I’m just a bill…Ordinarily a bill goes through an iterative process before it becomes law. The path goes something like this:
- One or more Senators introduce it
- The bill is then referred to relevant committee(s)
- The committee(s) hold one or more hearings and markup sessions on bill, debating its merits and adding or subtracting language (amendments)
- The final, amended bill passes committee by majority vote
- The full Senate then votes on the bill after committees are done
Out of the ordinaryThe failed July bill did not go through any committee hearings, which was one of Sen. John McCain’s (AZ) key objections when he voted it down. “We must now return to the correct way of legislating and send the bill back to committee, hold hearings, receive input from both sides of aisle, heed the recommendations of nation’s governors, and produce a bill that finally delivers affordable health care for the American people,” McCain said at the time. Other Senators also called for a return to “regular order” in the wake of the July mess. And so, a hearing. Sen. Ron Johnson (WI), one of the co-sponsors of the Graham-Cassidy bill, personally promised that the bill would get at least one proper committee hearing. He could bring it before his committee, he said: Homeland Security. “I’m chairman of Homeland Security,” Johnson said. “If either the Finance Committee or [Health, Education, Labor and Pensions] Committee won’t hold a hearing, I’ll notice one this afternoon. We’ll hold a hearing on this prior to September 30th.” And he did indeed put a hearing on the Homeland Security calendar for Sept. 26. If that sounds ridiculous to you, you’re right: The Homeland Security and Governmental Affairs Committee has nothing at all to do with healthcare or health insurance legislation. There’s no real overlap. But Johnson’s political dare paid off: Sen. Orrin Hatch (UT), chair of the Senate Finance Committee, agreed to hold a hearing on the proposal on Monday, Sept. 25. The relevant testimony and witness list are yet to be determined. “Senators have expressed a strong desire to examine the details of the Graham-Cassidy proposal through a public hearing,” Hatch said in a statement. “A hearing will allow members on both sides of the aisle to delve deeper into its policy and gain a better understanding of what the authors hope to achieve.” The hearing, however, is largely for show — to tick a box and say they did it. Aside from a few wild cards, Senators’ minds are already made up along partisan and ideological lines.
And what do they hope to achieve?The one leg up that the Graham-Cassidy bill has over McConnell’s summer attempts is that it’s not being hidden or kept secret. But other than that, it’s a very similar pile of cuts, likely to have consequences every inch as dire… if not worse. The Congressional Budget Office, tasked with analyzing potential legislation to run the numbers on it likeliest outcomes, won’t have time to churn out a full, deep-diving report on the Graham-Cassidy proposal. However, it is expected to release a high-level, preliminary sketch early next week. READ MORE: Senate may vote on latest Obamacare repeal bill without knowing how many people it will affect Anyone with a pre-existing condition would be at risk for incessantly skyrocketing premiums under Graham-Cassidy, Vox reports. The non-partisan Center on Budget and Policy Priorities also finds that federal healthcare funding — to programs like Medicaid and individual subsidies — would be slashed by hundreds of billions of dollars over the next ten years. The American Medical Association sent a letter [PDF] to the offices of McConnell and Senate Minority Leader Chuck Schumer (NY) asking the Senate to reject Graham-Cassidy because it “would result in millions of Americans losing their health insurance coverage, destabilize health insurance markets, and decrease access to affordable coverage and care.” Other organizations voicing opposition include the AARP, the American Cancer Society, Cancer Action Network, the American Diabetes Association, the American Heart Association, the American Lung Association, the Arthritis Foundation, the National Health Council, and the March of Dimes, among others.
