Congress’s last best chance to stabilize Obamacare, explained

For the last six months, a small group of lawmakers has been trying to get legislation passed that would shore up the Affordable Care Act’s insurance marketplaces. This week’s government spending bill, which Congress must pass by Friday, might be their last best hope to get it through.

After months of discussions, the most recent legislation — sponsored by Sen. Lamar Alexander (R-TN), Sen. Susan Collins (R-ME) and House Energy and Commerce chairman Greg Walden — would inject $30 billion dollars of federal money into the insurance markets.

It has been something of an obsession for Alexander especially, who has been bent on proving that Congress is capable of doing something to stabilize the health care law after years of partisan gridlock. He has been buoyed by recent reports that the two bills would reduce premiums by up to 40 percent in the next few years.

“It’s a modest bill, in some ways,” Alexander told me recently. “But it affects millions of people. We’ve wandered into the most highly polarized area in the Senate, and if we succeed, we will have accomplished something and it may lead to something else.”

But the White House hasn’t made it easy to reach a compromise. Politico and the Wall Street Journal reported that the Trump administration has made some deeply conservative demands if the president is going to support a stabilization plan. (Which the Washington Post reported he did over the weekend.)

Most importantly, the White House wanted and received abortion restrictions on federal tax credits — a condition some in DC viewed as a covert way to sink the plan with Democrats.

“Seems to me the White House list was more of an effort to give Republicans an ‘out” than to bring Democrats ‘in,’” one insurance lobbyist told me when Trump’s demands became public. “In my view, it is a document designed to elicit a negative response.”

Democrats had already soured a bit on these stabilization bills after Republicans repealed the individual mandate despite expert warnings that it would raise premiums and damage the markets. They have balked at the proposal made by Alexander and Collins, tarring it as a partisan plan that eschews the months of bipartisan negotiations over health care.

“Senator Murray is disappointed that Republicans are rallying behind a new partisan bill that includes a last-minute, harmful restriction on abortion coverage for private insurance companies instead of working with Democrats to wrap up what have been bipartisan efforts to reduce health care costs,” an aide to Sen. Patty Murray (D-WA), Alexander’s negotiating partner in the Senate, said in an email.

The plan making its way through Congress wouldn’t single-handedly save the markets, either, especially with the Trump administration taking bureaucratic steps to undercut the law. But they would represent a good-faith bipartisan effort on a hotly contentious issue, if both parties can navigate around the abortion issue. That’s a big if, but the clock is ticking.

With Congress needing to pass a major spending bill by March 23, an obvious vehicle for these measures, lawmakers might not get a better chance to actually do something positive to aid the Affordable Care Act.

The White House is rocking the boat on Obamacare stabilization

Obamacare stabilization has been an unsteady venture from the start. Democrats and Republicans have been viciously feuding over the law for almost an entire decade at this point.

Rank-and-file Republicans have always been reluctant to put any more federal money into the law’s markets, given that they have promised their voters for years that they would repeal Obamacare root and branch. Democrats have been antagonized by the GOP’s repeated attempts to repeal the law — and their success in the tax bill of undoing the individual mandate, which is expected to weaken the markets further.

Despite those misgivings, some kind of stabilization plan seemed to be in everybody’s best interest. Democrats would get affirmative Republican buy-in to making the law work for the first time and Republicans would be able to undo some of the damage their own policies have done to the law, lowering the risk that premiums will rise again this autumn right before the elections. This is especially important now that most voters consider Republicans accountable for the ACA’s success or failure.

The spending bill offered a strong vehicle to carry the contentious proposals. And House Speaker Paul Ryan’s exploration of some budgetary tricks to make the stabilization plans more palatable suggested that the biggest problem in Congress for these bills — conservatives in the House — might be surmountable.

But then the White House muddied the waters by pursuing abortion restrictions — usually a nonstarter for Democrats — and trying to formalize its proposal to expand short-term plans that don’t comply with Obamacare, when Democrats have said they want to do the exact opposite.

Democrats, who already thought the original Alexander-Murray proposal has already been undermined by the repeal of the individual mandate, have been pushing back.

“I certainly hope the president and Republican leaders won’t once again sabotage an opportunity to undo some of the damage they’ve done by choosing to play politics with women’s health and making last-minute, harmful demands that would raise families’ costs even more and place an age tax on seniors,” Murray said in another statement.

