Health insurer lobby group seeks delay in 2018 Obamacare deadline; GOP must reckon with AHIP’s foresight, however self-serving

InspiredImages / Pixabay

U.S. health insurers signaled Tuesday (December 6, 2016) that they’re willing to give up a cornerstone provision of Obamacare that requires all Americans to have insurance, replacing it with a different set of incentives less detested by Republicans who have promised to repeal the law.

Health insurers signal willingness to replace #Obamacare with a different set of incentives Click To Tweet

Known as the “individual mandate,” the rule was a major priority for the insurance industry when the Affordable Care Act was legislated, and also became a focal point of opposition for Republicans. In a position paper released Tuesday, health insurers laid out changes they’d be willing to accept, according to Bloomberg.

“Replacing the individual mandate with strong, effective incentives, such as late enrollment penalties and waiting periods, can help expand coverage and lower costs for everyone,” America’s Health Insurance Plans (AHIP) said.

That also includes openness to Republican ideas such as an expanded role for health-savings accounts and using so-called high-risk pools to cover sick people. In return, insurers are asking Republicans to create strong incentives to buy insurance, and to ensure the government continues to make good on payments it owes insurers under the ACA. The paper was released by America’s Health Insurance Plans the main lobby for the industry.

“Millions of Americans depend on their current care and coverage,” AHIP said in the document outlining its positions. The group called on lawmakers to “ensure that people’s coverage–and lives–are not disrupted.”

Now that they’re set to gain control of the White House, Republican lawmakers are working to define their vision for replacing the law after years of attempts to repeal it. Obamacare brought insurance coverage to about 20 million people via an expansion of Medicaid and new insurance markets, and repealing the law without a replacement would leave those individuals without coverage.

Trump has said that repealing and then replacing the law will be one of his first priorities. Republicans in Congress, however, have signaled that they’ll need time to write a replacement–potentially via a years-long delay between passing a repeal and implementing it–to craft a replacement.

And AHIP last Thursday (December 8, 2016) said insurers will need at least 18 months to create new products and get them approved by state regulators if Republicans change the market. It could take even more time to educate consumers and change state laws, AHIP said.

“It’s taken six years to get where we are now and to demonstrate the failure of Obamacare, so it’s going to take us a little while to fix it,” said Senator John Cornyn of Texas, a member of the Republican leadership in the chamber.

Republicans may also make substantial changes to Medicaid, by turning the joint state-federal program into one where the U.S. sends “block grants” to the states, which exert more control. Vice President-elect Mike Pence said on CNN Tuesday that the Trump administration will “develop a plan to block-grant Medicaid back to the states” so they can reform the program. Some Medicaid programs are administered in part by private insurers.

AHIP said any such plans should ensure that payments are adequate to meet the health needs of individuals in Medicaid coverage. And they should ensure that when enrollment increases in an economic downturn, funds are available to help states deal with the increased demand, AHIP said.

AHIP is open to working with Congress on replacement plans for the ACA, said Kristine Grow, a spokeswoman for the lobby group. The document is the first detailed look at AHIP’s priorities.

Big insurers like UnitedHealth Group Inc. (Minnetonka MN) and Aetna Inc. (Hartford CT) are already scaling back from the ACA’s markets, because they’re losing money. At the same time, remaining insurers are boosting premiums by more than 20% on average for next year.

Trump’s election increased the level of uncertainty in the market, and a repeal bill without something to replace the law could destabilize it further. To shore up insurance markets, AHIP says lawmakers should fund a program, known as reinsurance, designed to help insurers with high costs, through the end of 2018, and avoid cutting off cost-sharing subsidies for low-income individuals.

Steve’s Take:

Alright, let’s parse the AHIP pronouncement on Tuesday to make certain we know what insurers are really trying to tell all of us. After all, without them, neither the vestiges of Obamacare nor a Trumpcare spinoff program will work, regardless of the swaggering political rhetoric.

In essence, the insurance industry signaled that it has accepted that the individual mandate requiring people to purchase health insurance will be changing and it is prepared to work with Congress on policies that will encourage people to maintain continuous coverage. A high-minded sentiment to be sure, but clearly in insurers’ best interests as well.

AHIP also says Congress should finance cost-sharing reduction payments and the ACA’s temporary reinsurance program through 2019, address special enrollment periods, adjust the certification process time-frame and reduce regulatory burdens.

“The Affordable Care Act (ACA) will see significant changes,” AHIP says. “Those changes can either begin a stable transition to a better approach, or they can bring about even more uncertainty and instability. Everyone wants an individual market that works. That’s why we should all work together to find solutions that deliver both short-term stability and long-term improvement.”

AHIP stresses the importance of continuous coverage in the absence of a mandate, notes Inside Health Policy (IHP). Self-serving again, but here’s what the insurers are saying via AHIP:

“Today there are many more questions than answers, from timing and sequencing to what stays and what goes. What is clear is that the foundation of an effective individual insurance market is continuous coverage for everyone–those who utilize their coverage to get quality care AND those who are healthy but have insurance to protect them in case they get sick. The individual mandate will be changed, but the challenge of encouraging everyone to purchase coverage will remain. Finding effective incentives for continuous coverage is essential to avoid even higher premiums and fewer choices for everyone.”

The insurance industry’s first significant comments since the election arrive just as the GOP starts to work out its plan for repealing and replacing the law.

House Speaker Paul Ryan (R-WI) and other GOP leaders a have outlined a strategy that repeals the law through reconciliation but includes a transition period that protects consumers from losing coverage as a replacement plan is developed.