How’s that math?There are 52 Republican Senators and one Vice President — so to get to 51 votes, McConnell can only afford to lose three. An analysis by the numbers-minded folks at FiveThirtyEight concludes that 46 votes are a sure thing or a nearly sure thing right out of the gate. That leaves a couple of likely “no” votes and four “wild cards” to contend with. Sen. Rand Paul (KY) has already gone on the record in opposition, both in various Tweets and in an op-ed for Fox News. Paul’s opposition comes from the far conservative side: He believes that Graham-Cassidy does not go far enough to remove all traces of the ACA from the world. However, Paul also originally had stringent objections to the July bill at first, before changing his mind and voting for it anyway — so it’s anyone’s guess where his vote would actually fall. The same is true of Utah Sen. Mike Lee, who also initially opposed the July bill for being insufficiently conservative before then voting for it anyway. Sen. McCain has indicated that he might be amenable to voting “reluctantly” in favor, but said his approval was contingent on whether the governor of Arizona felt the Graham-Cassidy would help or hate the people of that state. Gov. Doug Ducey put out a statement endorsing Graham-Cassidy on Monday, and so now McCain is considered more likely to go for it. The other two holdouts in July were Sens. Susan Collins (ME) and Lisa Murkowski (AK). Both objected to deep cuts to Medicaid and other healthcare spending that would negatively affect the populations of their states — and since the new bill provides for cuts that are either equally as bad or worse, all eyes are on Collins and Murkowski to renew their objections once again. Neither, however, has yet gone on the record with either full opposition or support. The Portland Press-Herald reports that Collins has “concerns” with the Graham-Cassidy proposal, particularly with regards to Medicaid. Murkowski is also a long shot to bring on board, CNN reports, because the Graham-Cassidy proposal, as written, would likely be a losing proposition for Alaska overall. Alaska’s governor has come out against the bill. But as Axios reports, the Trump Administration has gone all-in on trying to sway every single Republican Senator to support the proposal — and so we are once again, as a nation, on tenterhooks, waiting to see which way the breeze blows up on Capitol Hill in the coming days.
So what is it this time?Senators Lindsey Graham (SC) and Bill Cassidy (LA), joined by Dean Heller (NV) and Ron Johnson (WI) on Wednesday released a new, last-ditch ACA repeal bill. Graham and Cassidy actually first pulled together their proposal in July, while the Senate was foundering on the McConnell bill that eventually failed. Most folks call this attempt the Graham-Cassidy bill, although the Senators’ offices are trying to make “GCHJ” happen. (It won’t.)
What does it do?Although this bill [141-page PDF] takes a slightly different approach to repeal than the failed July bill, Graham-Cassidy still aims for several similar outcomes, including:
- Repealing the individual mandate
- Repealing the employer mandate
- Permitting states to opt out of requiring insurers in their borders cover essential health benefits
- Ends the Medicaid expansion
- Replaces some Medicaid funding with block grants that states can use for whatever
Is it actually going to happen?Hill-watchers and Washington media largely consider Graham-Cassidy an unlikely long shot at best — but if watching Congress in 2017 has taught us anything, it’s: ¯_(ツ)_/¯ The math in the Senate is the same now as it was in July: Senate Majority Leader Mitch McConnell needs 50 members to vote in favor of something in order to get it to pass. (Vice President Mike Pence can cast a tie-breaking 51st vote as needed.) That’s leading Republicans in favor of the bill to crow that they’re almost there, boasting that at least 47-49 members are already in line to vote for it. But as we saw this summer with Sen. John McCain’s (AZ) dramatic late-night thumbs down, it’s that 50th vote that you can’t get by without. There are 52 Republicans in the Senate, meaning that if three choose not to support the bill, it’s dead in the water. Sen. Rand Paul (KY) has already gone on the record as a “no.” Sens. Susan Collins (ME) and Lisa Murkowski (AK) were the other holdouts over the Senate’s July bill. At the time, both cited objections to cuts in coverage and in Medicaid funding. Consdiering Graham-Cassidy promises equally dire cuts, it seems unlikely that either would suddenly be swayed — but unlikely is not the same as impossible. That said, anything that did manage to get through the Senate would still have to get through the House before becoming law… and the clock is ticking. Because the procedural tactic Congress has been using to try and rewrite healthcare, budget reconciliation, has a deadline. Congress has to be completely done with any bill before the clock strikes midnight on Sept. 30.