And if the White House holds firm, refusing to drop its demands and endorse the existing plans, that could be deadly for Obamacare stabilization in the House. Conservatives in the lower chamber typically take their cues from Trump on hot-button issues and don’t seem likely to support the health care fixes in sufficient numbers if the White House is opposed.

How the Obamacare stabilization bills would reverse Trump’s sabotage

Trump and congressional Republicans have undermined the Affordable Care Act on multiple fronts. They repealed the law’s individual mandate in their tax bill. Trump’s health department slashed funding for enrollment advertising and outreach by tens of millions of dollars. And Trump stopped making cost-sharing reduction payments to health insurers, which helped to lower out-of-pocket costs for the marketplace’s poorest customers.

The attacks have had real effects on insurance premiums for ACA plans, which likely would have increased by single digits on average without Trump’s meddling. But because of uncertainty about CSR payments, enrollment outreach, and the mandate, plans hiked their rates an additional 20 to 30 percent on average for 2018.

The plan being offered by Alexander, Collins, Walden and Rep. Ryan Costello (R-PA) would aim to prop the ACA’s markets up, through three years of CSR payments and $30 billion in federal funding to compensate insurers for their costliest patients.

Looking ahead to 2019, the deal would undoubtedly provide more stability to the ACA markets, which were reaching an equilibrium before Trump intervened. The cost-sharing payments would be guaranteed, plans would know that tens of millions of dollars would be spent on Obamacare outreach, and the reinsurance money should help keep insurers afloat if healthier people leave the market after the mandate’s repeal.

Plans and state insurance commissioners found a way to work around Trump’s refusal to make CSR payments, which actually gave many Obamacare customers who receive tax subsidies even more financial assistance. Some have argued that there is actually no need to fund the payments, given that workaround.

But the argument I’ve heard from Senate aides is that you don’t want to have a hobbled law forever. Trump, in stopping the CSR payments, has stopped the ACA from functioning like it’s supposed to. The stabilization plan would put the law back on track. Still, some outside experts have questioned the value of making the CSR payments now, which simply gives Democrats even less incentive to support a plan with abortion riders they oppose.

What Republicans would already get out of Obamacare stabilization

The Obamacare stabilization measures are the obvious wins for Democrats. Republicans wanted some deregulatory provisions and more state flexibility in return.

The bulk of the original Alexander-Murray’s changes would be to the ACA’s 1332 waiver program. The law established those waivers for states to pursue their own health care programs, as long as they provided coverage that was as comprehensive and affordable as what Obamacare itself would provide. States have had grand ambitions (like Vermont’s failed single-payer proposal) and more modest ones (like the reinsurance programs, which compensate insurers for high-cost patients, that a few states have pursued this year) for the waivers.

The deal would make several changes to streamline the waiver process, a priority for Republicans:

• Governors could pursue 1332 waivers on their law; under current law, the state legislature must approve the waiver
• “Me too” waivers — states pursuing a waiver already approved for another state — would receive expedited approval
• Waivers would last for six years by default instead of the current five

The most notable change is to the 1332 program’s so-called guardrails, which are supposed to ensure states are still providing coverage as robust as what Obamacare offers.

Under the ACA right now, health coverage and cost-sharing under a 1332 waiver is supposed to be “at least as affordable” as Obamacare coverage. Alexander-Murray would change that standard to “of comparable affordability, including for low-income people, people with serious health needs, and other vulnerable populations.”

How much does that actually change? Potentially not much.

“The language change is pretty modest,” Nicholas Bagley, a law professor at the University of Michigan, told me last fall. “The language change may signal that HHS could approve waivers where the protections are slightly less protective than what we've already got under the ACA — but only slightly. Doing away with cost-sharing protections altogether still isn't possible.”

The other major win for Republicans in the deal would be the expansion of catastrophic coverage under the ACA. Those plans, which have higher out-of-pocket costs than other Obamacare coverage but lower premiums, are currently limited to people under age 30. Alexander-Murray would make them available to everyone.

That does expand the choices consumers have, a priority for Republicans. But the effect on the market is expected to be muted.

“No big deal,” David Anderson at Duke University told me of the concept before the deal was announced. “It won’t help; it won’t hurt.”