However, other lawmakers argue that repeal and replace must happen simultaneously. Regardless, there is seemingly wide consensus that the struggling insurance markets must be addressed, says IHP.

AHIP believes lawmakers should follow these key principles as they begin the process of improving the individual market: A strong commitment to continuous coverage; delivery of affordable coverage, including tax credits and potentially high-risk pools; protecting taxpayers by boosting consumer choice and cost controls; and providing more flexibility to states.

For 2017, AHIP says it is critical that Congress ensure coverage is not disrupted.

“Millions of Americans are selecting and purchasing individual health plans now–and will continue to do so through January 2017. Millions more have enrolled in Medicaid. Making sudden, significant changes now or mid-year will jeopardize the coverage they depend on.”

Lawmakers must develop effective solutions to push continuous coverage, AHIP says.

“Replacing the individual mandate with strong, effective incentives–such as late enrollment penalties and waiting periods–can help expand coverage and lower costs for everyone.”

AHIP also calls on members to maintain sufficient funding in Medicaid to avoid a sudden and significant impact on state budgets and jeopardizing insurance coverage for enrollees. Alright, that’s definitely one for the insurers

Lawmakers and the new administration also must also show they are committed to market stability and consumer choice in 2017and 2018, AHIP says.

“The strongest signals would be to fund temporary, transitional programs, including cost-sharing reductions and reinsurance, through at least Jan. 1, 2019. These programs reduce costs for those who need financial help and provide coverage for high-need patients. Eliminating funding, such as CSR, would do the opposite,” AHIP argues.

To help mitigate premiums, Congress must also make the reinsurance payments for the 2016 plan year, and should eliminate both the health insurance tax and the Patient-Centered Outcomes Research Institute (PCORI) fee, AHIP says.

The insurance industry also wants the administration to implement a pre-enrollment verification system for the special enrollment periods, and to stop people eligible for Medicare or Medicaid from being steered into commercial plans.

IHP notes that U.S. Centers for Medicaid & Medicare Services (CMS) has already said it would pilot a pre-enrollment verification process–although it is unclear how broadly the agency would administer it–and is expected to issue guidance on third-party payers potentially steering consumers from public programs.

AHIP stresses that health plans are already developing products for 2018, but asks Congress to move the certification time-frame out, potentially into the summer. Uncertainty in early 2017 may discourage plans from submitting bids for 2018–which could mean most people have no pathway to purchase the coverage they need, AHIP says, adding that Congress should also consider actuarially sound methods for funding high-risk pools, or other risk mitigation efforts.

Lawmakers and the administration should also act to reduce regulatory burdens associated with “network adequacy, quality reporting, benefit offering requirements, grace periods, RADV (risk adjustment data validation), rate review, Summary of Benefits and Coverage, Renewal Notices and language taglines,” AHIP says.

For 2019 and beyond, AHIP says that issuers should be granted at least 18 months to develop and create products and work with state regulators under a “reformed market.” Policymakers should also consider whether new rules are needed, AHIP says, and points out that drafting rules will take time as will the comment periods and implementation.

There should also be enough time built into a transition to allow states to make any needed changes and to educate consumers on their options, AHIP says.

Finally, the lobby group says that policymakers should ensure any changes occur on Jan. 1 of the transition year, which can mitigate disruption for both consumers and businesses and give insurers the ability to plan for a full year of premiums “to ensure their options and pricing serve consumers and businesses well.”

When it’s all said and done, the industry seems willing to embrace some of the ideas being discussed by Republicans, including giving individuals more choices of plans and more accountability for the cost of their health care. Republicans also seem eager to put the states in charge of some of the details of how coverage in both the individual market and Medicaid will look.

On Tuesday, Marilyn Tavenner, the CEO of America’s Health Insurance Plans, said the industry had a long history of working with state insurance regulators. Yes, that may be true. But this isn’t the repeal of Medicare, which of course, didn’t occur. The repeal of what is now a fully-functioning, comprehensive and largely successful Obamacare is unprecedented in our history.

Republicans are discussing other ways to stabilize the market, notes The New York Times, including the creation of high-risk pools, where people with expensive medical conditions might be covered, bringing down the coverage costs for everyone else. “We would hesitate to rush back to that,” Ms. Tavenner said. In the past, those programs, typically run by the states, have not been adequately funded, she noted.

Insurers are also beginning to discuss a potential overhaul of Medicare, pushed by House Speaker Paul Ryan, who favors so-called premium support, or vouchers, as a way for people to find coverage. “We’re not big fans of that approach,” said Ms. Tavenner, although she said the industry would still be open to discussing the idea. Nor are the millions of current, and largely satisfied, Medicare beneficiaries and the millions of baby boomers yet to enter the program.

Ms. Tavenner said the industry wanted to know more about what the Republicans were planning, including information on the fate of the Medicaid expansion under the law.

“We still have more questions than answers,” Ms. Tavenner said. “We don’t want to disrupt individuals who are relying on our coverage,” she said.

It’s now clear that we’re not moving–anytime soon–toward either a Canadian or British healthcare system with the government essentially the sole insurer. That scheme will fail.

Steve's Take: Insurers are sitting at the head of the #Trumpcare table Click To Tweet

Which means the gigantic American insurance industry is here to stay for now and knows it, as is made crystal clear with the AHIP’s inaugural, post-election pronouncement. Insurers are sitting at the head of the Trumpcare table and both they and the President-elect know it.

We can expect more AHIP pronouncements like this one. On balance, and taking their legitimate, self-serving interests to heart, their debut offering makes some sense.