What does “single-payer” actually mean?At its most basic, single-payer healthcare is the idea that one single entity — generally a government body or agency — receives and handles everyone’s healthcare bills. All treatment is paid for from a single body, which in turn is financed by taxes. Basically, there’s one insurer, everyone can use it, and it covers most or all preventative and medically necessary treatments. That’s in contrast to the multi-payer system we currently have in the U.S., where you and one or more insurance companies split up the bills for any services you receive. For example, if a physician bills you $1,000 for a procedure, you might be expected to pay anywhere from 10% to 50% of the cost, with your insurer picking up the remaining tab. It gets even more complicated depending what kind of treatment you’re seeking, what the specific terms of your annual deductible and out-of-pocket cap are, and how many entities are involved in providing your care, but the general principle holds. Related: How surprise medical bills knock consumers down
Are “single-payer” and “universal coverage” the same thing?The term “single-payer” often gets interchanged with “universal healthcare,” but no, the two are not the same. A national single-payer plan would almost certainly be universal (although the law could, for whatever reason, choose to exclude certain groups — limiting coverage to documented citizens, for example), but there are alternative ways to produce universal or near-universal coverage as well. Germany, for example, has universal coverage through a multi-payer system that operates in a complex public/private partnership. Health care is provided by private doctors and is paid for by “sickness funds” — one of a couple hundred insurance carriers, basically — that get their funding not from taxes but from employer and employee premiums. Conceptually, it’s not unlike the system the U.S. has been heading towards since the ACA took effect in 2014. But Germany’s plan differs from the United States in that the statutory insurance doesn’t come with enormous, ever-growing co-pays, deductibles, and co-insurance like most private American plans do. When you’re covered, you’re covered, with nominal extra fees. That’s different from something like the UK’s National Health Service (NHS). In Britain, you can receive care in NHS hospitals with NHS doctors and nurses working directly there, as government employees. Other practitioners may own private practices, but contract with the NHS to receive payment for services rendered. Canada has something in between: Anyone in the country can apply for public health insurance. Each province has its own insurance plan, which then reimburses providers in private practice for most services they provide. In the U.S., we do have limited public insurance for qualified groups, through Medicare and Medicaid. One way that some single-payer advocates suggest the U.S. achieve single-payer coverage would be through expanding those programs universally; the rallying cry is “Medicare for all.”
Is “Medicare for all” single payer?In a broad sense, yes, it’s currently the most popular proposal for implementing single-payer care in the United States. As always, though, the devil is in the details. Medicare, New York Magazine notes, is not exactly easy to expand. It probably won’t scale very well, and it’s fairly confusing even for the millions who rely on it. Medicare recipients also still often owe significant co-pays and other out-of-pocket costs, NY Mag adds, which pretty much defeats the goal most of those who rally around single-payer care hope to achieve. What’s more, many critical aspects of care — dental and vision care, among them — aren’t included, and many participants (seniors) supplement their Medicare with private insurance. Realistically, then, many single-payer proposals being bandied about come closer to being a universal Medicaid expansion rather than a universal Medicare one. However, the phrase, “Medicare for all” tends to perform better in opinion polls than alternate phrasing, the Kaiser Family Foundation has found. Democrats (the party more likely to act in favor of some kind of universal care) in particular feel negatively about terms like “socialized medicine,” where majorities feel much more warmly about “Medicare-for-all.”
