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May 8, 2017

Market Watchers: Health Care Repeal Doesn't Address Industry's Top Priority, CSR Payments

IPI expert referenced: Merrill Matthews | In The News | Media Hit
  Best Wire

By Frank Klimko

Although the U.S. House squeaked through a bill to repeal the Affordable Care Act, market watchers say lawmakers have still failed to fix the biggest problem facing health care insurers, committing to fund the $10 billion cost-sharing reductions for next year.

"The crisis is now," said Cathy Mahaffey, chief executive officer of Common Ground Healthcare Cooperative, a Wisconsin Consumer Operated and Oriented Plan. "Consumers need to know now whether there will be available health plans in 2018."

By a four-vote margin, the House last week passed the American Health Care Act (HR 1628) (Best's News Service, May 4, 2017).

"The carriers need to know that the CSR payments will be there. The risk pools are unbalanced," Mahaffey told Best's News Service. "When you have members using substantially more than they are paying in premiums, that doesn't work."

HR 1628 does not reaffirm that payments to the CSR program will be made in 2018. President Donald Trump threatened to withhold the CSR payments as a bargaining ploy in the run-up to the vote on the bill. Concern over the CSR payments cuts across the industry.

"We are still waiting and wondering about the fate of the cost-sharing reductions," Ceci Connolly, president and CEO of the Alliance of Community Health Plans, told Best's News Service.

"That is the key mechanism for keeping health coverage affordable," Connolly said. "We are very disappointed that elected officials are not understanding and responding to that dilemma."

Although the bill contains language to continue the CSR program until 2020, it is not a legislative vehicle to fund it, said Kristine Grow, senior vice president, communications, America's Health Insurance Plans.

"We need the certainty for the CSR payments now," Grow told Best's News Service. "A lot of deadlines for filing are coming up now."

Aetna Inc. just said it will not participate in the individual exchanges in Virginia for 2018, citing marketplace uncertainty. And some states, like California, are allowing carriers to file two sets of rate requests, one without the CSR payments and a second one with them.

AHIP supports elements of the bill, like the repeal of the ACA taxes, but the group remains concerned about other parts of the measure, such as how those with pre-existing conditions will receive care.

Under the AHCA, states would be able to apply for a waiver to allow medical underwriting of individuals who do not maintain continuous coverage, provided the state sets up a program to provide some form of financial assistance to help high-risk individuals or health plans that cover them.

"We support pre-existing condition protections, coupled with continuous care," Grow said. "We support having everyone in the same risk pool so you bring down the cost of premiums for everyone."

According to the Congressional Budget Office, the U.S. Health and Human Services Department will this year transfer a total of about $49 billion to private insurers for market stabilization programs. That is scheduled to grow to $63 billion next year, the CBO said. The bulk of the 2017 funding, $38 billion, goes to insurers in the form of payments for advanced tax credits for individual exchange enrollees.

Under another amendment, states would be able to seek a waiver to be exempt from the ACA's 10 essential health benefits mandate. States could also apply for exemption from the community rating mandate, which blocks insurance companies from making sick people pay higher premiums.

The benefits' waiver raises troubling questions, said Blue Shield of California Vice President of Public Affairs Gary Cohen.

"You can argue that the (ACA) benefit package was too rich," Cohen said. "On the other hand, it's very clear from the polling that people are really scared. Before the ACA, people were buying health coverage that did not cover them when they got sick."

"Do we need a federal floor? That is a debate worth having," Cohen said.

Elimination of the benefits protections in the individual market could mean removal of those protections for about 70 million with employer-sponsored coverage, according to research from The Brookings Institution. Employer-based plans could race to the least-inclusive package because they are allowed to pick from any of the 50 states' essential health benefits when implementing ACA protections, the analysis said.

The state exemption from the community rating mandate is critical to stabilizing the marketplace, said Merrill Matthews, resident scholar at the Institute for Policy Innovation, an independent, nonprofit public policy research organization.

"I think it allows states to opt out and create a functioning health insurance market," Matthews said. "They are allowing waivers so insurers can risk-rate patients and assess actuarially accurate fair premiums. If they are above the standard (premium rate) they can go into the risk pool."

"Is this better than the status quo," Matthews told Best's News Service. "I think so, but I'm not entirely sure."

The bill now moves to the Senate for consideration. Senators are drafting their version of a replacement, which could take some time, said Laura Adams, senior insurance analyst,

"I wish I had a crystal ball and knew what would happen," Adams said. "But, if the Senate takes a more measured approach, it could take months for this to be put together."


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