This summer, as Senate Republicans put forward strictly partisan Affordable Care Act repeal measures, Sen. John McCain called for the Senate to return to “regular” order to address health reform. After Republican repeal attempts repeatedly failed, Sens. Lamar Alexander and Patty Murray, the leaders of the Senate Health, Education, Labor, and Pensions Committee did just that.
They heard testimony from governors, insurance commissioners, stakeholders and experts on what was needed to fix problems with the ACA. This week, as a result of that process, they reached a deal “in principle” on proposed compromise legislation to stabilize premiums under the ACA.
President Trump is sending mixed signals: On Tuesday, he commended the senators’ “bipartisan work.” By Wednesday he was already criticizing and backing away from it.
Let’s assume, however, that the senators will move forward on their proposal just the same. Just what’s on the table here?
It is tempting to evaluate compromise legislation with a scorecard: What did Democrats and Republicans win or lose? But the really important question is whether millions who purchase individual market coverage governed by the ACA win or lose. To their numbers might be added millions of Americans, many of whom likely have pre-existing conditions, who have employer coverage but are just a pink slip away from needing to find individual market coverage.
In sum, the proposal would be on the whole a win for ordinary Americans who buy individual insurance, for a few reasons.
First, the proposed agreement would substantially reduce premiums in the individual market, hopefully as early as 2018. This is a necessary step after President Trump recently cut off “cost-sharing reduction” payments to insurers. Although some have called these payments a bailout, they are in fact payments the ACA requires the government to make to reimburse insurers for legally required reductions in out-of-pocket limits and deductibles provided to their low-income enrollees.
Because the President stopped these payments, many insurers would on average raise premiums 20% or more to cover their losses, with the brunt of the increases being borne by middle-income Americans who do not get tax credits to help with their premiums. The payment cut-off would also have raised federal spending by almost $200 billion over 10 years. According to a draft published by Axios, the Murray-Alexander proposal would appropriate money for the reductions for 2017, 2018, and 2019, and require insurers to pass on the benefits of the payments to the federal government and their enrollees.
Second, as a Senate aide told CNN, the plan would restore just over $100 million to fund outreach and education to encourage enrollment. The more people who participate in the individual market, the healthier the group will be on average, and the lower premiums would be for all.
Third, the proposal would expand states’ ability to experiment with their own designs for the individual market. Section 1332 of the ACA allows state innovation waivers. States have complained that the waiver process is too long and complicated. Murray and Alexander’s compromise would speed up and simplify the process, and increase the generosity of the payments the federal government would make to the states to fund waiver programs. It would not permit waivers, however, that would permit less comprehensive coverage than the ACA and would ensure that coverage remains affordable for lower income people and people with pre-existing conditions.
Finally, their compromise would allow people to buy cheaper plans with higher deductibles and requires the administration to implement a section of the ACA that would allow the sale of insurance across state lines with appropriate consumer protections.
Overall, these changes could improve the functioning of the ACA. It remains to be seen, however, if Congress is capable of passing a bill that is a win for ordinary Americans, and not just a win for one political party or the other, and whether President Trump is willing to support the legislation — or even able to understand it.