Who’s in favor of single-payer?A rapidly-growing slice of the American public, for one thing. Data from the Pew Research Center, in June of this year, found that overall, 58% of respondents to a national survey felt that providing health care to all Americans is something the government should be responsible for. 33% of respondents overall felt that there should be a single national program, and 25% felt that it should be through a mix of public and private programs. Among self-identified Democrats, however, the skew now leans toward universal public coverage. By June 2017, a majority — 52% — responded that they favor a single, national government program for healthcare. That’s a marked increase from just one-third of Democrats agreeing with that statement in March, 2014. Physicians, overall, also seem to be moving in the same direction as the general public. A survey of doctors released in August found that a majority — 56% — supported the idea of moving to a single-payer healthcare system in the U.S. (In 2008, the same organization found that 58% of doctors opposed the idea.) Doctors largely want to be in the position to do medicine, not paperwork. And the more complicated the health insurance structure is, the more time physicians have to spend on the bureaucratic things they don’t care for — not just billing, but also spending time and energy making sure the tests or medications they prescribe will actually be covered by a patient’s insurance. “Physicians long for the relative clarity and simplicity of single-payer. In their minds, it would create less distractions, taking care of patients — not reimbursement,” an executive for the firm conducting the survey said in a statement.
Who’s opposed?Opposition basically falls into two very broad categories: the ideological and the practical. Many, particularly but not solely on the political right or in the Republican party, oppose single-payer care on philosophical grounds. That same Pew survey that found 33% in favor of a national single-payer health plan also found plenty of respondents who want no part of it. Overall, 38% of those surveyed said that making sure Americans can access health care isn’t the government’s job. Most still favor keeping Medicare and Medicaid, since those already exist, but 5% of respondents said that government should not be involved in healthcare in any way — a figure that leaps to 9-10% among self-identified Republicans. Vox reports that Republican lawmakers are already gearing up counter-attacks to Democrats’ recent embrace of single-player bills, saying that implementing expanding Medicare or Medicaid any further would endanger the Department of Veterans Affairs and the health care veterans receive. Meanwhile, there’s the business angle to consider. The health insurance industry is massive. In the Fortune 500, UnitedHealth Group ranks sixth, Aetna 43rd, Humana 53rd, and Cigna 70th — to say nothing of the dozens of other small, medium, and large providers in the country. You would expect insurers to be opposed to the idea of full, federal single-payer coverage that would cut them out of the loop entirely. But insurers may be less hostile to the idea of some kind of compromise approach to universal coverage than you’d think. Back in May, Aetna CEO Mark Bertolini said that, “we should have that debate [about single-payer] as a nation.” He added, “instead of shouting back and forth across the stage, let’s discuss what single-payer means,” and posited (rightly) that there are many, many different ways to approach that goal, if it’s the policy goal the country wants.
How realistic is it?Single-payer or universal coverage are certainly not in the cards as a serious policy proposal for 2017 or 2018, with the current Congress and White House we have. But the seeds of potential are being planted. Vermont Sen. Bernie Sanders, who retains much of the popularity he gained with his unsuccessful presidential run in 2016, plans to introduce a Medicare-for-all bill on Wednesday, Sept. 13. Sanders told NPR in early August that he had no expectation that the bill would go anywhere at all. “You’re not going to see it. That’s obvious,” he told NPR. Instead, he wants to use the bill to force a discussion about the merits and potential of single-payer healthcare going forward. Reports say Sen. Brian Schatz (HI) also plans to introduce a bill this fall that would expand Medicaid (not Medicare), allowing states to let anyone — not just low-income Americans — buy in. Basically, it would be similar to the Medicaid expansion that many states participate in under the ACA, effectively using Medicaid as a “public option” for anyone uninsured who wants it. Schatz and Sanders each plan to co-sponsor each other’s bills, Vox reports, part of a broader plan to move the conversation forward. Over the summer, several other high-profile Democratic Senators have joined the choir of voices singing the praises of “Medicare for all,”. Sanders’ bill now reportedly has 10 other Democratic Senators signed on as co-sponsors, including: Tammy Baldwin (WI), Cory Booker (NJ), Kirsten Gillibrand (NY), Kamala Harris (CA), Pat Leahy (VT), Ed Markey (MA), Jeff Merkley (OR), Brian Schatz (HI), Elizabeth Warren (MA), and Sheldon Whitehouse (RI). It’s also becoming a tenet of some 2018 House campaigns. As Rolling Stone and the Washington Post report, challengers for seats in California, Nevada, and Wisconsin — including House Speaker Paul Ryan’s seat — have already started campaigning with an explicit platform of single-payer, universal health care. There’s a single-player proposal currently afoot in the House, too. Rep. John Conyers (MI) introduced a bill that so far 117 of his fellow Democrats in the House support. The Conyers bill basically doesn’t just create a public option, but expands Medicare and Medicaid into one massive public option that would basically become mandatory — and fast. But that bill Vox notes, is skeletal at best — a sign that it stands absolutely zero chance of ever moving forward in the current Congress. It’s only 30 pages (the ACA, by comparison, famously clocked in at more than 900 pages of detail), most of which say merely that changes should be made, without specifying how.
