The Affordable Care Act (ACA) marketplace is less competitive than the drafters intended it to be. President Barack Obama once said the marketplace — where people can shop online for health insurance and compare plans — would be like an “Expedia for health care.” But if Expedia were anything like the ACA, people in some states would log on and see just one airline listed. In Virginia, they’d log on and see no listings at all.
To date, 1,476 counties are projected to have just one insurance carrier for 2018 — or 46.99 percent of the country. Just when all U.S. counties had at least one insurance option, health insurer Optima announced Wednesday evening that it would scale back in Virginia, leaving 63 counties without any insurers and more than 62,000 residents without any insurance plan.
Virginia’s bare county problem is having the broadest impact yet: More ACA consumers are affected by this ‘outage’ than any other bare county this summer, according to Bloomberg. Virginia has until the end of September to fill its bare counties, which is when insurers have to sign final contracts for selling plans on the 2018 marketplace.
“My administration and I have been doing everything within our power to strengthen Virginia’s health care Marketplace,” said Virginia governor Terry McAuliffe. “However, as we have heard from Optima and other insurers who have pulled back from Virginia markets, their decisions are being driven by instability and uncertainty that the President and Congress are creating through their inaction.”
Some lawmakers do intend to act. The Senate’s Health, Education, Labor and Pensions (HELP) Committee held its second hearing Thursday on the ACA, signaling congressional efforts to strengthen the current health law. Senators were joined by governors, who appeared just as frustrated with the state of uncertainty as their Virginia counterpart.
Given the dire need to shore up the marketplace by the end of the month, HELP Committee Chairman Lamar Alexander (R-TN) said the committee is aiming to draft legislation by the third week of September. And during the second health hearing this week, it became clear that the five state governors in attendance — three Republicans and two Democrats — have some ideas about what they want September’s short-term stabilization bill to include.
Pay cost sharing payments to insurance companies
All of the governors at Wednesday’s meeting called for the federal government to pay cost sharing subsidy payments to insurance companies, echoing the request of state insurance commissioners who also testified before the HELP committee this week.
The question that remains unanswered surrounding cost sharing subsidy payments is how long will the government commit to making these payments?
Montana Gov. Steve Bullock suggested the federal government should commit to these payments for three years. It signals a commitment to stability and predictability, said Bullock. Alternatively, Colorado Gov. John Hickenlooper suggested committing to these payments to insurers until 2019. Governors for the most part agreed that Congress should commit to these payments annually as opposed to the current month-to-month payment set-up. If these payments are eliminated then more insurance companies will pull out of the ACA marketplaces; Anthem said it would drop out of the Maine exchange if that’s the case.
Speaking frankly at the end of the hearing, Alexander said extending cost sharing payments had “no chance” with Republicans unless compromises were made.
Create a reinsurance program
Another wonk-ish question that arises is whether the final stabilization bill will include a state-based reinsurance program or federal-state based reinsurance program. Reinsurance is when the government pays insurers to cover higher-cost individuals; this protects consumers against premium increases.
Sen. Al Franken (D-MN) asked the governors which they would prefer — state or federal-state based. Most seemed to favor the latter because state reinsurance programs are more administratively cumbersome to set up. The point is, as Kaiser Family Foundation’s Larry Levitt points out, reinsurance is more cost-effective than you’d think.
But at the end of the hearing, Alexander shot down the idea of a federal-state based reinsurance program in the short-term bill. “Creating a brand new reinsurance program in the next ten days is not going to happen,” Alexander said.
If states want the program, they’ll likely have to set it up themselves. They can do this through 1332 waivers, an existing program that is already written into law. Streamlining the federal approval process for this waiver will likely make it into September’s stabilization bill; it’s a move supported unilaterally by governors and insurance commissioners alike.
Let consumers buy into federal works plan
The idea to allow residents to buy into the Federal Employee Benefit Program is featured in the Ohio Gov. John Kasich and Colorado Gov. John Hickenlooper’s bipartisan plan to stabilize the marketplace. This essentially would allow states to buy into government benefits. If this garners support, it’ll likely be part of a long-term stabilization plan. This will not make it into this month’s bill.
Let older people buy catastrophic plans
Catastrophic plans are offered on the ACA but exclusively to people under 30. This plan, dubbed the “copper plan,” would offer the lowest monthly premiums but highest costs when patients actually need care. Alexander has been advocating for this plan through the two hearings but when he posed the idea to governors, they didn’t bite. Alexander reminded governors, and everyone for that matter, that there will be trade-offs. Again, this will not make it into this month’s bill, but don’t strike it out in future long-term health bills.