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Wednesday, October 25, 2017

What's in the Alexander-Murray Stabilization Package?

Last week, Republican Sen. Lamar Alexander and Democrat Sen. Patty Murray introduced new legislation that represents a constructive, bipartisan step toward strengthening health care. The bill is a bipartisan package of so-called “stabilization" measures to support the individual and small group health insurance marketplaces.

We view this announcement as a positive development. After months of Republican efforts focused exclusively on ACA repeal and Medicaid cuts, Families USA, among many others, has been calling for constructive, bipartisan action as the better way forward.

Given the bipartisan nature of the bill, the bill also includes compromises. However, without this legislation, premiums will continue to rise, pricing millions out of coverage. Today’s CBO report finding that the bill would provide deficit savings and maintain coverage for the American people only reinforces the importance of passing this bill. 

Now with 24 cosponsors and 60 senators committed to passage, we are calling on Congress to bring the bipartisan Alexander-Murray bill to a vote.

What would the legislation do?

Restore cost-sharing reduction payments to insurers for two years: The proposed legislation restores cost-sharing reduction (CSR) payments for the remainder of 2017, all the way through 2019. CSR payments go toward reducing out-of-pocket costs for nearly 6 million lower-income people. The government pays for this assistance under the ACA by reimbursing insurers in exchange for them lowering deductibles and other out-of-pocket costs for low and middle-income families. 

In 2014, Republican members of the House of Representatives filed a lawsuit challenging federal payment of the CSRs, arguing Congress had never officially appropriated them. This suit was a part of the Republican Congress’s broader efforts to sabotage the ACA’s implementation.

Recently, President Trump announced the “immediate” end of payments to fund CSRs, in a transparently malicious act of ACA sabotage.  The Alexander-Murray legislation would both remove any legal doubt on the status of these payments and undo the Trump Administration’s destructive announcement. 

Partially restore marketplace outreach and enrollment funding for two years: The legislation requires over $100 million to be spent on outreach and enrollment activities for each of the open enrollment periods for plan years 2018 and 2019. This can include activities to educate consumers about enrollment and coverage options, as well as in-person enrollment assistance.   

As with the CSR component, this element reverses an act of executive branch sabotage, as this year the Trump Administration has significantly cut funding for marketplace outreach and advertising and the budgets of navigators to provide in-person assistance for people to enroll in coverage. 

Allow for sale of very high-deductible “catastrophic” plans: The legislation would expand the availability of thin-coverage “catastrophic” plans, currently available only to people under age 30, to people of all ages. Importantly, people would not be able to apply advance premium tax credits to these plans, and insurers would have to include people in these plans in the same risk pool as people with more comprehensive coverage to mitigate the threat of adverse selection. However, some consumers would be exposed to higher cost-sharing (out-of-pocket expenses like copayments and deductibles) for care.

Changes to 1332 marketplace waivers 

Under the guise of giving states flexibility, the legislation makes changes to marketplace waiver (Section 1332) authority. View our 1332 Resource Center to learn more about waivers.

The legislation loosens standards around 1332 waivers that allow states to modify Affordable Care Act standards for how they ensure their residents receive access to coverage and care, within certain rules, or “guardrails.” The legislation modifies these guardrails in a few key ways:

  • Modifies the requirement that states with 1332 waivers provide coverage that is “at least as affordable” as provided by the ACA such that states would instead be required to meet a standard where coverage is “of comparable affordability” to ACA coverage. This language may allow states to reduce affordability for some marketplace beneficiaries if they enhance affordability for other beneficiaries. Importantly, this section specifically mentions that waivers must maintain affordability for “low-income individuals, individuals with serious health needs, and other vulnerable populations.”
  • Expedites the federal process so that state waivers are approved on a faster timeline by CMS and otherwise loosens restrictions for states to submit waivers.
  • Changes the “deficit neutrality” requirement to allow for states to submit waivers to spend more for marketplace beneficiaries and offset those costs with savings in other federal programs, including Medicaid. Among other possibilities, this change could allow states to cover the Medicaid expansion population via a 1332 waiver.
  • Extends the term of waivers to six years unless the state requests a shorter time frame, and removes the federal government’s authority (standard in both Medicaid and current 1332 waivers) to terminate waivers prior to their expiration unless the HHS Secretary determines that the state has “materially failed to comply” with the waiver agreement. 

We support many aspects of this agreement. However, we have concerns about the catastrophic plans, as well as several of the 1332 components: the combination of removing process guardrails and weakening the affordability and deficit neutrality guardrails could open up negative changes to the Affordable Care Act.   

We are overall encouraged by this legislation, though the path forward remains uncertain. Much will depend on the willingness of House and Senate Republican leadership to allow the package to move to a floor vote, and willingness of Republicans in the conference to support this bipartisan effort to address health care. 

We continue to watch closely for further developments or legislative changes, as well as monitoring for ongoing administrative sabotage of the marketplaces. But the Alexander-Murray bill represents real bipartisan progress, and we urge Congress to move quickly to pass it to stabilize the market and improve health care for America’s families. 

 

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