“1. Reinsurance payments to insurers
Trump eliminated cost sharing reduction (CSR) payments on October 12. “When these payments to insurers are cut, insurers typically increase premiums to cover this loss,” says Rosemarie Day, president, Day Health Strategies, a healthcare strategy and transformation consultancy. “For 2018, insurers have mostly loaded these premium increases onto silver plans. As the silver plans’ premiums increase, the individual Advance Premium Tax Credit (APTC) from the federal government will also increase because APTCs are based on the second-lowest cost Silver level plan. Since the APTCs increase as rates increase, individuals that receive subsidies are unaffected by the rate increases.”
Interestingly, Day says, while the federal government will not have to spend money on CSR payments to insurers anymore, it will actually end up spending equal or more money because APTCs increase. “In the end, the insurer is made whole by increasing rates, the subsidized are buffered by federal government subsides, and the unsubsidized get hammered by rate increases,” she concludes.
However, a new bill could change all this. Introduced on October 17 by Senators Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.), the Alexander-Murray bill would reinstate CSR payments. “CSR payments would go to insurers and then they could lower rates, which would lower costs of premiums for the 2019 plan year,” Day says.
2. Payment and service delivery models
Another area to watch in 2018 is the direction of the Center for Medicare & Medicaid Innovation, which is tasked with supporting the development and testing of innovative healthcare payment and service delivery models. In September, CMS Administrator Seema Verma released a statement that reinforced CMS’ previous priority, which was a focus on the shift to value-based care. However, she also said a goal was to increase flexibility and make more programs voluntary.
Verma said that the goal of flexibility could be achieved through more state innovation waivers through Section 1332 of the ACA. These waivers allow states to pursue innovative strategies for providing their residents with access to high quality, affordable health insurance while retaining basic protections of the ACA. “While the federal government has approved a few such waivers that create reinsurance programs, the extent of their acceptance of wider ranging and inventive waivers is yet to be fully seen,” Day says. A number of states are in various stages of the process of developing 1332 waivers. Under a state reinsurance program, insurers are typically reimbursed for claims incurred by covered individuals for specified conditions or those that exceed a predetermined threshold, e.g., $50,000 to $250,000, as a way to allow individuals with pre-existing conditions to enroll in the same plans, receive the same coverage, and pay the same premiums as individuals without pre-existing conditions while reducing the adverse financial impact on insurers.
By approving 1332 waivers in Alaska, Oregon, and Minnesota, CMS has signaled that it will accept state reinsurance programs. “These reinsurance programs could lower rates in the individual marketplace and help mitigate the negative effects of discontinuing CSR payments because these states will have an additional pool of money to offset high-cost consumers,” Day says.
Other states looking at submitting 1332 waivers could see effects sooner if the Alexander-Murray bill passes. “One of the bill’s provisions is to shorten the timeline that the federal government has to review a waiver from 180 days to 90 days,” Day says. “Waivers that propose programs that have been approved for other states will have an even further expedited review process.”
3. Medicaid expansion efforts
Another state-level topic to watch in 2018 is Medicaid expansion efforts. “The 2017 election proved that a ballot initiative to expand Medicaid in a red state can be successful,” Day says. Maine passed such a ballot initiative by a sizable margin. Additionally, other Republican states have expanded Medicaid. Some states such as Utah and Idaho are looking into ballot initiatives for the next election.
Currently, 18 states have not expanded Medicaid. If these states did so, 4.5 million uninsured adults would be eligible for Medicaid, Day says. This would allow more people to benefit from the ACA, which could make it harder to repeal.”
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