What are the challenges?Setting aside political and ideological obstacles to changing healthcare law at all, transitioning the U.S. from its current system to a single-payer system would come with significant logistical and practical challenges to work through. The U.S. population is currently more than 320 million people, and changing anything for all of us at once is hard work. Our policy steers more like a stack of boulders than a sports car, with every stakeholder wanting to make their own adjustments. Major changes to federal law and regulation usually require a long, slow phasing-in process, and healthcare is one that touches literally everybody in some way. But the biggest obstacle facing any single-payer plan is money. Lots and lots of money. Healthcare, to be blunt, is super duper expensive. It’s not that the costs themselves would go up in a transition to a single-payer system, Vox explains — it’s that the costs are high already. About 16% of our overall economy is related to healthcare, but right now all the spending is scattered. The government pays some, states pay some, private insurers pay some, employers pay some, and end-users — all of us who seek medical care — pay some. It’s hard to get a solid feel for just how high the spending is when it’s broken up all over. To make all of it come from a single, federal source, you’d need funding… and funding means taxes, which are yet another political land mine in the U.S., unlikely to be quickly or easily resolved any time soon.
CEDAR RAPIDS, Iowa (AP) — Democrats used a bus emblazoned with the words “Drive for our Lives” to gin up opposition to vulnerable House Republicans who voted against Obamacare with the aim of upending the GOP’s majority in next year’s midterm elections.
The vote to repeal and replace the Obama health care law looms large for 21 GOP lawmakers, including Iowa Reps. David Young and Rod Blum. They represent competitive congressional districts where Democrat Hillary Clinton won or came close in last year’s presidential election.
The collapse of the yearslong Republican quest to dismantle Obamacare has been a bitter pill for House Republicans who voted for the legislation in May only to see the drive fall apart recently in the Senate when the GOP failed to muster enough votes.
Now all that some lawmakers have to show for the politically tough vote is the word “mean” — President Donald Trump’s description of legislation that would have made deep cuts in Medicaid, allowed states to opt out of coverage for essential benefits and knocked 23 million Americans off insurance.
The bus motored into Iowa on Friday, stopping in Cedar Rapids, the largest city in Blum’s eastern Iowa district.
The black-and-gray motor coach was parked in downtown Cedar Rapids as Diane Peterson urged Blum to listen to his district’s independent voters, who outnumber those affiliated with either major party.
“Of course there are things in the ACA that need fixing,” said Peterson, referring to the Obama health law’s name, the Affordable Care Act. The 61-year-old Democrat and coffee shop owner from Hiawatha added, “But Republicans now need to reach out.”
While Blum has allied himself with the House’s conservative Freedom Caucus, Young angered conservatives when he initially opposed a House GOP health care bill, then weeks later swung behind it. Independents were frustrated with the two-term congressman’s embrace of a partisan approach to repealing and replacing Obamacare.
“David Young is not as conservative as some would like here in southwest Iowa,” said Council Bluffs Republican David Overholtzer, a 56-year-old accountant.
“Things need to get done,” said Jeff Jorgensen, a western Iowa Republican county chairman. “He’s doing OK, but his chances for re-election are tied to Trump’s popularity.”
