A Few Simple Ideas From State Officials To Shore Up Obamacare Markets

Simpler to imagine than to pass, but the bipartisan Senate hearing is a start.

The weirdest thing happened on Wednesday: A calm, sensible and bipartisan conversation about health care broke out on Capitol Hill.

The discussion took place in the Senate’s health, education, labor and pensions committee, which held the first of four planned hearings on “stabilizing” the Affordable Care Act’s private insurance markets. And the very existence of the hearing represents a milestone of sorts, although the prospects of that conversation leading to meaningful legislation this year remain slim.

For the last eight months, ever since Donald Trump became president, the focus of official debate on Capitol Hill has been on whether and how to repeal Obamacare. The premise of repeal, a cause that has defined GOP politics for years, is that the 2010 health care law has been an utter failure ― sticking people with unaffordable, lousy coverage while causing private insurance markets to break down completely.

Wednesday’s hearing, which featured testimony from five state insurance regulators, produced a more nuanced picture ― of a law that has done a lot of good while running into some severe difficulties in parts of the country. Conversation between the senators and the witnesses kept returning to a series of relatively modest policy initiatives that could shore up shaky markets where they exist. And most of the senators seemed genuinely interested in thinking about, or at least talking about, the merits of each.

This is the way governing is supposed to work, and it’s precisely the sort of hearing that the committee’s Republican chairman, Lamar Alexander of Tennessee, had promised. “This hearing is about taking one small step,” Alexander said in his opening statement.

And it shouldn’t be a hard step to take, at least in theory. The Affordable Care Act has brought the number of Americans without insurance to historic lows, in part by making comprehensive insurance coverage available to people who couldn’t get it before, either because they had pre-existing conditions or couldn’t afford it without the law’s federal tax credits.

But in many states, insurers have struggled to attract enough healthy people, whose premium dollars end up subsidizing the bills of those with serious medical problems. In response, carriers have raised premiums or abandoned markets altogether. Although millions get tax credits that insulate them from higher premiums, millions do not. A large number of counties are down to just one insurer for next year and, as of Wednesday afternoon, a number of counties in Virginia have none ― although, if recent history is indicative, an insurer will swoop in to take the business.

“This hearing is about taking one small step.”

- Sen. Lamar Alexander (R-Tenn.)

Heading into 2017, as President Barack Obama was leaving office, there were signs that the overall situation was finally improving, with insurers finding their way to better margins and some companies expanding operations, even as others were withdrawing. One reason for this was careful nurturing from the Obama administration and those state officials, such as California’s, who were committed to making the program work well.

But now, instead of a president trying to make the program succeed, there’s a president doing what he can to make it fail. Trump has threatened repeatedly to stop special payments to insurers, promised by the law but never appropriated, that are designed to underwrite the cost of extra financial protection for low-income consumers. Insurers have responded by seeking even higher premiums for 2018. The higher premiums might not affect consumers, depending on how insurers and regulators set the increases, but the federal government would end up spending more, and it’s one more sign of how antsy the carriers have become.

As if that were not enough, last week the Department of Health and Human Services announced a massive cut to advertising and outreach. Many experts fear that, without the outreach, enrollment will drop, particularly among the healthy people insurers want to attract. In other words, the cut to enrollment spending could make the system’s actuarial problems worse, driving premiums even higher.

The potential damage of those moves and the importance of counteracting them were common refrains from the witnesses and their interlocutors at Wednesday’s hearing. Julie McPeak, Tennessee’s insurance commissioner, called restoration of the insurance funding “the single most critical issue that you can address to help stabilize insurance markets for 2018 and potentially bring down costs.”

The other big idea to get attention Wednesday was a proposal to create a federal “reinsurance” program, similar to one that the Affordable Care Act had in place for its first three years. Reinsurance essentially reimburses insurers for their most expensive customers ― say, anybody with claims that exceed $1 million in a year. It’s a way of spreading those costs across a broad population, which is what insurance is designed to do, and such an initiative would almost certainly allow insurers to reduce premiums across the board.

States can take that action on their own by taking advantage of special waivers the Affordable Care Act already allows, and the commissioner from one of those states, Alaska’s Lori Wing-Heier, told the panel how successful it’s been. But she and other state officials want the federal government to streamline the waiver application process, and many would like Congress to put some new federal money into the program as well.

That last part is probably more than Congress is willing to do right now. Even though creating a new federal reinsurance program is a sensible idea with a history of bipartisan support, it would require appropriating money that, at least in the short term, this Republican Congress is not about to spend. Alexander made that clear, endorsing the idea in theory but repeatedly asking why the federal government, rather than the states, should devote new money to it.

Of course, passing even a narrower measure could be difficult. Alexander and the committee’s ranking Democratic, Patty Murray from Washington, have sketched out what such a bill would entail: making those insurer payments, at least for a little while, in exchange for giving states some new flexibility over how the law works in their states. Although it looks like Murray wants a longer duration of payments than Alexander is willing to guarantee and Alexander wants more flexibility than Murray wants to give, it’s easy to imagine the two of them finding a compromise.

What’s not so easy to imagine is getting agreement from the rest of the Senate, to say nothing of the House and then the president, given lingering GOP interest in repeal. As if to underscore the difficulty, Sen. John McCain (R-Ariz.), whose no vote helped kill a GOP repeal effort in July, told reporters Wednesday that he would support a health care bill his best friend in Congress, Sen. Lindsey Graham (R-S.C.), has sponsored. That bill is another effort at full repeal and would almost surely leave millions without coverage.

McCain later walked back his statement, saying he wasn’t sure if he would support the bill and reiterating his earlier calls to write legislation through the usual committee process. And even if McCain did come around, it’s not clear when Congress would take up the legislation, because it already has a packed schedule and the ability to pass health care with with just 50 votes expires Sept. 30.

But Alexander also wants to act quickly because insurers have until late September to back out or potentially change rates ― and he’d like to reassure them on the payments before then. If there are significant portions of his caucus still entertaining the idea of repeal, getting their support for a narrow repair bill will be that much harder.