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Sen. Collins’s health proposal isn't going to save Obamacare

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Sen. Susan Collins (R-ME) has been pushing a stabilization plan to save Obamacare from individual mandate repeal.

A new analysis suggests that her plan would help offset some of the premium hikes and coverage loss expected to happen if Congress repeals the requirement to carry health insurance. But at the end of the day, it wouldn't be nearly enough.

For those who need a refresher, you should go back to this article from my VoxCare co-author Dylan Scott. Collins has partnered with Sen. Bill Nelson to introduce a bill that would "provide $4.5 billion in federal reinsurance funding over 2018 and 2019 to help lower insurance premiums by compensating insurers for their costliest patients."

"The thinking, from Collins's point of view, is this money would help mitigate the 10 percent increase in premiums that CBO projects if the tax bill passes, because healthy people would drop out of the market without the mandate," Dylan writes.

And Collins's thinking is partially right: The research firm Avalere Health estimates that her plan would reduce premiums by about 4 percent in 2019 and 2020.

That's not bad. But keep in mind, the Congressional Budget Office estimates that premiums would rise by 10 percent that same year due to repeal of the individual mandate. So the Collins bill is only getting rid of a part of that rate hike — at the end of the day, premiums would still be rising.

“While funding reinsurance and cost-sharing reductions would help mitigate the impact of mandate repeal, eliminating the requirement to purchase coverage would create additional uncertainty in the market,” says Elizabeth Carpenter, senior vice president at Avalere. “As a result, it is important not to overlook the negative impact of repealing the individual mandate on long-term market stability.”

And remember: The individual mandate repeal in the tax bill is permanent. But the Collins plan would only cover 2018 and 2019, doing nothing to offset the premium hikes expected to follow in the next decade.

Now, there would be a way for Collins to draft a plan that does offset all the premium hikes expected by the individual mandate. It involves throwing more money at the problem — making bigger payments to the insurance plans that get stuck with the most expensive patients. Avalere mapped out some of the possibilities in this chart:


A reinsurance program funded with $10 billion or even $15 billion in annual spending could actually offset the price hikes expected to result from individual mandate repeal. But that, of course, costs more money. And again, it doesn't address what happens after 2020 at all.

This is what experts predicted about the Collins bill. "The Collins-Nelson bill would help mitigate premium increases resulting from repeal of the individual mandate, but it would fall short of completely offsetting the hikes," Larry Levitt at the Kaiser Family Foundation told Dylan last week.

And at the end of the day, a lot of this debate may be moot. The Collins plan needs 60 votes to move through the Senate (unlike the tax bill, which is being run through the reconciliation process and thus only requires 50 votes). Whether Democrats would want to work with Republicans to pass a bill like this — whether more conservative senators would even get on board — is a big open question.

My takeaway from the Avalere analysis is this: Repealing the individual mandate will cause uncertainty and confusion in the individual market. That much is certain. The Collins plan is a Band-Aid on a much larger problem caused by the Senate bill — one that it just can't fix.

Chart of the Day

Obamacare sign-ups hit 3.6 million with two weeks left to go


Is the Obamacare enrollment glass half full — or half empty? This week's Obamacare enroll numbers are out, and if you've been keeping up with VoxCare, the story is pretty familiar. Sign-ups are 22 percent higher than they were at this point last year — but because the enrollment period is so short, we may still see lower enrollment for 2018. This graph from Avalere explains why: It shows sign-ups compared to the percentage of the enrollment period elapsed. Right now we're about 75 percent of the way through the sign-up period — and when you use that metric, enrollment is lagging badly.

Kliff’s Notes

With research help from Caitlin Davis

Today's top news

Analysis and longer reads

  • “What the CVS-Aetna deal means for the future of health care”: “Familiar as a corner drugstore, CVS Health actually makes most of its money from one of the most lucrative points along the supply chain as a pharmacy benefit manager, negotiating drug prices for health insurers and employers. The merger, which would be one of the biggest health-care deals of all time, signals the primacy of those negotiations in the health-care system.” —Carolyn Y. Johnson, Washington Post
  • “Providers See CMS Continuing Value-Based Care Push Despite Project Rollbacks”: “Though the Trump administration last week rolled back several Obama-era projects designed to shift the U.S. health care system away from fee-for-service care to models that pay doctors and hospitals based on the quality of care, industry groups believe the government is likely to continue with the push toward value-based care.” —Jon Reid, Morning Consult
  • “Local Responses To The Opioid Epidemic”: “We found that most successful efforts are marked by a set of common factors that together create client-centric systems of care that align law enforcement, criminal justice, public health, and community resources to coordinate, improve access to, and deliver a broad spectrum of treatment, recovery, health, and social services. Two programs exemplify this comprehensive approach, others we reviewed shared some of these features.” —Jonah Frohlich, Deborah Bachrach, Chris Cantrell, and Alixandra Gould, Health Affairs

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