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The BellCare ACA fixer proposal

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Now that the American Health Care Act bill is dead (or, at least, playing dead, in a convincing way; without fidgeting), other players may get a little attention for other proposals for shoring up the Affordable Care Act system.

Here’s my BellCare 2017 proposal: Recognize that the ACA system itself is supposed to be a leaky emergency pup tent, not a brick house; admit that the critical killer problem is in the individual major medical market; and stabilize the individual major medical market for 2017 and 2018 by using full funding of the ACA individual and small-group subsidy programs through at least 2019 to pull insurers back into the market.

Related: Anthem: Subsidy cash key to saving individual health

1. Stop thinking of the ACA as ‘Obamacare.’

One of the biggest barriers to the Trump administration and Republicans in Congress shoring up the current system is the absurd idea that the ACA is ‘Obamacare,’ and that many Democrats like the parts that have to do with the commercial health insurance market.

The ACA is a huge legislative package, created from the Patient Protection and Affordable Care Act of 2010 and the health care parts of the Health Care and Education Reconicliation Act of 2010. The only parts that normal well-read people know about are the parts that expanded Medicaid, set new commercial health insurance market rules, created the ACA public exchange system, and imposed new taxes and fees in an effort to make Medicaid expansion and changed the commercial health insurance market.

Three House committees and three Senate committees fought tooth and nail over what would go into the ACA. Aides to Sen. Harry Reid, D-Nev., the Senate majority leader at the time, assembled it in some spring-water-filled backroom at the last minute.

I’ve watched many streaming videos of ACA-related press conferences and congressional hearings. Since then, I’ve seen many Democrats praise the Medicaid expansion program, and ACA health insurance “patients’ bill of rights” type rules, such as the ban on medical underwriting. When Republicans were trying to kill the ACA exchange system, Democrats responded by attacking Republicans for being nasty obstructionists.

I’ve never seen Democratic lawmakers go into any detail about how great the ACA exchange system is, or how much they love the health coverage they get from the ACA public exchange for the District of Columbia. Democratic lawmakers never seem to brag about the wonderful luncheon conversations they’ve had with ACA public exchange administrators. Democratic lawmakers never seem to go into any detail whatsoever when defending the ACA subsidy programs, or, for example, trying to defend the ACA Consumer Operated and Oriented Plans.

The Obama administration itself seemed to shrug when Republicans cut ACA CO-OP funding out of budget bills.

I think the the Obama administration did just barely enough to keep the biggest ACA commercial health programs staggering forward because the ACA is not really Obamacare. To the Democrats in Washington, the ACA is really Harry Reid’s Annoying Step-Nephew Care.

The Obama administration and Democrats in Congress defended the ACA as a whole because they liked Medicaid expansion and some of the ACA commercial market rules and subsidies. But, in general, they hated the ACA public exchange system. They also hated the individual mandate, and they were cool or cold toward ACA taxes and fees that affect Democrats. They defended the commercial health insurance market component because letting it collapse would involve loss of political face, not because they liked it.

To put it another way: The Democrats wanted the ban-on-medical-underwriting cookie without having to eat their individual mandate penalty broccoli.

For the Democrats, the ACA individual health market system was an emergency storm shelter made out of a trash bag. It existed to give poor people and sick people some kind of temporary protection while Democrats built up the political capital to push Medicare for all through Congress.

If Republicans can recognize how much Democrats in Washington despised the ACA exchange system and the need for individual market subsidies to keep the system going, maybe they can come to this important, helpful realization: Keeping the ACA exchange system stable, and commercial sellers of ordinary individual major medical coverage in the game, would be a pretty good way to stick it to the Democrats.

The ACA "three R's" subsidies were supposed to keep the individual market seesaw level. (Image: iStock)

The Affordable Care Act “three R’s” subsidy programs and exchange plan user subsidy programs were supposed to act like helpful giants who enjoyed keeping the individual heath market from tipping over. (Image: iStock)

2. The ‘Obamacare crisis’ is mostly an individual major medical market crisis.

Most parts of the ACA are either working well enough, or dying slowly and quietly enough, that they’re not that big of a deal.

Medicaid expansion may, eventually, do bad things to our health care system and contribute to national insolvency, but probably not next year.

Enforcement of the ACA penalty on people who fail to own the minimum required level of health coverage may not be going all that way, but the government seems to be collecting some penalty money.

Related: Filers paid most reported 2014 ACA IRS bills, watchdog says

The Obama administration made all kinds of changes to the rules for that penalty, and the Trump administration could get more creative.

For employers, counting employees for purposes of ACA compliance seems to be an expensive nightmare, but again: The Obama administration wiggled those rules to help employers. The Trump administration could just wiggle the employee-counting rules harder.

The real crisis is in the individual health market. The ACA drafters knew going in that keeping it stable would be a nightmare, because keeping any voluntary individual health market stable has always been a nightmare, because sick people always have a much stronger incentive to get covered than healthy people do. Sick people flood in, drive up costs, and push healthy people out. The more rates go up, the worse the problem gets. One common solution is to have “stabilization funds” act like giants that stand next to the individual market seesaw and keep it reasonably level.

The ACA drafters included three helpful giants: a reinsurance fund, a risk corridors progra and risk-adjustment program.

They also built stabilizers into the exchange program itself: a premium subsidy program, to help low-income and moderate-income healthy people get covered, and a cost-sharing reduction subsidy program, to help lower-income healthy people pay their deductibles.

The reinsurance originally was supposed to turn a big profit for the federal government. It hasn’t worked well enough to turn a profit, but it’s worked well enough to pay its obligations.

The risk corridors program was a disaster: It owes more than $8 billion for 2014 and 2015. That compares with total individual health market earned premiums of about $125 billion for those two years, and about $10 billion in total losses for those two years, according to new figures from Milliman.

Maybe the 2016 losses will be about the same as the 2015 losses, or about $7 billion in losses on $90 billion in premium revenue, and the total ACA risk corridors program shortfall will increase to about $15 billion.

3. Come up with money to pay the subsidies.

Say the individual market will generate about $90 billion in premium revenue in 2017 and 2018.

Maybe the federal government could offer this deal: Insurers can get all of the $20 billion or so in risk corridors payments owed for 2014 through 2017, if they participate in the individual market, either on or off the exchange, in 2017?

Combine that with flexibility on filing deadlines and benefits mandates, and maybe insurers that were throwing up their hands in disgust

Democrats could see supporting the payment of the subsidy money as a way to continue save ACA face.

Republicans would have to overcome their revulsion against the ACA, but they could justify it as a temporary bridge to whatever will come next.

Health insurers might not really be made whole, but they could end up a lot closer to being whole than they are now, and they could be part of the emergency coverage solution. If commercial insurers don’t find a way to stay in the game now, the Republicans’ own alternative could end up being a “temporary” Medicaid for all program that has the staying power of kudzu.


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