Obamacare Stability Plan Calls for $30B Reinsurance Fund (1)

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By Alex Ruoff

A prominent Senate Republican is pushing a plan to inject $10 billion a year for three years into the nation’s individual health insurance marketplaces, according to an outline of the plan provided to Bloomberg Law.

The proposal, sponsored by Sens. Lamar Alexander (R-Tenn.) and Susan Collins (R-Maine), would reduce insurance premiums by an average of 10 percent in 2019 and by 40 percent over three years, according to the outline. Alexander expects these promises of lower rates and a more stable insurance market to persuade fellow lawmakers to include his proposal in the upcoming omnibus spending bill.

“If we can lower rates 40 percent for people buying insurance, I think most Republicans and Democrats will want to find a way to do that,” Alexander, chairman of the Senate Health, Education, Labor and Pensions Committee, told reporters March 14.

It’s unclear if Republican leaders will include it in the omnibus, Republican Conference Chairman Sen. John Thune (R-S.D.) told reporters. He said the measure is “in play” but no final decision has been made.

Some conservatives are reluctant to support any measures that could prop up Democrats’ signature health law after they failed to pass an Affordable Care Act overhaul in 2017. Conservative think tanks like Heritage Action for America, FreedomWorks, and Club for Growth sent a letter to Congress calling such proposals “bad ideas” and “bailouts” for the ACA.

Rep. Tom Cole (R-Okla.), the top Republican on the House Labor-Health and Human Services appropriations panel, said an ACA stabilization measure will be difficult for many Republicans who supported overhauling the law last year.

“Voting for that makes me wince,” he said, adding he wants a major concession for any stabilization measure, such as medical liability reform.

Elements of Earlier Agreement

The latest proposal combines elements of a bipartisan agreement struck late last year between Alexander and Sen. Patty Murray (D-Wash.) to authorize the health law’s cost-sharing reduction payments and a proposal by Collins and Sen. Bill Nelson (D-Fla.) to fund reinsurance programs that effectively subsidize the expense of covering high-cost beneficiaries for insurers.

The cost-sharing reduction payments were ended by the Trump administration last year after Republicans successfully sued to prove the payments weren’t properly appropriated when the ACA was passed.

The plan would fund reinsurance and “invisible high risk pool” programs at $10 billion per year from 2019 to 2021 for states that apply for an ACA waiver, with a federal fallback for states that don’t get one during the first year.

Alexander’s plan would also streamline the ACA’s waiver process, which allows states to alter the health law’s rules, by reducing the time it takes states to obtain one and making them last longer.

Democrats led by Murray, however, have asked for more than reinsurance funding and for the cost-sharing reduction payments to be reinstated. Murray is seeking to expand insurance subsidies and block a Trump administration rule to expand access to short-term plans that don’t have to meet ACA coverage requirements.

A Democratic aide told Bloomberg Law negotiations between Republicans and Democrats are ongoing.

Some House Republicans, including Rep. Mark Walker (R-N.C.), chairman of the Republican Study Committee, have asked that any ACA stabilization measure include a provision barring funds from going to abortions. Alexander’s outline states the measure has the same protections as any federal spending measure, which restrict funding of abortions.

To contact the reporter on this story: Alex Ruoff in Washington at aruoff@bloomberglaw.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bloomberglaw.com

For More Information

Alexander's proposal is at http://src.bna.com/w5r. The conservative think tanks' letter is at https://s3.amazonaws.com/hafa/No-Obamacare-Bailouts-Coalition-Letter.pdf.

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