What a crazy summer it’s been for the health insurance industry. Since it appears the “repeal and replace” efforts are done — for now, anyway — we thought we’d provide a quick recap of what happened and, more importantly, what didn’t’ happen. We’d also like to take a look at what happens next. After all, we’re entering the Open Enrollment period for the individual market, and this one promises to be unlike any we’ve seen before.

Repeal and Replace

We’ll start with a quick look at the FIVE ACA repeal bills that failed to become law, one in the House and four in the Senate.

  1. American Health Care Act: This bill, which was introduced in the House of Representatives March 6 and passed by one vote 18 days later, was far from the ACA replacement plan that Speaker Paul Ryan outlined in his “Better Way” policy paper. It did not reform the Medicare program, allow for the sale of insurance across state lines, reform our medical liability laws, expand opportunities for pooling, or encourage innovation by increasing NIH funding. Instead, it was a reconciliation bill, one that could only contain provisions that have a direct impact on the federal budget. The AHCA would have rolled back Medicaid expansion, reduced the individual and employer mandate penalties to $0, converted the premium tax credit to an age-adjusted taxcredit, eliminated the cost-sharing reduction subsidies, and allowed states to eliminate some of the essential benefits while rating for pre-existing conditions. According to the Congressional Budget Office, it would have caused 23 million people to lose their health coverage. Perhaps that’s why its approval rating among the American public was somewhere around 17%.
  2. Better Care Reconciliation Act: After the AHCA passed the House, Republican Senators were very critical of the bill, vowing not to support it but instead to start from scratch with their own version. Leader McConnell and about a dozen other GOP Senators went behind closed doors to craft their replacement plan, and what emerged several days later was a bill that looked strikingly like the House bill. It, too, would have rolled back the ACA’s Medicaid expansion, though it would have done so more slowly. It also would have reduced the individual and employer mandate penalties to $0. Like the AHCA, it would have eliminated the cost sharing reduction subsidies and established state innovation grants, but it would have handled the premium tax credits a bit differently, keeping the Obamacare structure but basing the calculation on the lower-cost bronze-level coverage. According to the Congressional Budget Office, it would have caused 22 million people to lose their health coverage. The BCRA was the first of three bills that failed to achieve a majority vote during the Senate’s vote-a-rama the last week of July. 
  3. Repeal Now, Replace Later: This bill never really had a chance of passing, but since the House had voted more than 50 times to repeal the Affordable Care Act during President Obama’s terms in office, and because the Senate voted just last year to repeal the ACA, Senator Rand Paul basically forced the Senate to consider this option. The CBO said that the bill would have caused 35 million people to lose their health coverage, and the effort failed on July 26 by a vote of 45-55.
  4. Skinny Repeal: The last bill considered in July was the so-called “skinny repeal” bill. This version of the legislation would have rolled back a few of the provisions of the Affordable Care Act but, unlike the AHCA or BCRA, didn’t offer much in the way of replacement.  Specifically, the skinny repeal bill, like other bills, would have eliminated the employer and individual mandate penalties, defunded Planned Parenthood, temporarily eliminated the medical device tax, increased HSA contribution limits, and given the states essential benefits waivers. Unlike other bills, though, it would not have touched the ACA’s Medicaid expansion. The interesting thing about skinny repeal is that nobody really liked it, but a lot of GOP Senators voted for it anyway—a lot, but not enough. You’ve no doubt seen John McCain’s now famous thumbs-down vote at nearly 3:00 a.m. on July 28, effectively killing the legislation and, we thought at the time, putting the final nail in the coffin of the Republicans’ repeal efforts. McCain, along with Susan Collins (R-MN) and Lisa Murkowski (R-AK), was unable to support the legislation because Speaker Paul Ryan couldn’t assure him that the House would not vote to enact the legislation. Most Republican Senators who voted for skinny repeal, which the CBO said would have caused 15 million people to lose their health coverage and increased premiums by 20% as reported by CNN Money, did not actually want the bill to become law; rather, they wanted to get it out of the Senate and into conference with the House with the hope that the two chambers would be able to find common ground and negotiate a final bill that they could both agree on. When skinny repeal failed, Mitch McConnell declared that the repeal efforts were over for the time being and that it was time to move on.
  5. Graham-Cassidy: Leader McConnell may have thought it was time to move on, but President Trump disagreed. He continued to talk and tweet about the failed health care bills, criticizing John McCain for his deciding vote and Leader McConnell for his failure to get it done. With the President’s encouragement, the Senate decided to take up the issue one more time with the Graham-Cassidy bill. This legislation, among other things, would have eliminated the employer and individual mandate penalties and also would have eliminated the premium tax credits, cost sharing subsidies, and Medicaid expansion. The savings from these ACA programs would be divided among the states, which would have a lot of power in determining plan design and rating rules. To many people’s surprise, some of the opponents of the July bills took a while to make up their minds about Graham-Cassidy, causing many to believe it would actually win approval. Opponents revived their lobbying efforts, and late-night talk show host Jimmy Kimmel even got involved, offering several monologues saying that the bill did not pass what Cassidy himself had termed the “Jimmy Kimmel test.” After John McCain and others came out against Graham-Cassidy and the CBO predicted that millions would lose coverage if it were to pass, Mitch McConnell made the decision not to move forward with a vote.

A Bi-Partisan Solution?

