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Life Health > Health Insurance > Health Insurance

Senate Mulls Health-Law Rewrite Pushing ACA Change to 2020

By Laura Litvan

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(Bloomberg) — Senate Republicans are weighing a two-step process to change the Affordable Care Act that would postpone a repeal until 2020, as they seek to draft a more modest version than a House plan that nonpartisan analysts said would undermine some insurance markets.

Republicans — in the early stages of private talks on the Senate plan — say they may first take action to stabilize premium costs in the Affordable Care Act insurance-purchasing exchanges in 2018 and 2019. Major insurers have said they will leave the individual market in vast regions of states including North Dakota, Iowa and Missouri.

(Related: Health Bill May Shut Out One-Sixth of Sick: CBO)

A Senate plan is likely to continue subsidies that help low-income Americans with co-pays and deductibles, said third-ranking Republican John Thune of South Dakota. White House budget director Mick Mulvaney said Thursday the administration hasn’t committed to paying subsidies due in June — which would create additional uncertainty for insurers as they set rates for next year.

“There clearly has to be a short-term solution that works with the transition until some of our long-term policy changes can take effect,” Thune told reporters. “There’s got to be certainty in the marketplace.”

The private Senate GOP negotiations include a 13-member leadership-controlled working group as well as almost daily closed-door discussions among all Senate Republicans. In addition, Republican Sen. Susan Collins of Maine has convened bipartisan talks with about a dozen senators.

CBO Report

Republicans in the Senate are stepping up their efforts to build consensus after the nonpartisan Congressional Budget Office said Wednesday that H.R. 1628, the American Health Care Act bill that the House narrowly passed May 4 would result in 23 million more people without insurance and, in some states, plans that are too costly for older or sicker people.

Democrats in both chambers are united against efforts to replace the 2010 Affordable Care Act and said yesterday the CBO assessment provides added ammunition for the Senate fight. Senate Minority Leader Chuck Schumer said the report should be the “final nail in the coffin” in the Republican drive to repeal the Affordable Care Act.

“The report makes clear: Trumpcare would be a cancer on the American health care system, causing costs to skyrocket, making coverage unaffordable for those with pre-existing conditions and many seniors, and kicking millions off their health insurance,” said Schumer of New York.

A Quinnipiac University national poll released Thursday said Americans voters disapprove of the House measure by 57% to 20%. The May 17-23 poll of 1,404 voters had a margin of error of plus or minus 3 percentage points.

Senate Republican leaders say they expect to try to pass a bill with only GOP votes. The party controls the Senate 52-48, and the parliamentarian will determine which parts of a bill could advance under streamlined procedures that can pass with 50 votes plus Vice President Mike Pence’s tie-breaker.

ACA Taxes

Whether the GOP can attract 50 votes remains to be seen. Senators have indicated the talks have spent little time on perhaps the toughest issue: How to pay for a plan that would cover more people and offer lower premiums than the House bill. That would require retaining some of about $800 billion in Affordable Care Act taxes the House measure repeals, or finding other cost savings in the federal budget.

“I think we ought to try to look for savings anywhere we can find them,” said Senate Finance Committee Chairman Orrin Hatch, a Utah Republican. “But my experience is that we don’t find many savings.”

The subsidies for low-income insurance customers total about $7 billion a year. BlueCross BlueShield of North Carolina filed Thursday to raise its rates on average by 22.9% next year — but if the subsidies were funded, the increase would be 8.8%, according to Brian Tajlili, the insurer’s head of actuarial and pricing services.

Sen. Bill Cassidy, R-La. (Photo: Cassidy)

Sen. Bill Cassidy, R-La. (Photo: Cassidy)

The health insurer has seen results from Affordable Care Exchange individual plans improve markedly after raising rates, but the uncertainty from Washington is threatening those gains. “We’re seeing the market begin to stabilize after three years of coverage,” Tajlili said in a statement.

Senate Republicans say there is a growing consensus that they want a slower phase-out of the Affordable Care Act’s expansion of Medicaid health coverage for the poor than in the House bill, which would cut the program by about $800 billion. Senators from states that elected to take advantage of the Medicaid expansion, including Rob Portman of Ohio, want a several-year phase-out to avoid a “cliff” that would occur if the expansion ended in 2020 as the House bill requires.

Republican Sen. John Hoeven of North Dakota, a member of the 13-person working group, said the longer phase-out has some support, as well as a proposal to give states more flexibility to shape their own approaches under Medicaid.

(Related: Collins and Cassidy Unveil Partial ACA Repeal Bill)

He said there’s some early interest in his idea to allow states that achieve Medicaid cost savings to retain the money as a rainy-day fund for future years.

‘A Bad Year’

“Then if they have a bad year they draw on those savings,” Hoeven said.

Meanwhile, Republicans including Lamar Alexander of Tennessee and Thune are addressing the affordability of individual coverage on the insurance exchanges, including the tax credits available to consumers. Thune said there is momentum behind his idea of ensuring that tax credits are based not just on age, as the House bill allows, but also on income levels.

“I think they did some things with the tax credit that we would want to refine and change it, for sure,” Thune said. “If that’s how you want to cover the people who aren’t eligible for Medicaid but can’t afford to buy insurance on the individual marketplace on their own, you have to have a mechanism to do that.”

Members of the 13-member working group and in Collins’ group say there is little interest in using state-run high-risk insurance pools to cover the chronically ill and those with pre-existing conditions. The House bill allows states to opt out of the Affordable Care Act ban on higher premiums for those with pre-existing conditions if they provide high-risk pools, with federal funding help.

High-Cost Customers

Because of evidence that high-risk pools are expensive and have been underfunded, Senate Republicans say they’re weighing using reinsurance instead. That approach would provide money to individual-market insurers to help pay for high-cost customers — an effort to discourage insurers from setting higher premiums for those people.

“High-risk pools have not had a stellar record,” said Sen. Bill Cassidy, a Louisiana Republican who is part of the bipartisan negotiations. “I think reinsurance is a better way to go.”

“There is growing consensus” for the reinsurance idea, Hoeven said.

Senators say they’re examining the idea of automatically enrolling people who lack coverage into private insurance plans and are seeking advice from outside groups about whether that’s a good replacement for Obamacare’s mandate that people have insurance or pay a penalty.

“We haven’t figured out exactly how you identify people and get them auto-enrolled,” Thune said. “I think that would be a challenge, but it’s certainly an idea that’s of interest to me.”

—With assistance from Doni Bloomfield and Arit John.

— Read Senate ACA Replacers May Tap Medicare Surtax and Net Investment Tax on ThinkAdvisor

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