If bipartisan ACA legislation comes back to the House, remember the Problem Solvers

As hope goes stronger that the Senate will reject the ruinous Graham-Cassidy ACA repeal bill, the back-burnered Senate HELP Committee hearings in pursuit of bipartisan legislation to stabilize the individual insurance market may become relevant again. On Sept. 20, HELP chair Lamar Alexander pulled out of the talks to get on team Scorched Earth.  After John McCain came out against Graham-Cassidy yesterday, Patty Murray, ranking Democrat on the HELP Committee, put out this statement:

I  agree with Senator McCain that the right way to get things done in the Senate—especially on an issue as important to families as their health care—is through regular order and working together to find common ground. I’m still at the table ready to keep working, and I remain confident that we can reach a bipartisan agreement as soon as this latest partisan approach by Republican leaders is finally set aside.

That raises the possibility too that at some point the Problem Solvers, the House caucus formed to seek bipartisan solutions on multiple fronts, could also become relevant. On July 31, the Problem Solvers released a five-point outline for bipartisan market stabilization legislation. As in the HELP Committee, "state flexibility" -- i.e. some easing of the process for states seeking ACA Section 1332 innovation waivers -- was a plank.

On September 5, the day before the first HELP Committee hearing, I participated in a call between BlueWaveNJ and Rep. Josh Gottheimer, Democratic co-chair of the Problem Solvers. It seems another lifetime, as the Graham-Cassidy cancer was still in watchful waiting phase, but we were concerned as to what Democratic Problems Solvers might be prepared to yield on the waiver front. Here's what we learned, as reported on the BlueWaveNJ blog:

The Problem Solvers introduce their state flexibility plank like this:

Provide technical changes and clear guidelines for states that want to innovate on the exchange or enter into regional compacts to improve coverage and create more options for consumers.

The Problem Solvers are focused here on two sections of the ACA. Section 1332 allows states to seek "innovation waivers" to redesign their marketplaces. They can propose to alter or repeal almost any core marketplace feature, including the Essential Health Benefits that every ACA-compliant health plan is required to provide.  ACA Section 1333 provides ground rules for states that want to enter "multistate compacts" -- that is, agreements to let insurers sell insurance "across state lines"  in states joining a given compact.

These ACA provisions giving states "flexibility" sound pretty sweeping, but they come with important guardrails. For a Section 1332 "innovation waiver" to be approved by HHS, the state's alternative plan has to cover as many people as would be covered without the waiver, offer coverage at least as affordable and comprehensive, and not increase the federal deficit. The state has to prove with rigorous economic analysis that its plan meets these standards.

Easing up on these requirements sounds good to a lot of people. But Republican bills to repeal core parts of the ACA showed just how dangerous increasing "flexibility" can be. The main Senate partial repeal bill loosened the approval standards and practically compelled HHS to accept any waiver application.

With respect to the Section 1332 innovation waivers, the Problem Solvers' press release suggests that "legislative changes" as well as "revised HHS guidance" might be called for. That worried us. We asked just what legislative changes the caucus might be considering.

Gottheimer responded that the Problem Solvers were seeking only administrative clarity on ACA Section 1332, adding, "Any form of gutting the ACA is unacceptable to me."

When asked directly, "You're not looking at legislative changes to Section 1332?" he responded, "No."

The HELP Committee hearings hinged mainly on what might be done to the 1332 waivers. And word is that before Alexander put his statesmanship on hold, Murray was acceding to most of what Alexander was demanding. In response to Alexander's specious claim that consensus was impossible, Matt House, a spokesman for Schumer, said in a statement, "This is not about substance — we gave them many of the things they asked for, including copper plans and wide waiver authority."

"Wide waiver authority" could mean a lot of things. There are ways to ease the process by which states obtain ACA Section 1332 innovation waivers administratively -- some of which were matters of broad consensus among those offering testimony -- and then there are ways to seriously compromise the Section 1332 "guardrails," which Murray said at the outset she was at pains to protect. In a prior post, I spotlighted what seems to me a likely boundary that Democrats would have to decide whether to cross if legislation becomes an actual possibility.  Here's the thought:

Perhaps undoing HHS's 2015 guidance requiring that waiver proposals be shown not to hurt vulnerable subpopulations would [satisfy Republicans demands]. 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.

Perhaps this baby might be divided in some way, and there's a way to protect vulnerable populations while allowing more tradeoffs than the 2015 guidance might seem to allow. Of course the Price administration may effectively ignore that guidance -- and has the authority in any case to change it through established administrative procedure. But I assume it could be altered by legislative direction as well.

Could the Problem Solvers at some point have an effect on such decisions? The possibility feels remote right now. Still, it seems worth noting that as of September 5, Gottheimer did affirm (press release language notwithstanding) that the Problem Solvers were not contemplating legislative changes to 1332.