The Des Moines Register’s Iowa poll last month showed Trump’s disapproval climbing to 52 percent. The increase was driven largely by independents, 59 percent of whom disapproved of Trump’s job performance, compared to 50 percent in February.
Independents, who hold sway in Young’s politically diverse district, want a bipartisan approach to health care.
“That’s what I and others like me have been saying: Because of this fail, people might reach across the aisle and craft something together,” said Mark Scherer, a 65-year-old manufacturing representative and political independent from a north Des Moines suburb.
Now, Young is threading the needle, talking bipartisanship as he faces the reality that Democrats are gunning for him in a state where Trump’s approval is sinking and neither can boast a major legislative achievement.
“We’ve got to pivot for the good of the country to a more bipartisan solution,” the 49-year-old Young, a former chief of staff to Iowa Sen. Chuck Grassley, told The Associated Press during a visit to far western Iowa. “It’s probably an easier, clearer path.”
A national poll released Friday by the nonpartisan Kaiser Family Foundation found that around 4 in 5 want the Trump administration to take actions that help Obama’s law function properly, rather than trying to undermine it. Just 3 in 10 want Trump and Republicans to continue their drive to repeal and replace the statute.
Young defended his vote for the House GOP bill, arguing that Republicans added billions of dollars more to help people with preexisting conditions.
Democrat Janet Norris from Red Oak, who met privately with Young in her western Iowa hometown last week, called his reasoning “doublespeak.”
“You need to assure me you care about us in the Third District, and not what Republican leadership tells you to do,” she recalled telling Young during their private chat at the Red Oak fire station.
Norris doesn’t rule out voting next year for Young, who has drawn seven potential Democratic challengers, but cringed and said, “I just don’t feel like he’s independent enough.”
Young’s newly expressed, less-partisan view is music to the ears of Republican Christi Taylor, 46, a physician from Waukee in Des Moines’ burgeoning western suburbs, heavy with moderate Republicans and independents.
But she lamented Republicans’ attempt to quickly pass legislation with support from only GOP lawmakers. “This is not something any one party should ram through,” Taylor said, describing the House’s effort as “naive and arrogant.”
Democrat Bryce Smith from nearby Adel agrees with Young that the 2010 law needs tweaking, not shredding. The 26-year-old bowling alley owner complains that Young’s bipartisan tone is convenient, in light of the spectacular collapse of Republican efforts.
“All of a sudden, now that this failed, we need to approach it in a bipartisan way?” Smith said in disbelief. “If it would have passed the first time, we would have never heard from him that we need to work on a bipartisan solution.”
Health insurance companies that sell individual coverage plans through state exchanges are currently in the process of setting the rates they will charge customers for 2018. And the uncertainty over the state of America’s health care laws and President Trump’s repeated threats to summarily cut off billions of dollars in federal subsidies to insurers has many of these companies asking for significant increases. But not everyone would have to pay those higher prices, and some could actually end up with slightly lower premiums than they pay now.
Insurers have to lock in their rates in the coming weeks with each of the states in which they sell coverage, so that the prices are all set when 2018 plans go on sale Nov. 1 through Dec. 15 (which is a much narrower window of time than in previous years).
Researchers at the Kaiser Family Foundation looked at insurers’ 2018 rate requests (all final rates must be approved by the states) in the 20 states and the District of Columbia that make this preliminary information publicly available. They compared current costs and proposed rate changes on the second-lowest cost “Silver” plan — which is the benchmark for setting tax credits and accounts for a large number of people in the individual market — in the largest city in each state.
Price Hikes Coming
[NOTE: All the rate quotes that follow are based on the price that a 40-year-old non-smoker would pay in each market.]
Insurance companies in 15 of these 21 markets are seeking rate increases that are at least 10% higher than their current level, with some premiums looking to jump as much as 49% (in Wilmington, DE), bringing the monthly premium (before tax credits; more on that in a bit) to $631, up from its current level of $423. Other large proposed rate hikes come from Albuquerque (up 34%), and Richmond, VA (up 33%).
