Why ACA market upheaval still looms large

At least one part of the healthcare industry is still looking to Washington D.C. after the flurry of activity last month, if only for one action. In addition to the highly public failure to pass major healthcare legislation before leaving town for a month, Congress and President Donald Trump also left the Affordable Care Act (ACA) exchange markets in a dangerous flux by not taking action on the cost-sharing reduction (CSR) payments for insurers.

It’s not clear whether Congress will continue to take up Republican healthcare legislation to repeal the ACA when it returns. Even within the party, senators are singing different tunes, while President Donald Trump continues to pressure lawmakers to get an ACA repeal bill on his desk. A bipartisan group with members from both chambers has a few ideas, but the majority of lawmakers appear ready to move on. Regardless, they will still have to take up reauthorization of the Children’s Health Insurance Program (CHIP) in September, potential reigniting some debates around the ACA.

If GOP leaders do declare ACA repeal off the table for this year, its opponents will look to the executive branch for efforts to weaken the law and its effects. Here’s what to look out for.

Cost-sharing reduction payments

Payers have been begging for assurance that CSRs will continue to be paid, but the White House and Congress have so far refused. The result has been many payers pulling out of the exchange markets or reducing their footprints, as well as premium hikes of 30% or more. Just last week, Anthem announced it is pulling out of the Nevada and Virginia exchange markets and reducing its participation in Georgia.

Not paying the CSRs would increase federal spending, because the higher premiums will require higher premium subsidies for the 84% in the exchanges who qualify for help. That’s not to mention the 30,000 or more who would have no insurance options.

Trump hasn’t been shy about his plan to halt any efforts that stabilize the exchange markets (like CSRs) in an effort to sabotage the ACA and force unwilling Democrats to cooperate on a repeal bill. Others in the GOP, however, have been reluctant to hurt constituents with such an overtly political play.

America’s Health Insurance Plans has said it is imperative the CSRs are funded. “These benefits are essential to making coverage and care affordable for American families who receive them,” the organization said. “Clarity and commitment to this funding is needed to eliminate confusion and anxiety for consumers.”

It may soon be too late for CSR payments to matter for next year. Payers must sign their contracts with HealthCare.gov by Sept. 21. The CMS and some states have tried to give insurers more flexibility because of the uncertainty by pushing back rate filing deadlines. Connecticut said it will allow payers to refile their rates if the CSR payments are eliminated, and California allowed them to file two sets of rates, one of which assumes no CSRs.

Weakening the ACA

Trump’s threat to “let Obamacare implode” may go beyond refusing to shore up the exchange markets. His administration has already pulled advertising and promotion of the exchanges, and is being investigated by the Government Accountability Office for pushing the GOP healthcare bills in official HHS communication channels. Immediately after his inauguration, Trump signed a wide-ranging executive order instructing federal agencies to “exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay any provision or requirement” of the ACA that imposes a fiscal or regulatory burden.

No major changes have resulted from the order so far, but it could be used to roll back benefit requirements for preventive care, contraception and mental health services.

HHS Secretary Tom Price could also make changes that weaken the ACA’s individual mandate. Repealing the mandate would mean 15 million fewer Americans would have coverage by 2026 and result in premium increases of about 20%, according to the Congressional Budget Office. Watering down the requirement instead of ditching it completely would have less drastic results, but there would still be an impact.

Price could create more exemptions for the mandate or attempt to force the Internal Revenue Service to stop enforcing it. Either of these actions would add turmoil to the exchanges markets and undermine the efforts of the ACA.

Reauthorizing CHIP

Those watching health legislation in Congress are eyeing CHIP reauthorization as a possible vehicle for changes to the ACA. Lawmakers will be hesitant, though, as CHIP is a successful program with bipartisan support.

The program, which turned 20 years old this past weekend, covered nearly 9 million children in fiscal 2016. CHIP coverage is more affordable than employer-sponsored or marketplace coverage, while children covered under CHIP are more likely to have a usual source of care and regularly attend well-child visits, according to the Medicaid and CHIP Payment and Access Commission, which recommends Congress extend CHIP funding through 2022.

The commission estimates more than a million children would lose coverage if CHIP loses funding.

Bipartisan legislation and state waivers

A bipartisan group of about 40 members of the House is proposing some relatively small changes to the ACA that have received support from both sides of the aisle in the past. The plan is to put them in a bill that would also immediately fund the CSRs.

Their suggestions include exempting smaller businesses from the employer mandate, a fund states can go to for help covering people with high care costs and more flexibility and guidance for states looking to apply for ACA waivers. Another possible measure is repeal of the medical device tax.

Their proposal is to change the employer mandate by having it apply only to businesses with 500 or more employees, instead of the current requirement for businesses with 50 or more workers. Analysis from the Urban Institute and Rand Corporation has shown the employer mandate has little effect on the number of people who have coverage, partly because nearly all businesses with at least 50 employees offered coverage even before the mandate went into effect.

The ACA has always given states the option of applying for a waiver that allows them to eschew essential health benefits and other requirements — as long as they can prove their plans will cover the same number of people with coverage that is just as comprehensive and affordable. HHS under President Barack Obama was careful in ensuring that state proposals met those guidelines, but current HHS Secretary Tom Price has said he wants to encourage more waivers and will be less strict with approvals of those waivers and Medicaid demonstration waivers.

With this in mind, some recent proposals have included aspects that would have previously been rejected. Last week, Maine applied for a Medicaid demonstration waiver that includes work requirements and asset testing. Those measures are likely to restrict access to coverage for people with low incomes.

Many of the options available for Congress and the executive branch could roil the industry, but some bipartisan options could provide much needed clarity. Summer is usually pretty quiet in Washington D.C., but this year has not been business as usual. Healthcare leaders would be wise to be ready for new developments with the ACA and beyond.