Annual premiums in Affordable Care Act (ACA) exchange plans could drop 17% if Congress approved a $15 billion reinsurance stabilization package, delayed the ACA’s health insurance tax through the end of 2018 and funded cost-sharing reduction (CSR) payments to insurers, according to a new report by Avalere that was funded by America’s Health Insurance Plans.
Payers and ACA proponents support guaranteeing CSR payments for at least the next year or two in an effort to help stabilize the market and keep premiums from skyrocketing.
A bipartisan group of lawmakers in Congress is working on legislation that includes as least the CSR funding and reinsurance package, but their talks could get crowded out by a last-chance shot at ACA repeal.
Payers have continually pushed Capitol Hill for a commitment on CSRs, but as they face a deadline at the end of this month to decide whether they will offer ACA plans, they still have no assurance the monthly payments will be made.
Insurers in the exchanges say President Donald Trump’s threats to stop paying CSRs are causing some payers to stop offering ACA plans, or at the very least, increase premiums.
The CSRs would certainly help stabilize the individual market — but claims of a death spiral are overblown. Several insurance company executives have said they want to offer ACA plans so long as it is financially viable. Despite concerns that some people would have no plans available to them, payers have reached agreements to cover all U.S. counties next year. Premium rates, however, are rising amidst the uncertainty. A recent Congressional Budget Office analysis found premiums will likely rise 15% next year, at least without guaranteed CSRs.
Avalere said yearly individual market premiums would drop from $8,000 to $6,637 if Congress were to approve a $15 billion reinsurance stabilization package, CSR payments and delay the health insurance tax. It would also increase enrollment in the individual market from 18.3 million to 18.6 million. However, Avalere said funding the reinsurance program and delaying the tax would increase federal spending and foregone revenues by $21.8 billion.
Chris Sloan, senior manager at Avalere, said implementing the package would “ensure a healthier market in the long-term.”
Eight major healthcare organizations, including the American Medical Association and American Hospital Association, recently sent a letter asking Congress to agree to payments through 2019. Committing to at least two years “would go a long way to bring much-needed stability to the individual market and promote access to more affordable coverage and choices for millions of Americans,” the groups wrote.
In addition to CSR payments, the Avalere report analyzed a $15 billion reinsurance to help stabilize risk pools. Reinsurance risk pools (a relatively bipartisan concept) are part of the Kasich-Hickenlooper plan that eight governors announced earlier this month. That plan has since stalled. The ACA repeal bill that Republican leaders are currently pushing also has a reinsurance program, but with vastly different circumstances than the current healthcare landscape.
Several states are proposing reinsurance programs as a way to stabilize their markets. Iowa and Oklahoma recently requested the CMS give them a section 1332 waiver under the ACA to allow them to overhaul their exchanges and create reinsurance programs for high-cost members. The CMS already granted a similar request from Alaska, and Minnesota is also interested in a reinsurance program.