Four markets (D.C.; Atlanta; Detroit; Minneapolis) only face single-digit percent hikes in the costs of these plans, and a fifth, Burlington, VT, should see no change in price in 2018, though premiums in Burlington would remain one of the highest on this list (see next paragraph). Only Providence, RI, is expected to see a drop in premiums for the popular plans — a 5% decrease from $261 to $248.
If Delaware were to approve the price hike, the $631 monthly premium would be the highest of the 21 markets in the Kaiser survey, followed by Philadelphia ($515; a 23% hike), Nashville ($507; up 21% from 2017), New York City ($504; a 10% increase), and Burlington ($491).
Tax Credits Mean Not Everyone Will Pay More
According to Kaiser, 84% of Americans who purchase insurance through the exchanges receive some amount of tax credit to help cover the costs of their insurance premiums. These credits, which are based on household income, put a cap on the amount an insured person pays out-of-pocket each year.
For the purpose of the Kaiser analysis, they assume that this 40-year-old non-smoker is single and earns $30,000 per year. For 2017, this person’s premium costs are capped at $207/month, with the tax credit covering the difference between that cap and the sticker price of the plan. For 2018, premiums for this same person should actually be capped at an even lower rate ($201/month), regardless of whatever increased cost the insurer charges.
The farther above the poverty line a person (or family) is, the higher their monthly cap, but anyone purchasing insurance through the exchanges who is below 400% of the federal poverty level (FPL) is eligible for some amount of premium tax credit intended to shield them from soaring rates.
So Who Will Pay More?
Not everyone purchasing individual insurance plans fall within the income eligibility range for the tax credits. For instance, a single person with no children earning more than $50,000 a year would make too much money to qualify. In a city like New York or Los Angeles, where there are large numbers of well-paid freelance workers who don’t have employer-sponsored insurance, you’ll see folks having to pay the full sticker price for coverage.
In all, there are about 1.62 million people currently enrolled in exchange plans that aren’t receiving any tax credits to cap their premium payments. These folks will be shouldering any additional rate hikes for 2018.
And they won’t be alone. There are around 5 million Americans who purchase individual plans outside of the exchanges, meaning their plans are not eligible for the credit and will pay sticker price regardless. It’s possible that many of the people in this category are above the 400% FPL threshold anyway, so it doesn’t matter to their bottom line where they purchase coverage.
A lot has been made in the recent debate about repeal of the Affordable Care Act regarding the shrinking number of insurers willing to participate in the exchanges. In the 21 states surveyed by Kaiser, an average of 4.6 insurance providers expect to sell these policies in 2018, down from an average of 5.1 last year, and the high of 6.7 in 2015.
Having multiple providers in a market helps by not only ensuring that residents will have access to quality insurance, but that these providers are competing against each other on price and service.
Of the 21 states in the Kaiser report, about half are seeing insurance companies exiting the exchange entirely, though in some cases the loss of one provider is being offset by the entry of a new insurer.
Delaware, which is expecting to see the highest premium increase of these states for 2018, is also going down to just a single insurer offering plans in the state after Aetna decided to exit this market. Vermont, where premiums are high but remain flat, has only two providers selling insurance through the exchange. D.C., Connecticut, and Rhode Island also only have two options for their residents.
New York remains the state on this list with the largest number of providers (14), followed by California (11), and Michigan (8, a decrease of one because of the loss of Humana). Though it’s worth noting that that the total number of insurers available in a state isn’t necessarily the number of options available to everyone in that state. In California, for example, insurance giant Anthem has announced its intention to exit large swaths of the state, meaning residents of those areas will have fewer providers to choose from.
Why the higher than usual rate hikes? The insurance industry is blaming the widespread uncertainty about the future of American healthcare laws and regulations.
