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What insurance market fixes can the GOP cram into an ACA repeal bill?

Republicans risk crashing the individual insurance markets and causing if they repeal the Affordable Care Act without immediately replacing it with a new system.

That's the prevailing fear among policy experts. But it's not what some prominent insurance industry leaders are saying. They think congressional Republicans are listening seriously to their proposals for stabilizing the markets during the process of repealing the law and subsequently crafting a replacement. And they expect some of those measures to be included in the expedited repeal bill that could pass as soon as next month.

Those discussions come as Congress approved a budget blueprint Thursday—despite fierce Democrat efforts to derail it—that would enable them to rapidly wipe out most of the ACA on a party-line vote. It instructs key committees to draft repeal legislation by Jan. 27.

“I think they understand that on the runway to a replacement plan, they've got to seriously consider some of these things and come up with options on how to sustain the marketplace,” said Daniel Hilferty, CEO of Independence Blue Cross, who serves as board chair of the Blue Cross Blue Shield Association and also sits on the executive committee of America's Health Insurance Plans.

These executives say the congressional Republicans they are talking to share their interest in strengthening the market by making coverage cheaper and attracting more healthy, young customers to offset the costs of older members.

House Speaker Paul Ryan and other GOP leaders said this week they may elements of their replacement plan into their repeal bill, which they aim to pass under budget reconciliation rules that enable them to avoid a Democratic filibuster in the Senate. That may include replacing the ACA's requirement that nearly everyone buy insurance with incentives for people to maintain continuous coverage, such as late enrollment penalties and benefit waiting periods for those with coverage gaps.

If Republicans pass insurance rule changes as part of repeal, insurance executives say that might significantly ease widespread concerns about market stability during the period between the law's repeal and its replacement. And it might convince carriers to continue selling plans in the transition years of 2018 and 2019.

“There is a lot of very positive discussion going on around the concept of what it will take to assure stability,” said Karen Ignagni, CEO of EmblemHealth and former CEO of America's Health Insurance Plans. “I think these kinds of provisions and concepts theoretically could be worked into a reconciliation discussion.”

Still, insurers remain uncertain if they will offer individual-market plans for 2018. They will have to file their offerings and rates by May unless the incoming Trump administration grants a delay, which they may request. “It's too soon to say for 2018 until we see what (the Republicans) are thinking about for the interim,” said Hilferty, whose company hasn't made a decision yet.

One GOP lobbyist agreed that insurers are getting a positive reception from congressional Republicans, who are nervous about a market collapse occurring on their watch. “Despite all the doom and gloom from Democrats that repeal and delay is a terrible strategy, carriers have come up with constructive suggestions on how repeal and replace should be put together,” said Chris Condeluci, who served as a senior Senate GOP aide during the drafting of the ACA. “They realize the individual mandate hasn't been effective and they have an opportunity to fix the regulatory environment.”

In contrast, hospitals and physicians may be getting a less favorable hearing with their arguments that ACA repeal could leave them with lower payment rates and more uncompensated care. “Republicans will say, 'You already agreed to reimbursement cuts under the ACA, we won't help you out there,' ” Condeluci added.

President-elect Donald Trump said this week that he wants Congress to pass a replacement bill at the same time or very soon after it repeals the ACA. That would be difficult or impossible, however, if his party quickly erases the law, because Republicans are far from agreement on any replacement package and they will struggle to win enough Democratic votes in the Senate to pass their substitute legislation.

Trump said his administration will unveil a replacement bill once the Senate confirms his nominee for HHS secretary, Dr. Tom Price. But that confirmation likely won't happen until mid-February. So quickly passing replacement elements as part of the expedited repeal bill could be a politically attractive option.

Some experts doubt the Congressional Budget Office and the Senate parliamentarian would count insurance regulatory changes as having a budgetary impact. Provisions deemed not to have a budget effect can be ruled extraneous under Senate rules and struck from a reconciliation bill. And Democrats are sure to object. “If they try to break the rules and turn the Senate into a banana republic, we will be very loud about that,” said Topher Spiro, a health policy expert at the liberal Center for American Progress.

But some ACA supporters and opponents believe Republicans have a reasonable chance to get such policy measures scored as having a budgetary impact and pass them quickly through the reconciliation process.

“They may have significant room to put these things into the reconciliation bill,” said Douglas Elmendorf, dean of Harvard's Kennedy School of Management of medicine and former head of the Congressional Budget Office, who believes making such policy changes without a full legislative debate is a bad idea. “But it's the parliamentarian's decision.”

