While some Democrats pivot to single payer legislation this week, the immediate health policy agenda item is shoring up the 2018 Affordable Care Act (ACA) individual marketplace in time for September 27, the final deadline for insurers to decide if they’ll participate or not. The Senate’s Health, Education, Labor and Pensions (HELP) committee is resuming hearings Tuesday on how best to stabilize the marketplace this week, and one theme continues to dominate bipartisan negotiations: state flexibility.
Governors and state insurance commissioners testifying before the Senate HELP committee unanimously asked lawmakers to pay insurers for subsidies provided to low-income people, a more widely accepted request, and provide states more flexibility, a plea that’s not so clear-cut. If conservatives agree to include these cost sharing payments in the ACA stabilization bill, which is expected to be finalized by September 22, they need to get something in return.
“It’s pretty easy to be for extending cost sharing reduction payments. I mean, that’s just more money and we can argue about for how long it should be and that’s one thing,” said HELP committee chairman Lamar Alexander (R-TN). “We will have no chance of getting that unless we have, in addition to that, some restructuring of the market.”
The chairman spoke frankly about the political constraints of the bill. The success of this bill is contingent on Democrats making some concessions of their own. When Republicans talk about restructuring the marketplace, it’s clear they want to change two provisions within the current health law: allow older people to buy catastrophic plans, or cheap premium plans, and rework state innovation waivers. What’s unclear is whether Democrats are amenable to such requests. As for the latter tweak to the law, if reworking state innovation waivers means states can undermine the ACA’s ‘guardrails’ — which are meant to safeguard consumers from bare-bones plans — it’s hard to see how Democrats can cosign any stabilization bill.
“If we are talking about violating the guardrails that are in the ACA that provide protections for comprehensive coverage, for coverage numbers for benefits, then that’s something that Democrats are not going to agree to — it was something that was heavily litigated during the [repeal and replace] debate,” said health expert Topher Spiro during a bipartisan ACA event hosted by liberal Center for American Progress (CAP) and conservative American Enterprise Institute (AEI). ThinkProgress is editorially independent of CAP.
State innovations waivers, as outlined in section 1332 of the ACA, allow states to waive key provisions of the law as long as they do not jeopardize health coverage afforded to patients and the federal deficit is not increased. Under current law, states can already waive regulations, essential health benefits, which is when insurance companies must offer a basic set of benefits. Before the Department of Health and Human Services (HHS) can approve such waiver, they need to ensure no substantial losses in health coverage and affordability. Additionally, before a state can apply for a wavier, the state needs to pass legislation enacting the plan.
During repeal and replacement efforts, Republicans tried to amend the health care law by removing the coverage-related guardrails. (The Center for Health Policy at Brookings Institution has a good write-up on how the Senate GOP health bill looked to change 1332 waivers.) The Senate parliamentarian ruled that the GOP bill could not pass a bill that includes such waiver changes under reconciliation, which allows the Senate to pass a bill with a simple majority. If conservatives want any major tweaks done to section 1332, it’ll have to be done through regular order.
Stakeholders testifying last week have largely called for states to streamline the waiver application process. Insurance commissioners from Alaska and Pennsylvania asked Congress to change the waiver requirement that states need to pass legislation before enacting a plan. Additionally, insurance commissioners asked that Congress expedite the approval process. “The part that is stifling states right now is the six-month waiting period before they receive final approval,” Alaska’s Lori Wing-Heier told the Senate last week. In addition, former acting administrator of the Centers for Medicare and Medicaid Services turned advocate Andy Slavitt called for cutting the federal review time to a 90-day maximum.
“Expediting federal approval means less opportunity for public input and less time for the federal government to scrutinize waivers, particularly the effect on federal spending,” Kaiser Family Foundation Larry Levitt told ThinkProgress. “However, it wouldn’t fundamentally alter the protections for consumers. It would allow waivers to be more responsive to changing circumstances.” He added that “eliminating the requirement for state legislative approval would give states with powerful governors more leeway.”
Chairman Alexander’s own state insurance commissioner, Julie Mix McPeak, asked that states be able to change the essential health benefits provision through waiver authority, a request about which she is adamant. Additionally, Governors John Kasich and John Hickenlooper during a bipartisan ACA stabilization event Friday hosted by AEI and CAP, called for states to have more wiggle room to waive ACA regulations, like essential health benefits and the individual mandate.
Republican Ohio Governor John Kasich asked that Congress allow states to define essential health benefits. “You shouldn’t have to comply with every one of those essential health benefits,” said Kasich. For example, he said, give someone who is 23 years old the option to purchase a plan that doesn’t include maternity coverage.
Democratic Colorado Governor John Hickenlooper agreed that the waiver’s administrative process was “a pain in the neck,” and that if states wanted to change, let’s say the individual mandate, states should have the ability to. When asked if the essential health benefits is too onerous on states, Hickenlooper said “it was a huge long process to get to those benefits and if we are going to change them, you are going to have to get to another huge long process to negotiate that out.” He added that stabilization talks should be narrow in scope.
Hickenlooper and Kasich have been praised by the left and right for coming together and working on bipartisan ACA legislation. Their take on whether the essential health benefits regulation has been burdensome is indicative of the ideological riff that will be hard to escape as Congress writes the ACA stabilization bill.
When discussing what provisions may make it into September’s health bill, it’s important to remember the objective of the bill: stabilize the marketplace. This largely means calming insurance companies and guaranteeing cost sharing payments, thereby ensuring they don’t leave the marketplace. It also means securing the market by making it more attractive to consumers. Conservatives have argued that the essential health benefits regulation drive up health costs.
Fewer benefits would mean cheaper insurance premiums. However, that’ll make for skimpier plans, consequently raising out-of-pocket costs. As Health Affairs expert Timothy Jost writes: “Removing maternity coverage from insurance coverage, for example, might lower premiums by $8 to $14 per month, but would dramatically raise the cost of coverage for women in child-bearing age, and possibly make maternity care essentially an out-of-pocket expense, costing potentially $30,000 to $50,000.”
A study authored by actuarial firm Milliman reported that the vast majority of health care costs are attributable to benefits that insurance companies nearly universally covered:
According to HHS, prior to the ACA:
- 62 percent of enrollees did not have coverage for maternity services.
- 34 percent of enrollees did not have coverage for substance abuse services.
- 18 percent of enrollees did not have coverage for mental health services.
- 9 percent of enrollees did not have coverage for prescription drugs.
If reworking 1332 waivers means weakening the guardrails, then what becomes evident each passing day is that it’ll matter more and more where patients live than anything else.