Federal government's new CSR liability boosts Democrats' leverage in Congress

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Good news: Democrats in Congress understand that if they're going to join with Republicans to appropriate funds to  directly reimburse health insurers for Cost Sharing Reduction (CSR), they need to extract a price. They have the leverage to demand a price -- and two federal judges increased that leverage last week in rulings that vastly increased the government's potential liability for stopping direct CSR payment.  A letter to CMS Administrator Seema Verma from Democratic Senators Patty Murray and Ron Wyden and Reps Frank Pallone and Bobby Scott flexes that leverage.

Briefly: The ACA directs the federal government to reimburse insurers for the CSR they are legally obligated to provide to marketplace enrollees with incomes below 250% of the Federal Poverty Level who select silver plans. In one of several fits of absent-mindedness, the ACA's creators neglected to make the payment part of mandatory spending, leaving it to Congress to appropriate funds. The Republican Congress did not appropriate; the Obama administration made the payments anyway; the Republican House sued to stop them; and Trump cut the payments off in October 2017. State regulators, having prepared during the long months that Trump threatened the cutoff, allowed insurers to price CSR into premiums for silver plans only, since CSR is available only with silver. Since income-adjusted premium subsidies are set against a silver benchmark, "silver loading" predictably created discounts in gold and bronze plans. That created a bounty for many subsidized enrollees with incomes too high to qualify for strong CSR -- i.e. those with incomes in the 200-400% FPL range.

Does the Alexander-Murray bill adequately protect vulnerable groups?

The changes to the ACA's Section 1332 state innovation waivers in the Alexander-Murray marketplace stabilization bill  have broad support, having been proposed by multiple HELP Committee hearing participants and endorsed by bipartisan outside advocates including  former acting CMS director Andy Slavitt, one of the ACA's most vocal defenders. These include providing for an expedited waiver process, an emergency waiver process, and the creation of "cookie cutter" waiver templates that multiple states may opt to adopt. (There are dissenters, however, as discussed below.)

Also a matter of broad consensus: easing the terms by which states meet the requirement that a waiver proposal be budget-neutral by 1) allowing states to combine Section 1332 waivers with Medicaid and CHIP waivers and using savings from one to offset extra spending on another, and 2) considering budget impact over the 6-year term of the waiver and a ten-year budget plan.

There is one alteration, though, that gets to the crux of the debate over state flexibility, and was probably a matter of intense negotiation. That is a change to the so-called "guardrails" pertaining to quality and affordability of coverage.

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?

Twas the Night Before Shutdown...Twas the Night Before Default

The epic continues...

Then Collins cooked up something Murray could swallow,
Five queens signed on, and the old bulls clicked "follow":

Senate-House conference on terms uncoercive,
Tweaks to Obamacare none too subversive,

Debt ceiling bump-up and short CR, clean,
Sequester not locked in for 2014.

Markets exhaled and the indexes soared,
Till Boehner rolled one more grenade of discord:

"Don't touch that hostage! A price must be paid --
Even if only by us and our aides...

National default is a bridge none too far
To uphold our values -- whatever they are."

Thus Boehner spooled his caucus one last yard of rope
To twine round their necks, as the nation's last hope.

Lo, Heritage Action gave one mighty yank,
The diehards jumped ship, and the House CR sank.

    To be continued (if the world does...)

Twas the Night Before Shutdown, Canto I
UPDATE: Here's the whole thing