Replacing the individual mandate with new continuous coverage rules is one key policy change Republicans are eyeing for the reconciliation bill. Insurers warn that without a strong substitute for the mandate, younger and healthier consumers will drop insurance, sicker people will stay in, costs and premiums will shoot up, and insurers will abandon the individual market in 2018. While they say the mandate hasn't been as effective as they hoped, they aren't convinced the continuous coverage proposals being considered would work better.

“We will need something in place immediately,” said Ceci Connolly, CEO of the Alliance for Community Health Plans, which represents not-for-profit insurers. “But we'd need to spend time on the details of that.”

Elmendorf said it's “possible” that putting a continuous coverage provision in the reconciliation bill “might fly” with the CBO because changing the individual mandate would have a significant effect on federal spending for premium subsidies. But G. William Hoagland, a former senior staffer for Senate Republicans and currently a senior vice president at the Bipartisan Policy Center, doesn't think that would pass muster.

Insurers also have asked lawmakers to close loopholes that allow consumers to buy coverage outside of the open enrollment period when they get sick or pregnant, and that let patients receive benefits during so-called grace periods when they have not paid premiums.

Other provisions insurers want to see in the reconciliation bill include payments to health plans to offset the ACA's cost-sharing reductions for low-income exchange enrollees, which House Republicans have sued to block; reducing mandated benefits to allow sale of cheaper plans; giving insurers more leeway to charge higher rates to older members; and authorizing risk-protection payments to plans that sign up sicker people. Experts say some of these provisions have better odds than others of getting green-lighted by the CBO and the parliamentarian.

In addition, insurers are asking Republicans to preserve generous premium and cost-sharing subsidies to keep coverage and care affordable for low- and moderate-income Americans. “Subsidies may have had more to do with people participating than the threat of a mandate or penalty,” Connolly said.

Insurers want lawmakers to repeal the ACA's premium tax and the so-called Cadillac tax on high-value employer health plans, which they say would reduce premiums. Those asks won't get much pushback from Republicans, though repeal of the various ACA taxes and spending reductions could cause big problems later in financing the GOP's replacement coverage.

Republicans have mentioned expanding the permitted uses of health savings accounts as part of the reconciliation package. But some experts doubt that would have any significant impact on making coverage more affordable or stabilizing the insurance market.

“They could put a lot of important replace elements in there for an interim period,” Hoagland said. “You're outlining what a total replacement package would look like.”

The CBO would score the provisions on whether they have budgetary impact and would add to the deficit after 10 years, though many of these measures likely would phase out when the replacement plan took effect. Republicans then would have to persuade the parliamentarian, Elizabeth McDonough, that these regulatory changes have budgetary effects that are not “merely incidental” to the non-budgetary elements. The Democrats likely would try to convince her that the budget effects were incidental and therefore the provisions were extraneous to budget reconciliation.

But the Senate's presiding officer, a Republican, would have the final say and the parliamentarian. Experts questioned, however, whether Senate Majority Leader Mitch McConnell would allow that, no matter how much Republicans wanted to ram reconciliation through.

“Overruling the parliamentarian would be something with damaging long-term effects for the Senate, and I think Sen. McConnell will not try to do that,” Elmendorf predicted.

Insurance leaders caution, however, that they aren't at the point of negotiating any deals. That's at least partly because congressional Republicans remain divided on strategy and policy, while the incoming president has sent conflicting messages. They would like to see Republicans slow down in their race to repeal the law and first craft coherent transition and replacement plans.

“I'm encouraged by the number of Republicans in Congress who have spoken up about the need for a smooth transition period,” Connolly said. “But the hurry hurry hurry message is not going to serve anyone well.


Harris Meyer

Harris Meyer is a senior reporter providing news and analysis on a broad range of healthcare topics. He served as managing editor of Project Japan from 2013 to 2015. His more than three decades of journalism experience includes freelance reporting for Health Affairs, Kaiser Health News and other publications; law editor at the Daily Business Review in Miami; staff writer at the New Times alternative weekly in Fort Lauderdale, Fla.; senior writer at Hospitals & Health Networks; national correspondent at American Medical News; and health unit researcher at WMAQ-TV News in Chicago. A graduate of Northwestern University, Meyer won the 2000 Gerald Loeb Award for Distinguished Business and Financial Journalism.

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