Saturday, September 16, 2017

How could Patty Murray "thread the needle" with Lamar Alexander?

Ever since the Cassidy-Collins bill was introduced in January, I've thought that Democrats should engage with Republicans in Congress who were willing to leave the ACA's taxes and core benefits intact. Cassidy-Collins didn't do that, but I thought it came close enough to be a basis for talks.

Triage was the byword. If a handful of the dozen-odd Republican senators who were then expressing qualms about repeal of the Medicaid expansion in particular could be engaged in compromise negotiations, I thought, that would lessen the chances of passage for a bill that would uninsure tens of millions -- as would the AHCA, the BCRA, and now Cassidy-Graham.

Events have almost proved me wrong. The prevailing Democratic strategy -- we'll talk about fixes when they give up on repeal -- has almost worked. Three repeal bills failed in the Senate. Lamar Alexander, HELP Committee chaired, has held hearings on a bipartisan bill to stabilize the individual market.  And on the other end of the equation, Cassidy -- who seemed like a possible partner since he wanted to preserve ACA taxes and so something like its scale of benefits -- is now a driving force behind a bill that would zero out ACA benefits and lay waste to Medicaid.

Still, ironically, we're at a point again where I'm tempted by similar logic: if Patty Murray and other Democrats engage with Alexander and come up with a compromise stabilization bill, that could blunt the drive toward Cassidy-Collins passage. Would co-sponsors of a stabilization bill, led by Alexander, turn around and vote for Graham-Cassidy?

The key sticking point in the HELP Committee negotiations is the Republican drive to loosen up the ACA's Section 1332 innovation waivers that allow states to amend or redesign their ACA marketplaces.

As written, the waiver provision allows states to propose changes to almost every aspect of the marketplace except guaranteed issue/community rating. States can change the Essential Health Benefits, the subsidy structure, and the individual and employer mandates (which they can in fact repeal).

What's at issue is a set of so-called guardrails to the waiver: For a waiver to pass muster, the state must demonstrate that it will cover as many people, with coverage as affordable and comprehensive as the default structure, and must not increase the deficit. Also at issue is HHS guidance that makes the waivers more restrictive -- e.g. by requiring that waiver proposals not reduce coverage for "vulnerable subgroups."

Iowa's pending waiver proposal, which increases premium subsidies for most but eliminates Cost Sharing Reduction (CSR) subsidies for low income enrollees and saddles all enrollees with a $7,350 deductible (albeit with many service not subject to the deductible), would not meet this test. About half of current ACA marketplace enrollees have deductibles under $1000, thanks to CSR.

In his opening statement to the September 12 hearing, Alexander called for changes to Section 1332's "severe restrictions on benefit design." Murray promised to consider proposals to alter the waivers, but warned, "Democrats will reject any effort to use this discussion as a way to erode the guardrails and protections that so many patients and families rely on."

The ACA repeal bills introduced in the House and Senate show how harmful tampering with these "guardrails" can be. The bill that passed the House allowed states to obtain waivers to reintroduce medical underwriting -- ostensibly just for those who failed to maintain continuous coverage, but de facto for the whole market. The BCRA reduced the guardrails to "increasing access to comprehensive coverage, reducing average premiums, and increasing enrollment," and essentially required HHS to accept virtually any waiver proposal.

That said, participants in the HELP hearings, including insurance commissioners, governors, administrators and actuaries, proposed a panoply of waiver alterations, many of which could be changed via HHS administrative guidance rather than statute. Many of those changes could also be enacted by statute, however.

One at least is widely accepted by progressive healthcare scholars -- including Timothy Jost of Washington & Lee and Linda Blumberg and John Holahan of the Urban Institute. That is allowing states to combine ACA and Medicaid waiver applications and allow savings from one to offset increase spending in another -- for example, using savings in Medicaid under a 1115 waiver to offset the cost of putting some of those whom the ACA renders eligible for Medicaid into private plans. Another is to allow states to show that a waiver is deficit-neutral over the lifetime of the waiver, rather than in every year that the waiver is in effect.

One change urged by multiple hearing participants is to reduce the time allotted to HHS to rule on a waiver request, set by Section 1332 at 180 days. Emma Sandoe, a former HHS spokesperson with a good feel for how the waiver process actually works, doubts that the timetable can realistically be sped up much. But Andy Slavitt, former acting head of CMS,  de facto lead advocate for preserving the ACA, and enthusiast for bipartisanship, put out a 5-point compromise plan with former Republican Senate Majority Leader Bill Frist this week that calls for cutting the approval time in half, to 90 days. So that would appear to be a relatively easy give for Democrats.

Governor Charlie Baker of Massachusetts asked that the waiver process allow a substantive change in benefit design:
Certain technical parameters of EHB [Essential Health Benefits] make important kinds of benefit design innovation difficult. For example, in many areas, bronze and silver plan deductibles are extremely close to the maximum out of pocket (MOOP) limits. States may want to experiment with designing plans in which there are lower MOOP levels for high-value care (like chronic illness care) in exchange for a slightly higher MOOP overall, perhaps exceeding the existing EHB MOOP limit for relatively lower-value services. This would help make sure people who opt to buy high deductible plans don't put off care that will keep them healthy and also help make sure they don't develop an even more costly medical condition.
As far as I can tell, Section 1332 already would allow such a proposal, providing the waiver proposal  convinces HHS that the alternative "will provide coverage and cost sharing protections against excessive out-of-pocket spending that are at least as affordable as the provisions of this title would provide."  Perhaps, however, variable MOOP would be interpreted to violate HHS's 2015 guidance, which stipulates: 
Increasing the number of state residents with large health care spending burdens would cause a waiver to fail the affordability requirement, even if the waiver would increase affordability for many other state residents.
Could Democrats co-sponsor legislation with Alexander et al if they agreed to a) speed up the waiver approval timeline, b) stipulate by statute that the budget impact of marketplace, Medicaid and CHIP waivers be considered together, and c) stipulate by statute that budgetary impact be assessed across the life of the waiver, rather than year-by-year?

I doubt it. I imagine that going thus far and no further would fulfill Murray's idea of "threading the needle," as she put it at the outset of the herings, but not Alexander's. 

Perhaps undoing HHS's 2015 guidance requiring that waiver proposals be shown not to hurt vulnerable subpopulations would do it. Tammy Tomczyk, an actuary with the consulting firm Oliver Wyman, who testified on Sept. 12, suggested that Congress could rescind HHS's 2015 guidance and allow states to:
o Demonstrate each of the guardrails are met in aggregate for the market
That means, I assume, remove the requirements that subpopulations not be hurt by a waiver provision. Doing so would open the gate to a lot of market changes that Democrats would not like, such as Iowa's rechanneling of CSR dollars into increased premium subsidies and extension of limited premium subsidies to enrollees with incomes above 400% FPL.

Tom Price's HHS could put the "aggregate"standard in effect by issuing its own guidance. But if Alexander got Democrats to agree to specifying in legislation that HHS should consider the impact of waiver proposals in aggregate only,  he'd be drawing some blood.

P.S.  In the House, the Problem Solvers, a bipartisan group of some 40 House members, put out a 5-point plan for ACA stabilization on July 31 that included a call for increased flexibility for states seeking innovation waivers or waivers to create multistate compacts. In a September 5 phone call with leaders of the healthcare committee of Blue Wave New Jersey, including me, Josh Gottheimer, Democratic co-chair of the Problem Solvers, said that the group is not seeking legislative changes to ACA Sections 1332 or 1333 (which lays the ground rules for multistate compacts). An account of the conversation is here, on the BlueWaveNJ website.

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