Tuesday, March 28, 2017

What's next for Democrats in the healthcare wars?

While the ACA appears to have escaped repeal for the time being, the ACA marketplace remains under apparent and threatened assault from the Trump administration -- which, after all, has to administer it.

The avowals of Trump and other Republican leaders, including Ryan and McConnell, that the marketplace will implode or is in a death spiral; the withdrawal of advertising for the marketplace in the closing weeks of open enrollment last January; the threat not to enforce the individual mandate; the possibility of destroying the marketplace immediately by stopping federal payments to insurers for Cost Sharing Reduction subsidies; and, most recently, the walk-back of avowals that Ryan's repeal bill is dead -- all these factors have left insurers and therefore the marketplace in a shaky position. Insurers may withdraw, and premiums are likely to spike, as they did last year.

Even if Hillary Clinton had won the presidential election, the marketplace would be in need of fixes. The risk pool is sicker, older and smaller than originally envisioned. The subsidies are smaller than they should be. Millions whose employers offer nominally "affordable" individual insurance but unaffordable family insurance are denied marketplace subsidies through the family glitch. The trio of risk control programs designed to smooth insurers' losses in a new kind of market expired too quickly, and one -- the risk corridor program -- was sabotaged by Republicans.

Given the need for fixes, and the at least momentary acknowledgment by Republican leadership that "we're going to be living with Obamacare for the foreseeable future," as Paul Ryan rather astonishingly put it last Friday, a number of progressives have started to scope out possible means by which Democrats in Congress could win Republican support for legislation that would improve competition, participation and affordability in the marketplace. If such a deal were possible, it would entail agreeing to provisions that would reshape the marketplace more to Republicans' liking. These might include:

  • Easing the process by which state governments could obtain the ACA's "innovation waivers" to implement alternative schemes to make insurance affordable for their residents. Under the ACA, states seeking such waivers must demonstrate to HHS that the alternative will covers as many people as comprehensively as the ACA, for as little money. A "superwaiver" might allow states to access ACA-level funding with fewer strings attached, and possibly combine these waivers with Medicaid waivers to reshape the two programs together.

  • Repealing the employer mandate (requiring employers of more than 50 full-time workers to offer ACA-compliant insurance), which many progressives acknowledge to be a regulatory burden and not particularly effective.

  • Increasing "age-banding" -- the multiple by which insurers can charge the oldest adult enrollees more than the youngest. The ACA limits the ratio to 3:1; the pre-ACA norm was 5:1. 

  • Incentivizing insurers to offer more High Deductible Health Plans (HDHPs) linked to tax-sheltered Health Savings Accounts (HSAs), and increasing HSA contribution limits.  HSAs are a juicy tax shelter for affluent buyers and accordingly a Republican shibboleth alleged to be central to cost control.
In return, Democrats might seek:
  • Federal funding for state "stability" funds: this was probably the only provision in Ryan's failed American Health Care Act that progressives would like to preserve. The AHCA allocated $115 billion over nine years to the states to use for reinsurance, boosting cost-sharing subsidies, establishing high risk pools, or other means to stabilize their marketplaces and hold down premiums. Two of the ACA's three risk control programs, reinsurance and risk corridors, expired in the 2017, and the risk corridors had been effectively defunded by Republicans previously.

  • Assured funding for Cost Sharing Reduction subsidies. Without these little-understood, secondary subsidies, most of the 58% of marketplace enrollees who receive them would likely find medical care unaffordable. The ACA established them as a permanent benefit but left it to Congress to allocate funds yearly. When a Republican Congress refused to do so, the Obama administration maintained the payments with funds diverted from elsewhere in the federal budget. Republicans challenged the payments in court and won a first-round decision that the Obama administration appealed. The Trump administration has not decided whether to maintain the appeal. They could freeze up the marketplace instantly by declining to do so -- unless Congress appropriated the funds.

  • Fixing the family glitch - An Urban Institute study estimates that over 6 million people are in families subject to the glitch, though most of them accept the employer's offer of family insurance even though the premiums exceed the 9.66%-of-income threshold: Allowing either the entire family, including the employee, to access marketplace subsidies, or the family minus the employee offered "affordable" individual insurance to do so would improve the marketplace risk pool and make coverage more affordable for these beneficiaries, though it wouldn't reduce the uninsured rate appreciably.

  • Money for outreach to education and assist the uninsured in enrollment.

  • A general end to Republican denigration and sabotage of the marketplace. If Republicans in Congress acted to make the marketplace work, that would presumably ease administration hostility and bolster a commitment to administer the program competently.
There is strong cause to doubt, however, whether there's any possibility that a compromise combining elements from these two lists has any chance at all of passing a Republican Congress. At a minimum, passage would require House Speaker Ryan -- or a successor -- to abrogate Republicans' self-imposed "Hastert Rule", which holds that no bill should come to a vote unless Republicans alone can muster a majority for passage.  

There's also a case to be made that Democrats should focus on more progressive means to improve -- or replace -- the ACA -- and that regaining control of Congress and the presidency is the only path to improving healthcare access, or even to maintaining the ACA's gains.

In a sequel, I'll report a conversation with a public policy scholar making that case. Update, 3/29: here it is -- Professor Lawrence Jacobs of the University of Minnesota.

1 comment:

  1. There's also a case to be made that Democrats should focus on more progressive means to improve -- or replace -- the ACA -- and that regaining control of Congress and the presidency is the only path to improving -- and even, ultimately, preserving -- healthcare access.

    Any energy spent on trying to reach compromise is wasted.