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By Sara Hansard
Nov. 10 — Repealing Obamacare tax credit subsidies and the law’s Medicaid expansion provisions could easily be accomplished by a Republican-controlled Congress and White House. But it will be more difficult to repeal health insurance coverage requirements, including the law’s bar on discriminating against people with medical problems.
That’s the assessment of analysts critical of the Affordable Care Act who spoke to Bloomberg BNA. Republicans may be able to gain the support of moderate Democrats and health insurers by replacing the ACA’s guaranteed issue requirement with Medicare-type rules that penalize people who don’t keep continuous coverage and allowing insurers to offer cheaper, less comprehensive coverage that would appeal to young, healthy consumers, they said.
President-elect Donald Trump and the Republican House and Senate will have to thread a needle in repealing the ACA as they have pledged to do. The 2010 law has resulted in about 20 million more people gaining health-care coverage, and congressional Republicans have said they want to ensure that people with pre-existing conditions can continue to retain coverage.
Trump’s administration will work with Congress to repeal the ACA with a replacement that “returns the historic role in regulating health insurance to the states,” according to a transition plan released Nov. 10. The replacement would include promoting health savings accounts and allowing health insurance sales across states lines, the statement said. Those ideas were included in plans Trump had called for during the campaign.
The transition statement also says it will “modernize Medicare, so that it will be ready for the challenges with the coming retirement of the Baby Boom generation—and beyond.”
Republicans are likely to use legislation similar to H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act, as a vehicle to repeal the ACA, Brian Blase, senior research fellow at George Mason University’s Mercatus Center, told Bloomberg BNA Nov. 9. The bill was passed by Congress in December 2015 but was vetoed by President Barack Obama. Blase has been a critic of the ACA.
The bill was structured so it could be passed through the budget reconciliation process and avoid a filibuster in the Senate, where Republicans will not have the 60 votes necessary to stop debate and force a vote, Blase said. But only legislation that deals with budget issues can be acted on through the reconciliation process, he said ( 218 HCDR, 11/10/16 ).
That means the ACA’s health insurance market reforms, which include guaranteed issue, modified community ratings that limit what insurers can charge people with medical problems and coverage of a comprehensive set of essential health benefits, may not be addressed through the reconciliation process, he said.
“Those are the fundamental drivers of the underlying cost increases” in premiums that have taken place under the ACA, Blase said of the law’s health insurance market reforms. Premiums for marketplace benchmark plans on which ACA subsidies are based are rising an average of 22 percent in 2017, the HHS reported.
In addition to sharp premium increases in 2017 major insurers, such as UnitedHealth Group Inc., Aetna Inc. and Humana Inc., are reducing their involvement in the marketplaces in 2017 because of heavy losses for exchange plans, which have attracted a high portion of enrollees with costly medical needs. Anthem Inc., a Blue Cross Blue Shield plan with a national presence, has also said it may withdraw from the marketplaces in 2018 unless its financial situation improves.
The premium increases were cited by Trump in the final weeks of the campaign as evidence that the law needs to be repealed and replaced.
Insurers “would be open to reforms that would make that market more inviting to them, which they’ve been pressing for, in terms of offering more flexible coverage and a more significant penalty for the remaining uninsured,” Paul Howard, director of health policy at the free-market oriented Manhattan Institute for Public Policy, told Bloomberg BNA Nov. 9.
The Republican Better Way health plan proposed by House Speaker Paul Ryan (R-Wis.) includes a provision under which enrollees must maintain continuous coverage to avoid paying higher premiums based on medical conditions, he said. Medicare already requires beneficiaries to pay higher premiums if they don’t stay enrolled continuously.
Such a penalty could be more costly for enrollees than the ACA penalties for not having coverage, Howard said. The penalties are $695 per adult or 2.5 percent of income in 2016, topping out at a whopping $2,085 per family. “That is a very strong incentive to get and hold coverage,” he said.
Moderate Democrats, including vice presidential candidate Sen. Tim Kaine (D-Va.), have supported lowering coverage requirements on ACA plans, including offering a so-called copper tier, which would provide a lower level of coverage and be less expensive, Howard said. That would help attract younger, healthier people to buy plans and improve the risk pool, which would reduce costs and premiums for others, he said.
“Consumers should be covered and patients should be protected—and sudden disruptions would jeopardize both,” Kristine Grow, spokeswoman for America’s Health Insurance Plans, told Bloomberg BNA in an e-mail Nov. 10. “Consumer, patients, and plans should be given enough time, flexibility and support so that any changes ensure safe and stable coverage.”
“We look forward to working with the new president and Congress to improve our healthcare system and ensure that Americans have access to high-quality healthcare at a price they can afford,” Blue Cross Blue Shield Association Chief Executive Officer Scott Serota said in an e-mail to Bloomberg BNA Nov. 9. “We are sharing ideas for improving the individual market, so that consumers have more choices, better prices and a robust private marketplace that is predictable and stable.”
Some states are also planning to apply for waivers under Section 1332 of the ACA. That section of the law, which takes effect in 2017, allows states to make major changes to the law as long as the same level of coverage is provided without costing the federal government more.
For example, Alaska is planning to apply for the waiver while Obama is still in office, Lori Wing-Heier, director of Alaska’s Division of Insurance, told Bloomberg BNA Nov. 8. Alaska Gov. Bill Walker (I) signed House Bill 374 in July that sets up a reinsurance fund for marketplace enrollees with high medical claims.
Alaska was facing premium increases of an average 42 percent from Premera, which was the only health insurer left in the state’s marketplace after several others left since the ACA took effect, Wing-Heier said. The state has allocated $55 million for 2017 to cover an estimated 495 high-risk enrollees under the plan, she said.
The reinsurance plan has resulted in premiums rising only 7.3 percent in 2017, and the state believes that will result in federal savings for subsidy payments to the 21,000 marketplace enrollees who aren’t covered by the high-risk pool, Wing-Heier said. The waiver wouldn’t take effect until 2018, she said. Under the Obama administration, the Centers for Medicare & Medicaid Services “has been quite supportive of this,” she said.
Health insurers are also hoping for changes in the premium stabilization programs to cover the higher medical needs that ACA enrollees have had. BlueCross BlueShield of Tennessee Inc. withdrew from the state’s major markets for 2017 in Nashville, Memphis and Knoxville, due to losses expected to approach $500 million from 2014 through 2016, company executive Calvin Anderson told Bloomberg BNA Nov. 4.
The company, which has remained in other ACA marketplaces in the state, would have had to increase premiums by about 62 percent to stay in the three market regions, Anderson said. The company was expecting to receive greater funding under the ACA’s risk corridor program than it received after legislation was enacted limiting payments for 2014 and 2015 to money collected from other insurers, he said.
“We’re talking about making the payments whole as they were promised,” Anderson said.
The ACA’s risk adjustment program needs to change, Aetna Inc. Chief Executive Officer Mark Bertolini said during the company’s third quarter earnings call Oct. 27.
“Right now we have a risk adjustment mechanism that has a centering point on the average population in the pool,” he said. “The population in the pool is largely people who are too young for Medicare, chronically ill and older. And until that changes, the center point is probably 10 percent to 15 percent below break-even.”
Under the ACA, risk adjustment program plans that have lower claims costs must make payments to plans with higher claims costs.
To contact the reporter on this story: Sara Hansard in Washington at email@example.com
To contact the editor responsible for this story: Kendra Casey Plank at KCasey@bna.com
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