Bipartisan deal to fund insurer payments faces tough political slog

(Updated on Oct. 18)

In hopeful news for health plans, two key senators announced the outline of a bipartisan agreement Tuesday to stabilize the individual insurance market by extending cost-sharing subsidy payments to insurers for two years.

Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.), the leaders of the Senate Health, Education, Labor and Pensions Committee, paired that Democratic demand with a Republican-sought plan allowing states to ease Affordable Care Act rules for the individual insurance market.

Healthcare industry groups generally welcomed the agreement, which could avert an unraveling of the individual market, much higher premiums and the exit of many insurers from the ACA exchanges.

But President Donald Trump has given mixed signals about his stance on the proposal, calling it a "short-term solution" in the Rose Garden, and the long-term answer would be giving states block grants to finance healthcare access, along the lines of the Graham-Cassidy Senate bill to repeal and replace the ACA that failed last month.

He pulled back that support hours later during a Tuesday evening speech at the Heritage Foundation. While Trump praised Alexander's and Murray's work, he said, "I continue to believe Congress must find a solution to the Obamacare mess instead of providing bailouts to insurance companies."

A White House official said the statement meant to convey his opposition to the agreement.

Last week, Trump increased pressure on Congress to negotiate a deal by cutting off the cost-sharing reduction payments, calling them illegal payments because the money had not been appropriated by Congress.

Alexander said he hopes to release the market-stabilization bill later this week, in collaboration with Murray.

But it was unclear how open other congressional Republicans will be to any deal that they believe props up the Affordable Care Act.

"The GOP should focus on repealing and replacing Obamacare, not trying to save it," Rep. Mark Walker (R-N.C.), chairman of the ultraconservative Republican Study Committee, tweeted Tuesday. "This bailout is unacceptable."

According to Alexander and Murray, the painstakingly negotiated compromise bill would fund cost-sharing reduction payments to insurers for two years — including payments for the last three months of 2017 — and give states more leeway on insurance rules.

It would speed the approval of ACA Section 1332 waivers allowing states to redesign their coverage systems, and relax the ACA's affordability rules for qualifying plans. Any alternative model to the ACA coverage system would have to offer "comparable affordability" for consumers.

The proposal also would make high-deductible, "copper" plans available to people of all ages rather than just to people up to age 30, as the ACA permits.

But, in a relief to provider and patient advocacy groups, the agreement would not change the ACA's requirement that all individual market and small-group plans cover 10 categories of minimum essential benefits. Nor would it allow insurers to base premiums on customers' health status.

Without the cost-sharing reduction payments, projected to total $7 billion this year and $10 billion next year, insurers will face big financial losses for the last three months of 2017 and will have to raise premiums sharply in 2018.

Insurers want the cost-sharing reduction payments restored, though they are concerned about provisions to let states relax ACA insurance market rules.

They and other healthcare industry groups were encouraged by the bipartisan initiative and hope Congress will move quickly to enact the package, though it may come too late to moderate 2018 premium hikes. In most states, those rates already have been set assuming the CSR payments would not be made.

"The most important thing is to have the CSRs funded," said Ken Janda, CEO of Community Health Choice, a safety-net plan in Houston, whose plan will lose at least $7 million this month in federal CSR payments.

Janda added that the bill would need some floor requirements for state flexibility on ACA requirements. "I wouldn't leave it wide open to the states," he said.

The Alexander-Murray agreement would restore $106 million in funding for enrollment outreach, which the Trump administration previously had slashed. ACA supporters have warned that enrollment of younger, healthier people will drop, driving up premiums, unless strong enrollment efforts are made during the upcoming open enrollment, which starts Nov. 1.

It also would ease the way for states to obtain federal funding for reinsurance programs that would reduce premiums, which insurers strongly support and which Alaska and Minnesota already have done. Janda said that's one of the most important actions states could take to lower rates.

Alexander and Murray said they have the "basic outlines" of an agreement but have differences to bridge, particularly over giving states "meaningful" flexibility on coverage rules. Asked what the stumbling blocks to the deal are, Alexander replied: "The definition of meaningful."

The agreement is not expected to stop Republicans from continuing to press for repeal and replacement of the Affordable Care Act.

The agreement "takes care of the next two years," Alexander said. "After that, we can have a full-fledged debate on where we go long-term on healthcare."

Senate Minority Leader Chuck Schumer and other Democrats expressed support for the Alexander-Murray agreement, though Democrats have concerns about whether Republicans may try to add provisions to further relax the ACA's consumer protections.

There are widespread concerns that Senate Majority Leader Mitch McConnell and other congressional GOP leaders are in no hurry to find a legislative vehicle for passing the market stabilization agreement because they are unenthusiastic about it. In addition, many Republicans want to focus on passing tax cuts and fear getting bogged down in another healthcare debate.

"It's never been clear that Alexander has anyone's consent to speak for the entire Republican world in this idea of a cutting a deal," said Rodney Whitlock, a Republican healthcare lobbyist and former Senate staffer.

"This is not a priority for McConnell," said Tom Daschle, the former Democratic Senate Majority Leader, who was generally pleased with the bipartisan deal but worried about its prospects for passage.

The problem, he said, is finding a legislative vehicle for the market stabilization package, and there are no easy or obvious candidates that have political momentum. "The best Alexander can hope for is that he can fold it into the omnibus (spending) bill at the end of the year. Right now, that is 50-50 at best."