Under the Affordable Care Act, most people are required to purchase some form of qualifying health insurance coverage or pay a financial penalty. This so-called “individual mandate” is one of the more controversial aspects of the ACA and it’s one of the few aspects of the law that has been common to all Republican repeal bills.
Before the ACA, the individual insurance market had a reputation of being a high-cost, high-risk business, with large numbers of policyholders paying for expensive coverage because it was still less expensive than going out of pocket for their costly medical expenses.
The intention of the individual mandate was to nudge all adults — particularly younger, healthier Americans — into purchasing insurance they would have otherwise gone without. The hope was that a larger, less-risky pool of insured people would allow plans to be sold at a more affordable rate.
In terms of changes that many people liked, the ACA significantly improved the mandatory level of coverage provided by these individual plans. Insurers can no longer exclude or limit coverage applicants with pre-existing conditions; they must provide a suite of essential health benefits; dependents can now stay on parents’ plans until the age of 26; and insurance companies are now required to account for how much of their premium revenue is actually spent on providing patient care — if a company doesn’t spend enough of that money in a year, it has to issue refunds to policyholders.
The various GOP repeal bills all sought to eliminate the individual mandate, but many of these bills left in (or revised without eliminating) the aspects of ObamaCare that are popular with voters. From a political standpoint, it made sense: Get rid of the easy target that makes people made, and keep the stuff that people want. The problem is that the former is intended to pay for the latter.
The Congressional Budget Office, consumer advocates, healthcare providers, and the insurance industry repeatedly warned GOP lawmakers that eliminating the individual mandate while retaining these new coverage requirements would cause large numbers of healthy people to drop their insurance, driving up costs and premiums for those who remain. It would also likely result in an even faster exodus from the exchanges, argued some.
While the repeal efforts stalled in July when the Senate was unable to muster enough votes to pass its bill, it’s highly likely that repeal legislation will continue to be considered after these insurance companies have locked in their rates for 2018. That means that these insurers have to set a premium for a year in which it’s entirely possible that the individual mandate could be dropped.
The President has also previously directed the Department of Health and Human Services to consider whether it should continue enforcing the individual mandate, meaning the White House may try to eliminate or soften this requirement without help from Congress.
In the Kaiser report, 25 insurers in 12 states explicitly indicated in their rate filings that their rate request is based on the assumption that the individual mandate would either be dropped or weakly enforced. Still others told states that they would seek higher rates if the mandate were eliminated. In some states, insurers are blaming premium rates of up to 20% on the uncertainty about the mandate.
In addition to the premium tax credits, the federal government provides insurers with billions of dollars a year in subsidies to reduce out-of-pocket medical costs beyond premiums, like co-pays and deductibles. These cost-sharing reduction payments — estimated at around $7 billion this year — help to lower the cost burden for about 57% of enrollees who purchased insurance through the exchanges.
President Trump has repeatedly decried these subsidies, referring to them publicly as “bailouts” for the insurance industry. The White House has also made multiple statements that the President can, and might, cut these payments off at any time he chooses.
Meanwhile, House Republicans have been challenging the legality of these subsidies in court for several years, arguing that President Obama sidestepped necessary appropriations processes. That dispute, which could also end the subsidies, is currently before a federal appeals court, which recently allowed a coalition of states to step in to defend the payments since the Trump Administration has given no indication that it intends to continue this defense.
And once again, a number of the insurance companies in the Kaiser survey are telling the states that they are basing their 2018 premiums on the possibility that these payments could end, with multiple providers saying that this lack of certainty is responsible for rate hikes of 20% or more.
Additionally, there are insurers whose rate request are not currently based on an assumption of lost subsidies, but who have told the states that they intend to tack on an additional 3% to 10% beyond their initial requests if the payments are eliminated.
“Some states have instructed insurers to submit two sets of rates to account for the possibility of discontinued cost-sharing subsidies,” notes Kaiser. “In California, for example, a surcharge would be added to silver plans on the exchange, increasing proposed rates an additional 12.4% on average across all 11 carriers, ranging from 8% to 27%.”