Additional Health Care Reforms Considered, Health Insurance Market Uncertainty Looms

Despite a series of failed negotiations and legislative attempts throughout the year, Congress continues to propose measures to attempt to stabilize federal health insurance marketplaces. We highlight the latest proposals below, as well as detail recent developments around health insurance premiums in light of President Trump’s decision to end cost-sharing reduction (CSR) payments.

Legislative Proposals

Alexander-Murray Proposal

Last week, Senators Lamar Alexander (R-Tennessee) and Patty Murray (D-Washington) reached an agreement to stabilize health insurance marketplaces and reduce health insurance premiums. The proposed measure is the result of months of ongoing bipartisan meetings and negotiations between Alexander and Murray that initially began after the Senate’s failed attempt to repeal and replace the ACA in July. Notably, the latest bipartisan deal would:

  • Restore cost-sharing reductions (CSRs) to insurance companies through 2019
  • Reinvest in outreach and enrollment assistance activities through 2019
  • Maintain ACA core protections around affordability, coverage, and comprehensiveness (including restrictions on lifetime coverage limits and coverage of essential health benefits and pre-existing conditions)
  • Streamline state waiver processes to permit additional state flexibility

The measure would also expand eligibility for catastrophic health plans to individuals over age 30 and also require the Administration to issue regulations around interstate health compacts.

The Congressional Budget Office (CBO) released an analysis of the Alexander-Murray proposal this week. The report estimated that, if the measure were to be signed into law, the federal deficit would be reduced by approximately $4 billion over the next decade and would not substantially impact the number of Americans with health insurance.

A bipartisan coalition of 24 U.S. Senators—12 Republicans and 12 Democrats—signed off on the Alexander-Murray proposal, and the bill is expected to have enough support to pass the Senate. President Trump, however, has not indicated his support for the measure and has been pushing for more conservative changes to the measure that Democrats are not likely to support. Senate Majority Leader Mitch McConnell (R-Kentucky) announced he will not bring the bill to the Senate Floor for a vote until President Trump gives his approval.

Hatch-Brady Proposal

This week, Senator Orrin Hatch (R-Utah) and Representative Kevin Brady (R-Texas) countered the bipartisan Alexander-Murray Proposal with a proposed measure that includes top priorities of Congressional Republicans and the Trump Administration. The Hatch-Brady Proposal would:

  • Fund cost-sharing reductions (CSRs) through 2019
  • Temporarily eliminate the ACA individual mandate until 2021
  • Forgive penalties assessed for ACA employer mandate non-compliance between 2015-2017
  • Expand health saving accounts (HSAs)

The Hatch-Brady proposal, however, has not received a warm reception among Congressional Republicans and appears to have party members split. Several Republicans do not believe the measure is expansive enough, while other Republicans seem inclined to support a more bipartisan approach to healthcare. The full legislative text of the Hatch-Brady measure is expected to be released in the coming days

Uncertainty Continues as Judge Rules on CSR Request, Premiums Expected to Rise

A federal judge in California this week denied an emergency motion that would have required the Trump Administration to immediately restore cost-sharing reduction payments to insurance companies while a lawsuit makes its way through the courts. Recall, shortly after President Trump indicated he would no longer make cost sharing reduction (CSR) payments, 18 states, including California, and the District of Columbia filed a federal lawsuit, arguing that withholding CSRs is unlawful and violates mandate provisions of the ACA.

U.S. District Court Judge Vince Chhabria was not convinced that ending CSR payments would cause immediate harm to residents of the state. Citing action by several states in anticipation of a Trump Administration decision to eliminate CSR payments, Judge Chhabria, in his 29-page ruling, determined that the majority of people who purchase insurance on health insurance exchanges would be unharmed. Despite being denied their emergency request, the 19 state attorneys generals have indicated they will continue to push for a permanent resolution during the remainder of their lawsuit.

Also this week, Avalere Health released an independent analysis revealing that premiums for the most popular ACA health plans are rising by an average of 34 percent in 2018 among states using the federal health insurance marketplace exchange. Avalere Health indicated the premium increases are primarily being driven by overall marketplace instability.

With open enrollment set to begin next week, it remains to be seen what impact the looming uncertainty will have on marketplaces and enrollment numbers.