Without a Republican-only reconciliation bill, the two sides are now trying to work together on a bi-partisan solution. These talks were already underway in the Senate HELP (Health, Education, Labor, and Pensions) Committee under the leadership of Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) before being interrupted by Graham-Cassidy. Now, those efforts have resumed. The initial focus is not on replacing or re-writing the ACA but rather on making immediate, short-term changes to shore up the individual market and reduce health insurance premiums. While any  bipartisan efforts are a bit of a long shot, committee members on both sides of the aisle say the talks are going well and seem to be optimistic that something positive can come out of the negotiations. Two big ideas that have emerged according to an October 3 article from The Hill are “continuing cost-sharing payments for two years” and giving “states meaningful flexibility in the types of policies they can write.”  Whether there is enough support in the Senate to pass this bill is still unclear.

Market (De)Stabilization

While Congress considers changes that could help to stabilize the individual market, we’re getting mixed messages from the administration. On inauguration day, President Trump signed an executive order instructing government agencies to review the regulations and take actions to ease the financial burden of the Affordable Care Act on the American people.

One way, of course, to ease the financial burden is to make changes that reduce insurance premiums. The market stabilization rules released by HHS in April were an important first step. The new rules shortened the open enrollment period, placed new verification rules on special enrollment periods, and modified the 90-day grace period, all of which were aimed at reducing adverse selection. They also modified the way states determine network adequacy and expanded the actuarial value corridors for metallic plans, giving carriers more flexibility in plan design. Collectively, these rules were designed to have a positive impact on insurance premiums and to coax individual carriers into continuing to offer coverage through the marketplace.

On the other hand, there are real questions about whether the administration actually wants to stabilize the market or whether the executive branch is deliberately trying to sabotage the Affordable Care Act. The strongest evidence of this is President Trump’s recent decision to immediately halt cost sharing reduction (CSR) payments to insurance companies. The cost sharing reduction subsidies, created by the Affordable Care Act, help reduce the out-of-pocket expenses for families with incomes up to 250% of the federal poverty level who purchase coverage in the silver level of the marketplace. The federal government is supposed to reimburse carriers for the reductions in the out-of-pocket costs that would not otherwise be covered under these plans, but the President has now decided to cut off these reimbursements, calling the payments “bailouts” and saying they created a “windfall” for insurance companies.

In anticipation of the CSR decision, many insurance companies built in higher increases for silver-level plans when filing their rates for 2018. Other carriers, according to The Washington Times, received permission from CMS “to file rate increases after President Donald Trump’s decision last week to end certain payments to insurers that help low- to middle-income workers.”

There are other signs that the administration is trying to sabotage the individual market, including lax enforcement of the individual mandate and the controversial decision to cut the HHS marketing budget used to promote marketplace enrollment by 90%. On September 27, CNBC reported that the “The Trump administration has told the federal health agency's 10 regional directors not to participate in events promoting Open Enrollment in Obamacare insurance plans nationwide.” Dave Jones, California’s health insurance commissioner, sums it up this way in an October 3 article in the LA Times: “The degree of uncertainty and instability that the Trump administration has injected into the market this year cannot be understated.”

President Trump’s Executive Order

On October 12, the same day that President Trump announced an end to the CSR payments, he signed an executive order designed to promote healthcare choice and competition. The executive order seeks to “expand the availability of and access to alternatives to expensive, mandate-laden PPACA insurance, including AHPs, STLDI, and HRAs.” It does so by encouraging government agencies, like the Department of Labor and the Internal Revenue Service, to do the following:

  • Association Health Plans: The executive order asks the Secretary of Labor to consider “proposing regulations or revising guidance” that would “promote AHP creation on the basis of common geography or industry.” The idea is that “Large employers often are able to obtain better terms on health insurance for their employees than small employers” because they’re able to spread risk and administrative costs across a greater number of lives. So, allowing small employers to band together would give them more negotiating power. President Trump makes the point in the executive order that these Association Health Plans would allow for the purchase across state lines, an idea he has long supported.
  • Short-Term Health Plans: Short-term medical plans are not considered qualified coverage under the Affordable Care Act. This means that they don’t help people avoid the individual mandate penalties, but, as the executive order points out, they are “exempt from the onerous and expensive insurance mandates and regulations included in title I of the PPACA.” For instance, short-term plans do not cover preventive care or pre-existing conditions, and they are allowed to decline applicants who don’t meet the company’s underwriting guidelines. For these reasons, short-term plans usually offer lower out-of-pocket costs and lower price points than most plans sold in the individual market. In an attempt to reduce adverse selection in the individual market, the Obama administration limited these short-term duration insurance plans to three months with no option to renew them at the end of the term. The executive order reverses this rule, encouraging government agencies to “consider allowing such insurance to cover longer periods and be renewed by the consumer.”
  • Health Reimbursement Arrangements: The executive order also encourages government agencies “to increase the usability of HRAs, to expand employers' ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with nongroup coverage.” Until we receive further guidance, it’s unclear how the administration will expand HRAs beyond what is currently permitted.

Children’s Health Insurance Program

Last but not least, it’s been widely reported that, while debating the Obamacare repeal bills, Congress let the Children’s Health Insurance Program (CHIP) expire. It’s widely believed that lawmakers will reach an agreement to re-authorize the popular program which provides coverage to nine million children, but they do need to hurry as several states are expected to run out of funds by the end of the year.

Here we go!

So, here we are. We’re have entered into the Open Enrollment period in the individual market, and things are a mess. Premiums are up, out-of-pocket costs are up, and the number of options available to our clients is down. But it is what it is; unless something unexpected happens very quickly, this is our reality for the 2018 Open Enrollment period.

The good news is there’s at least one individual option in every county in the United States, plans are still guaranteed issue, people can still qualify for premium tax credits and cost sharing reduction subsidies (even if the government fails to reimburse carriers), and people are still required to have coverage. That means that, for brokers, there is an opportunity to help clients and earn a commission.

With all of that said, we hope you’re not giving up. The individual market, for this year at least, is still around and there’s still a lot of business to be had. Let us know how we can help.