Can the Senate Function as Intended?

Yesterday afternoon it was announced that Senator Murray and Senator Alexander had reached a bipartisan agreement to provide funding for cost-sharing reduction subsidies and make other minor changes to how the ACA is currently being administered.

This is how the Senate is supposed to work, two sides meet and hash out a compromise.  However, questions remain as to if the compromise will be fully accepted (more on that below). 

After reviewing the bill, my bottom line is that this is a good deal for supporters of the ACA.  It represents some compromises, but to me, the benefits far outweigh my concerns.

Summary of the bill (being circulated by Andy Slavitt):

If you’re interested, here is the full text of the bill.

As mentioned above, as of this morning, acceptance of this compromise by all parties is far from assured.  While passage in the Senate is the easier lift, Senator McConnell (as of this writing) has not yet committed to bringing it to a vote.

Prospects in the House are even more questionable, as some conservative Republicans have already come out against the bill.

There are suggestions that the compromise may be part of the next funding bill for the Federal Government (needed by December 8) but those are just rumors at this point.

Finally, the President has been ambiguous in his reaction, while praising the compromise in an afternoon news conference, in the evening he made the following remarks:

It’s also worth remembering that we thought there was a deal to reauthorize CHIP, but we’re still waiting on that to be introduced in both chambers as well as waiting on Community Health Center funding.

So, as of this morning, while I would vote for this bill, it’s unclear if enough of our representatives would do so, or if they will even have the chance to do so.

But hope springs eternal, so let's review a few things about the specifics of the compromise:

• The copper/catastrophic plan is just another option – they will be part of same risk pool as other plans so do not present an adverse selection risk.  At the end of the day, due to limits of out-of-pocket max, the plans are not that different than Bronze plans
• This is not a “bailout” – these payments are about providing insurance companies funding for the benefits (cost-sharing subsidies) they are legally obligated to provide
• It is unclear (and to me doubtful) that this will impact rates currently set for 2018.  To do so the bill would have to move much more quickly than expected and there would need to be a delay in the start of open enrollment.  That said, there will be a mechanism so that insurers are not paid twice for the cost-sharing subsidies
• There is funding in the bill to support enrollment.  The money would be sent to each state, and for states that did not want to spend the money (good morning Maine) there are provisions for the Feds to allocate the money within the state so that it would still be utilized

We can expect to hear a lot more in the next few days about if and how this compromise moves forward.  

In the meantime, remember that open-enrollment starts on November 1 and if you purchase individual coverage it is urgent that you comparison-shop, given the current state of the market.  This morning’s New York Times has a good rundown of the state of things absent passage of Murray-Alexander:  Trump’s Attack on Insurer ‘Gravy Train’ Could Actually Help a Lot of Consumers.

As always, thanks for reading and stay tuned.

Waking up to ACA chaos

Yesterday morning, the President signed an executive order instructing several federal agencies to consider actions which will further undermine the ACA. 

As I said to the Press Herald yesterday (Trump’s executive order could alter Maine insurance market) :

“As of the signing of the executive order, absolutely nothing changes,” said Mitchell Stein, an independent insurance industry expert. “It only instructs agencies to look at making changes, but any changes would require standard rule-making, which is a lengthy process. It’s likely nothing would happen for the 2018 calendar year.”

The wildcard, Stein said, is how individual insurance companies – most of which are already plagued with uncertainty – react to another layer of uncertainty.

“There certainly is potential to undercut the individual market,” he said.

To reiterate, the changes “suggested” have the capacity to cause a lot of damage, but nothing will happen immediately. Here’s a good summary from the NY Times: What Did Trump’s Health Care Executive Order Do?

I went to sleep with those calming thoughts but woke up to more chaos.  Apparently when told the order would not have an immediate impact, the Administration said, “hold my beer” and announced that they would cease making the cost-sharing reduction (CSR) subsidy payments to insurers.

This action has been expected for some time.  Many states, including Maine, have accounted for this possibility in their 2018 rates. 

Please keep the following in mind:

1) The payments will still be made to individuals; the insurers have a legal obligation to provide the subsidies.

2) Here in Maine, the individual plans have built a lack of subsidy payments into their rate for 2018.  That means the market won't collapse.

3) If you purchase an individual plan, this has implications for how to make your 2018 choice (remember, open enrollment starts 11/1):

• If you receive a premium subsidy, you are protected - that is because the premium subsidy is based on the benchmark silver plan (whose rates account for the lack of CSR payment)
• If you receive a premium subsidy and a CSR purchase the silver plan just as you would have last year (you must purchase silver to receive the CSR
• If you receive a premium subsidy but no CSR, consider a Bronze or Gold based on your circumstances (your premium subsidy will go further for these plans because they don’t have the CSR surcharge built in)
• If you do not receive a premium subsidy and want to purchase a silver plan, consider purchasing off the marketplace – those plan premiums do not have the CSR surcharge built in
• Bottom line, be an active shopper for 2018

The act of stopping these payments is not only vindictive; it is foolish.  The premium subsidy payments will go up more than if the CSR subsidy payments were made (The Effects of Ending the Affordable Care Act’s Cost-Sharing Reduction Payments), plus the insurers will sue the government for the payments.  

You can read more of the gory details in this excellent post by a health policy attorney: Cutting off the cost-sharing payments.

The bottom line this morning is more chaos and confusion.  None of these actions will reduce costs or improve benefits, but wasn’t that the goal?