States Need $50B for Health-Care Transition

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By Sara Hansard

States should get $40 billion to $50 billion in federal funding over the next three years for health care for the sickest people.

In addition, deadlines for health insurers to file 2018 rates should be pushed back from spring to August, an organization representing employers, insurers, health-care providers and patient groups said Jan. 12 at a congressional staff briefing. The recommendations were among proposals the group outlined for “significant transition relief” as Congress prepares to repeal the Affordable Care Act.

The incoming Trump administration should take steps immediately to ensure that the approximately 20 million people who have gained coverage under the ACA don’t lose it, Joel White, president of the Council for Affordable Health Coverage (CAHC), said. The individual and small group health insurance markets are in “turmoil,” with sharply increasing premiums and cost sharing for consumers, fewer plan choices and “a lot of uncertainty about what the future holds,” he said.

Senate Budget Resolution

The Senate Jan. 12 took the first step toward repealing Obamacare in a 51-48 vote on a fiscal 2017 budget resolution, S. Con. Res. 3, which instructs congressional committees to approve legislation by Jan. 27 that would be used to repeal key portions of the Affordable Care Act (see related article) . President-elect Donald Trump has called for near-simultaneous repeal of the ACA and enactment of a new health-care law shortly after his administration takes office.

More than 11.5 million people were signed up for 2017 ACA marketplace coverage as of Dec. 24, 2016, the Department of Health and Human Services reported. About 10.5 million people are expected to be enrolled in the ACA marketplaces at the end of 2017 after attrition from people getting employer coverage, moving to Medicaid or dropping their insurance, White said.

Half of the people who are eligible to enroll in the ACA marketplaces are “sitting on the sidelines right now, largely because we believe the premiums are too high,” White said.

Marketplace premiums rose about 25 percent in 2017 compared with 2016 for benchmark plans on which subsidies are based, and the increases vary widely from nearly 80 percent in Oklahoma to very small increases in Rhode Island, he said.

ACA Enrollees Older, Sicker Than Expected

ACA marketplace enrollees are older, sicker and smaller than had been expected, White said.

In 2016, only about 37 percent of people who have signed up for marketplace coverage are under the age of 35, compared with initial expectations that younger people would make up about half of enrollees, he said. “We expect 2017 to be even lower,” he said.

Eighty-one percent of people who are eligible for full ACA subsidies have signed up the plans, White said. In contrast, only 2 percent of potential exchange customers who are ineligible for subsidies because they have incomes over 400 percent of the federal poverty level have enrolled, he said.

Facing major losses, many insurers—such as UnitedHealthcare and Aetna—have pulled out of the marketplaces, White said. In 2017, 687 counties only have one insurer participating in the marketplaces, up from 182 counties in 2016, he said.

The ACA included a reinsurance program to pay for high-cost enrollees, but the program ended in 2016, and congressional Republicans have accused the Obama administration of providing health insurers more funding than they were legally eligible to receive.

The end of the reinsurance program added 4 to 7 percentage points to the 2017 premium increases, White said.

Stabilize and Improve Risk Pools

“Stabilize and improve the risk pools” is the top goal for the CAHC, which plans to issue a paper the week of Jan. 16 on steps the Trump administration could take to reduce regulatory burdens, White said. “This means money on the table.”

The Better Way health plan put forward by House Speaker Paul Ryan (R-Wis.) includes proposals to fund state high-risk pools to cover people with expensive medical conditions, such as cancer and hemophilia.

Medical costs above a set level could also be funded through a reinsurance program, White said. “Regardless, I think the money would need to go to the states,” which could use the funds to pay for high-cost individuals, he said.

Between $40 billion to $50 billion would be needed over three years to stabilize the market, based on what has been spent on reinsurance, cost-sharing reductions and the known risks in the marketplaces, White said.

Insurers are making decisions about whether to stay in the marketplaces for 2018 amid uncertainty about what legal changes will be made, and more may decide to leave the markets because they see the risk as being too high, White said.

“A big thing the Trump administration needs to do is to push the deadline back for the federal approval of qualified health benefit plans,” he said. That could be done by the new administration “on day one,” he said.

Before the ACA, people kept individual plans an average of 18 to 20 months, but post-ACA, people in the individual market keep their plans for less than a year, Jeffrey Smedsrud said.

Smedsrud is founder of HealthCare.com, a private website that helps people find health plans, and he helped create most state-based high-risk pools in existence prior to the ACA.

Web-based entities such as eHealthInsurance and HealthCare.com, and insurance carriers should be allowed to administer premium tax credits without requiring people to buy their plans through the ACA marketplaces, he said.

That would save the $1.7 billion annually charged by the federal HealthCare.gov exchange to administer the subsidies, which equates to about $170 per individual and $500 per family, Smedsrud said. That could be done quickly through a rule issued by the Centers for Medicare & Medicaid Services, he said.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com

For More Information

Information on S. Con. Res. 3 is at https://www.congress.gov/bill/115th-congress/senate-concurrent-resolution/3/text.

The HHS's Jan. 10 report on ACA marketplace enrollment for 2017 is at http://src.bna.com/lnH.

The Better Way health plan is at http://abetterway.speaker.gov/?page=health-care.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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