The Senate Health, Education, Labor and Pensions (HELP) Committee recently held the first hearing of several about ways to stabilize premiums and help individuals in the individual insurance market. The Committee heard from five different state insurance commissioners regarding their experiences with the individual insurance marketplaces under the Affordable Care Act (ACA). Most of the testimony focused on the need to fund cost-sharing reduction (CSR) payments, increase flexibility under the ACA’s section 1332 waiver program and establish a federal reinsurance program. There was bipartisan interest in stabilizing the individual market.
Chairman Lamar Alexander reported that there are eighteen million people with coverage through the individual market. He noted that thirty-one Senators not on the HELP Committee attended a morning coffee with today’s witnesses and applauded the wide interest in stabilizing the individual market. He said there has been a “partisan stalemate for seven years” and that action needs to be taken sooner rather than later, with final rate determinations due September 20th and Qualified Health Plan contracts for 2018 due September 27th. He also warned that insurer exits could occur prior to the contract finalization deadline and that half of counties nationwide have only one insurer participating on the Exchange.
Ranking Member Patty Murray was slightly more political, stating the Administration is “trying to create Trumpcare by sabotage,” cutting ACA outreach, and creating uncertainty about cost-sharing subsidies. She said it is important to reach a “multi-year solution” because plans develop rates over many months. She said, however, note that she believes that “agreement is possible,” while also noting the importance of preserving guardrails present in the ACA.
Julie Mix McPeak, the Commissioner of the Tennessee Department of Commerce and Insurance, noted that while the individual insurance market in Tennessee has not collapsed, the market should not be considered stable and that insurers have been “fleeing the market” because of uncertainty about rising costs. Most individuals in the state only have one plan to choose from, compared to last year, when at least two carriers offered policies in all counties. She stated that premiums have skyrocketed while choices have diminished and that the current situation is not sustainable.
McPeak stated that funding of CSRs is the single most critical issue and that such funding is not an insurer bailout, while also noting the importance of reinsurance and the cost of care, stating that there is no transparency in the pharmaceutical industry. She highlighted the fact that insurer rates are directly related to underlying health care costs.
Mike Kreidler, the Washington State Insurance Commissioner, stated that roughly 330,000 individuals purchase coverage through the individual state-based marketplace. He also noted that Washington embraced the ACA from the beginning and the uninsurance rate has dropped from fifteen percent to less than six percent. He stated that insurers in the state need certainty and that “progress forward is threatened by uncertainty around the fate of the ACA.” Mr. Kreidler asked Congress to address the market uncertainties by permanently funding CSR payments and enacting a federal reinsurance program for a minimum of three years. He also asked for federal investments in outreach and enrollment marketing to maximize the number of people enrolled in the market, especially the young and healthy, and to continue the “guardrails” in the section 1332 waiver process.
Lori Wing-Heier, Director of the Alaska Division of Insurance, testified to the health care challenges in Alaska, including its large size, rural population and insufficient provider competition. She stated that while the individual mandate reduced the number of uninsured residents in the state, it also had the unintended consequence of raising insurance premiums, resulting in a volatile market. She believes that congressional action is necessary in the individual market. Wing-Heier gave the example of the Section 1332 waiver that they did in Alaska and asked Congress to focus on stabilization of the health insurance markets. She asked for funding of CSR payments through at least 2019. Ste also stated that programs that allow states to address the unique needs of their residents are crucial to long-term stability of the health insurance markets.
Theresa Miller, the Insurance Commissioner of Pennsylvania, noted that while the ACA is not perfect, the narrative that it is failing and imploding is false. She stated that the ACA has worked well in Pennsylvania, where the uninsured rate has dropped to 6.4 percent. Commissioner Miller stated that for 2018, the insurers in the individual market filed for an average increase of 8.8 percent, assuming no changes come from the federal government. She noted that if CSR payments are not made, insurers estimate an average increase of 20.4 percent and if the individual mandate is not enforced, insurers would seek an estimated 23.3 percent increase. She stated that CSR uncertainty has a significant impact on rates and drives up costs for all consumers. Commissioner Miller asked Congress to allocate CSR funding through at least 2019.
John Doak, Commissioner of the Oklahoma Department of Insurance stated that small business owners and self-employed individuals are suffering with the insurance premium spikes. In addition, carriers are narrowing their networks. Doak stated that he is encouraged by the Trump Administration’s priorities for state flexibility and that Oklahoma has submitted a section 1332 waiver. He asserted his belief, however, that waivers are not the solution to the problems from the ACA and that powers must be returned back to states.