On June 28, 2017, the New York Times reported that Senate Majority Leader Mitch McConnell, facing difficulty in corralling 50 Republican Senators to unite behind a version of the Better Care Reconciliation Act, has suggested he might turn to the Democrats for help in shoring up the deteriorating situation under the ACA if he cannot get Republicans in line. If he does so, he may find that Democrats have both a proposed diagnosis and cure for the most immediately pressing problems facing the individual insurance market.
On June 28, 2017, the Democratic staff of the House Committee on Energy and Commerce and of the Senate Committee on Health, Education, Labor, and Pensions released a joint report entitled “A Manufactured Crisis: Trump Administration and Republican Sabotage of the Health Care System.” The report details how individual market stability is being undermined by the uncertainty created by President Trump’s repeated threats to withhold reimbursement from insurers that are legally required to reduce cost sharing for 7.1 million exchange enrollees, coupled with his ambivalence regarding the enforcement of the individual mandate. The report includes numerous quotes from insurance regulators and insurers from nearly 20 states and nationwide warning that uncertainty regarding cost-sharing reduction (CSR) payments and individual mandate enforcement is causing insurers to raise premiums and exit individual insurance markets.
Also on June 28, 2017, Senator Jean Shaheen, joined by 20 Democratic Senators, introduced the Market Certainty Act. (text) This bill would clarify that funds were permanently appropriated to fund the Affordable Care Act’s cost-sharing reductions. It would also expand eligibility for the CSRs, making them available to individuals with incomes up to 400 percent of the federal poverty level. It would increase the amount of cost-sharing reductions so that individuals with incomes between 100 and 200 percent of FPL would be responsible for only 5 percent of cost sharing on average; individuals with incomes between 200 and 300 percent of FPL for 10 percent, and individuals with incomes between 300 percent and 400 percent of FPL for 15 percent.
Under current law, individuals between 100 and 150 percent of FPL must pay 6 percent of costs on average; individuals between 150 and 200 percent of FPL, 13 percent; individuals between 200 and 250, 27 percent; and individuals above 250 percent of FPL, 30 percent.
Under the Republican Better Care Act, cost sharing reductions would be funded at current levels through 2019 and then repealed. After that, consumers would be responsible for 42 percent of health care costs on average under plans that could be purchased with premium tax credits available to individuals with incomes below 350 percent of FPL. The Congressional Budget Office estimated that the deductible for an individual at 75 percent of FPL under the Better Care Act would be half of annual income, and that few low-income individuals would purchase coverage with such little value.
Senator Shaheen’s proposal, coupled with reinsurance legislation offered by Senator Shaheen and other Democrats earlier in June, could go far toward stabilizing individual insurance markets, luring insurers back into markets they have abandoned and lowering premiums, deductibles, coinsurance, and out-of-pocket limits for insured Americans.
As noted in the Democratic staff report (and by others), the uncertainty regarding the commitment of the Trump administration to continuing cost sharing reduction payments is a major factor contributing to destabilization of individual insurance markets. (Anthem has apparently announced it is leaving 14 counties in Nevada, leaving 61 bare counties in Ohio, Indiana, Missouri, and Nevada for 2018.) Given this situation, a frequently asked question posted at the Centers for Medicare and Medicaid REGTAP.info website on June 28, 2017, strikes a note of irony. The FAQ describes in detail procedures that insurers must follow to address discrepancies in their cost-sharing reduction payment reconciliation data for 2016. CMS will notify insurers regarding overpayment or underpayment of CSRs for 2016 on June 30, 2017. Insurers have until August 11 to notify CMS of data discrepancies. It is all very technical, but illustrates again that while at the policy level storms are raging in the individual insurance market, at the technical level the engines keep chugging along.
CBO Projects Medicaid Cuts In Senate GOP Bill Would Reach 35 Percent By 2036
On June 28, 2017, the CBO released a supplement to its June 26 Better Care Reconciliation Act cost estimate. The supplement was requested by the Democratic ranking members of the Budget Committee and Finance Committee. It addresses the effects of the BCRA on Medicaid spending beyond 2026. The CBO recognizes the limits to its ability to make very long-term spending projections but does predict how the BCRA would affect spending through 2036.
The BCRA imposes a per-capita cap on federal Medicaid funding growth for some groups of enrollees beginning in 2020, and reduces the cap as of 2025 so that federal funding growth rates for all groups would be pegged to the consumer price index for all urban consumers. CBO had earlier estimated that BCRA’s Medicaid provisions would reduce federal Medicaid spending by 26 percent as of 2026—a $160 billion cut in spending for that year—compared to spending under current growth rates.
The CBO projects that the gap between federal Medicaid spending under the BCRA and under current law would widen to 35 percent by 2036. The CBO projects that Medicaid costs to maintain current services will grow at an annual rate of 0.7 percent above GDP growth in 2027, which will rise to a 0.9 percent annual excess growth rate above GDP growth by 2036. General increases in cost in the health care system attributable in part to new technologies will drive the cost of services higher while Medicaid programs will have to replace federal spending by state spending, cut provider payment rates, reduce benefits, restrict eligibility, or find some way to provide services more efficiently.
CBO believes that dollar projections 20 years out are misleading and thus gives its spending projections in terms of percent of GDP. In the absence of the BCRA, Medicaid spending would account for 2 percent of GDP for 2017 and 2.4 percent by 2036. CBO projects that under BCRA, Medicaid spending will account for 1.6 percent of GDP in 2036, a 35 percent cut. Medicaid would be a very different program in 2036 than it is now.