and do so at no extra cost. So far, we’ve only seen limited use of these waivers.
But allowing governors to apply for waivers without the support of their legislature could lead to more of them, particularly from states where the governor’s house and legislature are controlled by different political parties.
Everything up until now could, plausibly, receive bipartisan support in Congress. But this is where things start to get partisan.
Those reinsurance funds? They could make it impossible for Obamacare plans to cover abortion. Abortion coverage has always been a sticking point in any debate over the Affordable Care Act — anti-abortion Democrats frustration with abortion provisions in the original text nearly sunk the law altogether, back in 2010.
Now, that same issue has resurfaced, as this proposal would have these new reinsurance funds covered by the Hyde Amendment — a decades-old policy that bars the federal government from spending money providing abortions. When Obamacare was passed, the law dealt with this particular issue by requiring insurers to segregate money coming from government subsidies and money coming from individual premiums — and using the latter to cover abortions, in plans that included the benefit.
Democrats argue that adding the Hyde Amendment to this new pool of reinsurance funding would essentially make it impossible for Obamacare plans to offer abortion coverage. And that likely makes this package — which has a lot Democrats would like — a non-starter.
This story appears in VoxCare, a newsletter from Vox on the latest twists and turns in America’s health care debate. Sign up to get VoxCare in your inbox along with more health care stats and news.
