On September 5, BlueWave's healthcare committee leadership and BlueWave President Marcia Marley had a phone conversation about efforts to stabilize the Obamacare private insurance marketplace with Representative Josh Gottheimer, the Democratic House member representing New Jersey's 5th District.
Those five points include two that are a matter of near-consensus for anyone serious about stabilizing the individual insurance market for health insurance. First, appropriate funds for Cost Sharing Reduction subsidies that reduce out-of-pocket costs for more than half of ACA marketplace enrollees --which the Trump administration constantly threatens to cut off, destabilizing markets and turbo-charging insurers' requested premium increases for 2018. Second, re-institute or replace the ACA's reinsurance program, which held premiums down in the first three years but phased out in 2017.
As a bipartisan price for these common-sense reforms, the Problem Solvers endorse three more planks, two of which are clearly Democratic concessions and one of which is ambiguous. The first concession is to scale back the "employer mandate" -- that is, raise the threshold above which employers have to offer insurance or pay a penalty from 50 to 500. That's pretty close to mandate repeal, as almost all large employers offer insurance. Many progressive groups take umbrage at this near-repeal, but most progressive healthcare scholars consider the mandate ineffective. It's the easiest substantive "give" for Democrats. The second concession is repeal of the medical device tax -- a cave to a corporate lobby, but of relatively minor importance.
We focused on the last point, which sounds harmless but is potentially dangerous: Giving states more flexibility to alter or redesign the ACA marketplace.
Let states innovate -- but how much?
The Problem Solvers introduce their state flexibility plank like this:
Provide technical changes and clear guidelines for states that want to innovate on the exchange or enter into regional compacts to improve coverage and create more options for consumers.
The Problem Solvers are focused here on two sections of the ACA. Section 1332 allows states to seek "innovation waivers" to redesign their marketplaces. They can propose to alter or repeal almost any core marketplace feature, including the Essential Health Benefits that every ACA-compliant health plan is required to provide. ACA Section 1333 provides ground rules for states that want to enter "multistate compacts" -- that is, agreements to let insurers sell insurance "across state lines" in states joining a given compact.
These ACA provisions giving states "flexibility" sound pretty sweeping, but they come with important guardrails. For a Section 1332 "innovation waiver" to be approved by HHS, the state's alternative plan has to cover as many people as would be covered without the waiver, offer coverage at least as affordable and comprehensive, and not increase the federal deficit. The state has to prove with rigorous economic analysis that its plan meets these standards.
Easing up on these requirements sounds good to a lot of people. But Republican bills to repeal core parts of the ACA showed just how dangerous increasing "flexibility" can be. The main Senate partial repeal bill loosened the approval standards and practically compelled HHS to accept any waiver application.
With respect to the Section 1332 innovation waivers, the Problem Solvers' press release suggests that "legislative changes" as well as "revised HHS guidance" might be called for. That worried us. We asked just what legislative changes the caucus might be considering.
Gottheimer responded that the Problem Solvers were seeking only administrative clarity on ACA Section 1332, adding, "Any form of gutting the ACA is unacceptable to me."
When asked directly, "You're not looking at legislative changes to Section 1332?" he responded, "No."
Selling insurance across states lines? Consent required...
The result was similar in our discussion of the ACA provision setting ground rules for multistate compacts (Section 1333). Under these compacts, an insurer could offer a health plan in all states participating in a compact, but only be subject to the laws governing the state in which the plan was written or issued.
In the U.S., the primary authority to regulate insurance rests with the states. When Republicans tout allowing insurers to sell plans across state lines, they're basically calling for standards in states with the weakest regulations to become the law of the land for all practical purposes. That's not possible under ACA Section 1333, because a state must willingly enter a compact with another state or states to allow "selling across state lines."
HHS was supposed to issue guidance -- more detailed rules -- for states to implement Section 1333, but never did so. It makes sense to call on the Trump HHS to issue such guidance. Our worry was that the Problem Solvers might explore legislative changes to Section 1333 that would enable insurers to sell across state lines without the consent of all participating states.
Here too, Gottheimer's aide, Krista Barry, said that the group has "no clear intention of doing anything legislatively" and "did mean for it to primarily be done through HHS."
Easing Trump administration sabotage
More generally, Gottheimer expressed the hope that a legislative agreement would ease the Trump administration's ongoing sabotage of ACA implementation -- sabotage that includes creating uncertainty about Cost Sharing Reduction payments; signaling that it will not enforce or will only weakly enforce the individual mandate; and cutting back radically on advertising and enrollment assistance. We asked if the group was considering further concessions on the Democratic side to get a deal done, and Gottheimer indicated that it was not.
We were glad to hear Gottheimer state directly that the Problem Solvers were not looking to weaken the guardrails built into the ACA "state flexibility" provisions -- that is that they will not open the door to states subverting the ACA's coverage goals and requirements, nor to allowing the sale of insurance across state lines without the consent of all states in which such sales take place. Senate HELP Committee negotiations over a bill to shore up the ACA marketplace hinge on this point -- whether the innovation waiver process can be streamlined without weakening core consumer protections. As Senate and House members work toward legislation to strengthen the ACA this month -- and fend off one last radical ACA repeal bill -- we'll be watching the Problem Solvers' efforts on this important front.