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How insurance commissioners would fix Obamacare, if it were up to them

We run through those ideas, why they're coming up, and the inevitable caveats that could prevent them from being enacted.

The Great Obamacare Stabilization of 2017 got underway today, with five state insurance commissioners testifying before the Senate health committee. They represented a range of positions on the health care law, from those fully supportive to some who are ambivalent but want to make the law work to at least one who still wants it substantially overhauled.

Taken collectively, they gave a picture of what the state-level officials whose entire job it is to oversee the insurance market would like to see done to improve Obamacare. Their ideas are probably more ambitious than what Congress can actually achieve. But it's still a starting point.

So let's run through those ideas, why they're coming up, and the inevitable caveats that could prevent them from being enacted.

1) Fund cost-sharing reduction payments

This is the absolute minimum for what Congress could do to add some certainty to the Obamacare marketplaces, and every insurance commissioner — even Oklahoma's John Doak, who stated his support for repealing the law as much as possible — endorsed it.

As you may recall, these payments compensate insurers for the discounts they are mandated under Obamacare to provide on out-of-pocket costs for lower-income customers.

Trump has threatened to stop those payments, which he can do because of an ongoing lawsuit that found them to be illegal without congressional approval.

This idea has pretty broad bipartisan support. If anything is going to pass, it'll be CSR funding.

The catch: Republicans and Democrats disagree on how long to fund the payments. Democrats want at least two years (though they'd prefer a permanent authorization), but Republicans are reluctant to fund the CSRs for longer than 2018.

Several commissioners, for their part, said they wanted at least two years of funding for the payments, to provide more certainty for 2019.

"I believe it has to be at least two years," Lori Wing-Heier, Alaska's insurance commissioner, told the senators. "I believe there's already enough consternation in the market, that the insurers looking to remain are looking for more than a one-year commitment."

2) Reinsurance

Everybody also appeared to be on board with reinsurance, payments by the government directly to insurers to compensate them for high-cost patients. Alaska and Oklahoma, two states represented on the panel, have sought to set up their own reinsurance programs.

The policy logic is pretty simple: Some insurers have left the market because it hasn't been profitable for them and the risk pools have suffered from attracting too many sick people and not enough young and healthy people to offset the costs for the former group. Reinsurance would help to offset losses, keeping premiums lower and giving insurers a reason to stay in the market.

“Reinsurance would not only reduce premiums for consumers, but it would entice insurers back into the market because it would provide economic certainty," Julie McPeak, Tennessee's insurance commissioner, said at the hearing.

The catch: While reinsurance was a feature in some of the GOP's Obamacare repeal bills, Republicans have made pretty clear they aren't interested in further subsidizing the law's markets right now.

Sen. Lamar Alexander (R-TN), who is leading this month's stabilization talks, said at the end of the hearing that reinsurance could be part of a long-term fix to the markets, but would probably be too much for a short-term plan that could pass this month.

3) 1332 waivers

There has been a lot of talk about loosening the requirements for this Obamacare program, which allows states to set up their own health care programs as long as they meet certain requirements, like making sure as many people are covered as would be under Obamacare. Republicans consider it a way to provide states with more flexibility.

We got a better sense Wednesday of what those changes could be. Several of the insurance commissioners endorsed ways to streamline or otherwise alter the waivers to make them easier for states to utilize.

Alexander ticked through a list of changes he hoped would be unobjectionable at the end of the hearing:

  • Speeding up the six-month waiting period for waiver approval
  • Softening the requirement that state legislatures pass a bill to approve a waiver
  • Letting states piggyback on other waivers already approved for other states
  • Providing some planning funding for states
  • Allowing states to combine 1332 waivers with separate Medicaid waivers

The catch: Some left-leaning wonks are worried about the implications of merging 1332s and the Medicaid waivers. While in theory addressing the individual market and Medicaid in one waiver might make sense, the concern is that Medicaid cuts would be used to pay for changes that help higher-income individual market customers.

At the end of the hearing, Alexander said they would look at if there "is there any way to include savings that you have in Medicaid with what you’re doing in the individual market."

4) Funding for Obamacare enrollment

Fresh off the news that the Trump administration would cut funding for navigators who help people sign up for coverage by 40 percent, several commissioners urged Congress to approve more funding.

"We are very concerned about the decrease in funding for advertising on the exchange, which we rely, and the decrease in funding for the navigators," Teresa Miller, Pennsylvania's insurance commissioner, said during the hearing.

As we've explored, we have good reason to think less advertising and outreach leads to less consumer engagement during Obamacare open enrollment and likely lower enrollment, which hurts the marketplace's risk pool and could eventually lead to higher premiums.

The catch: While Democrats would surely endorse more robust Obamacare advertising (cut by 90 percent) and enrollment assistance, there is no sign so far that Republicans are interested in undercutting the Trump administration and pouring money back into the navigators.

Chart of the Day

Where the high-deductible plans at. If we ever move past Obamacare repeal, we might start talking more about the trends in employer-based insurance toward plans with high deductibles. This new data should give us a starting point on how those plans break down, geographically. More from the State Health Access Data Assistance Center here.

Kliff’s Notes

With research help from Caitlin Davis

Today's top news

  • “GOP Turns to 'Small Step' on Obamacare, Working With Democrats”:“Senator Lamar Alexander, the Tennessee Republican taking the lead on some of the efforts, said he wants an Obamacare package to include money for insurers to defray low-income Americans’ health costs, as well as flexibility for states to decide how they cover their citizens under the law. “This hearing is about taking one small step, a small step on a big issue which has been locked in partisan stalemate for seven years,” Alexander said Wednesday at a hearing by the Senate Health, Education, Labor and Pensions committee.” —Anna Edney, Steven T. Dennis and Zachary Tracer, Bloomberg
  • “McCain backs Graham-Cassidy ObamaCare repeal effort”: “Sen. John McCain (R-Ariz.) said Wednesday that he supports a newer version of an ObamaCare repeal-and-replace bill, throwing some support behind the last-ditch effort. McCain said he backs a bill from Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.) that would convert ObamaCare spending into block grants for states.” —Peter Sullivan, the Hill
  • “Anthem scales back by half in Kentucky's Obamacare market”: “Major healthcare insurer Anthem will only offer Obamacare exchange plans in roughly half of Kentucky's 120 counties due to mounting policy uncertainty from Washington and a deteriorating market.” —Robert King, Washington Examiner

Analysis and longer reads

  • “Vital Health Officials You’ve Never Heard Of: Insurance Commissioners In The Hot Seat”: “With insurance premiums rising and national efforts at health reform in turmoil, a group of 50 state bureaucrats whom many voters probably can’t name have considerable power over consumers’ health plans: state insurance commissioners. As insurers threaten to exit state markets and voters at town halls complain about unaffordable prices, the state commissioners are central characters in the unfolding drama that is America’s health coverage.” —Julie Appleby, Kaiser Health News
  • “AMA: Reversing DACA puts patient care at risk, could worsen doctor shortage”: “In reaction to President Donald Trump's decision on Tuesday to reverse the Deferred Action for Childhood Arrivals program that protects about 800,000 immigrants, the American Medical Association has called on Congress to consider alternatives that will not hinder the healthcare workforce.” —Tom Sullivan, Healthcare Finance
  • “The infant mortality problem by race and geography”: “Babies with black mothers die twice as often as babies with white or Hispanic mothers, according to new data from the Centers for Disease Control and Prevention. And that's across urban and rural settings.” —Bob Herman, Axios