Problem Solvers Caucus and the ACA
Within this bi-partisan House caucus, there are several points of burgeoning agreement on the future of the Affordable Care Act (ACA): 1) Extend cost sharing reductions. 2) Fund states to reduce individual market premiums through reinsurance or high-risk pools. 3) Eliminate the medical devices tax. 4) Roll back the employer mandate to employers of 500 or more employees. 5) Value and outcome based Medicare reimbursements. 6) Cross state sale of insurance.
What are they talking about and what would it mean? The cost sharing reductions help low and moderate-income individuals and families who buy through the Exchanges to reduce their copays and deductibles. They are available to an individual with incomes between about $12,000 and $30,000 annually. The House Republicans sued the Obama Administration claiming it had to seek annual Congressional appropriations to fund these tax credits. The federal District Court said “you’re right”, and it’s on appeal to the DC Circuit Court of Appeal. President Trump has threatened to agree with House Republicans in the lawsuit and wants to terminate these payments to insurers; the Appeals Court has allowed the states to intervene on behalf of their impacted citizens. The insurers are caught in the middle because the ACA says you must reduce the copays and deductibles and if the Trump Administration does not make the payments, they have to raise premiums to capture the $7 billion in federal tax credit funding they would lose. The caucus would continue funding for the tax credits for these cost sharing reductions.
The ACA guarantees all can buy individual insurance regardless of pre-existing conditions. The ACA balances the risk pool with healthy lives through the premium assistance for low and moderate income and the individual mandate that all must enroll. The ACA also provided for risk adjustments and reinsurance to help insurers who had too many catastrophic cases. This funding has been repealed and phased out in a measure sponsored by Senator Marco Rubio. It’s one of the reasons that premiums are now increasing in the individual market. Both the House and Senate “repeal and replace” legislation included funding for the states to stabilize their individual market place premiums. Reinsurance is simply federal or state funding to insurers for their costs of catastrophic care. The caucus has agreed to fund states and give them flexibility as to how to reduce insurance risk and premiums in the individual market. It is unclear how much money will be included, and it is unclear to me how those states, which have opted for federal Exchanges would use these funds to achieve Congress’ intent. It is also unclear to me how those states, which have strongly opposed the ACA would use these funds to better implement the ACA.
The medical devices tax was one of many small taxes that the health care industries agreed to in funding the Affordable Care Act. It’s like a federal sales tax. As I have said before, the device manufacturers were able to increase profits by selling to lots of new customers covered by the ACA and their actual costs were only their marginal costs. The manufacturers have waged a long lobbying war to eliminate it, and they now have bi-partisan support from the Problem Solvers caucus for their efforts.
The ACA’s employer mandate requires employers of 50 or more employees to offer basic coverage for their full time employees and dependent children. The requirement is set at a low bar; employers must pay 60% of the lowest cost bronze plan (covers 60% of expected medical costs, akin to a 40% copay). The Problem Solvers caucus would increase the employer size to 500 or more employees and increase the definition of full time from 30 to 40 hours a week. Since most large and medium sized employers already offered coverage before the ACA, this is not likely to have a large impact on employer offering. Those employers who may drop their offer of coverage are likely to be low wage businesses, and their employees may then qualify for the Exchanges and Medi-Cal. So this will have a financial impact primarily on higher wage employees of these businesses who earn too much to qualify for premium assistance in the Exchanges and on their undocumented workers who cannot qualify for full scope public coverage.
The caucus wants to shift Medicare reimbursements from volume to value. In other words, it’s not how many visits you delivered but whether your patients were getting better or at least less sick. This seems like an excellent idea.
Sale of insurance across state lines appears to be another area of agreement among the caucus members. It has been unclear to me how an out of state insurer develops sufficient buying clout in a state where it is not licensed to affect the underlying price of care and thus the costs of coverage. On the other hand, if insurers become licensed in a state of convenience that has weak regulations of insurer misconduct and weak or politicized regulators; this could lead to serious abuse with no remedy.
Senators Lamar Alexander and Patty Murray plan on holding hearings in September leading to a mark up of Senate legislation designed to afford relief to plans and customers in the individual market. Two of the issues being mentioned are giving wider latitude to the states in administering these programs and allowing for broader §1332 waivers for state experimentation. We’ll know more in September.
Prepared by: Lucien Wulsin