Some Democrats have urged allowing ACA insurers to use a percentage of Medicare FFS pay rates as the basis for what they pay their own network of providers.
May 4—The healthcare industry should prepare for major federal healthcare policy changes after the federal congressional election six months from now, no matter which party is in the majority, say policy analysts.
If Republicans retain congressional majorities, they are likely to undertake another push to repeal and replace the Affordable Care Act (ACA), said Robert Moffit, a senior fellow at the right-leaning Heritage Foundation.
But if Democrats retake one or both chambers of Congress, they are likely to push federal health care beyond the ACA to as far as a single-payer system, said Chris Jennings, a consultant and former health policy adviser for the Obama administration.
“There is more of a unification of ‘What else can we do to ensure greater affordability and simplicity in this country,’ and Democrat are looking at options,” Jennings said. “And yes, some Democrats look at ‘Medicare for All’ and they see that as one option.”
Among the Medicare-for-all approaches is legislation sponsored by Sen. Bernie Sanders (I-Vt.) and cosponsored by 16 other Democratic senators. Similarly, another bill to create a such a program has garnered the support of 116 House Democrats.
Democratic voters are divided between the ACA and single-payer approach. A March tracking poll by the Kaiser Family Foundation found 46 percent wanted Congress to improve the ACA and 48 percent wanted them to try to pass a “national health plan.”
Critics of single-payer proposals have warned that the increasing push will leave behind needed ACA fixes.
For instance, an ACA-stabilization bill was dropped from a federal funding package this spring in a fight over whether to restrict ACA plans’ coverage of abortion.
Republican opposition to the ACA stabilization package was likely to further stiffen as the financial performance of insurers selling ACA plans continues to improve, said Moffit.
“If in fact the private-sector entities you’re talking about are actually starting to generate profits, I don’t see any point or reason why taxpayers should be on the hook for that,” Moffit said.
Jennings said some Democrats prefer using Medicare as a means to achieve greater affordability and reduce costs, rather than adopting a single-payer approach that would widely disrupt the healthcare system.
“Yes, there will be a debate in the Democratic party, but it will be next year,” Jennings said. “The unifying principle will be, ‘Let’s look at Medicare to be a partner in this discussion,”’ he said.
Short of a single-payer approach, Democrats in the majority may push ACA policy changes that include allowing ACA plans that cover rural populations to base their rates on Medicare rates. Hospitals have warned that reducing commercial rates to near Medicare levels could create major financial challenges for them.
Such an approach would be just one of many that could be used in an attempt to build off of Medicare policies, Jennings said.
Replace Redux
A reloaded GOP effort to repealing and replacing the ACA likely would maintain current spending but give the states much more control over it, Moffit said. He also expects any ACA replacement to create first-time caps on Medicaid spending, such as those included in the defeated Graham-Cassidy repeal-and-replace bill.
Conversely, a recently revealed new ACA replacement push—led by Heritage, the Galen Institute, and former Sen. Rick Santorum (R-Pa.)—would not include Medicaid caps.
Whatever repeal effort are mounted, Moffit expects they will leave some ACA policies in place, including in particular the law’s ban on insurers raising prices based on preexisting conditions and establishing a right to renewal.
“I also see an openness to experimentation on different types of things,” said he said.
For instance, regulators could allow use of risk adjustment for ACA insurers, which already is used to set payment to Medicare Advantage insurers.
“They ought to allow states to experiment in some of these areas,” Moffit said.
Marketplace Outlook
Despite insurance-industry concerns about Republicans ending the penalty for the individual mandate and the Trump administration rolling out association health plans and expanding short-term plans, neither Moffit nor Jennings anticipate much impact on 2019 rates. Conversely, an Avalere Health analysis projects more than 3 million ACA enrollees will switch to association health plans by 2022.
Jennings said the public may be surprised by flat rates in some markets where insurers “over-priced” premium increases for 2018. In his words, “2019 will not be a disaster,”
However, bigger hikes could occur in states that have not expanded eligibility for Medicaid and that provide little regulation to their marketplaces. The few states that have subsequently enacted their own mandate penalty also will perform better, Jennings said.
Moffit expects small decreases in enrollment in line with declines that have occurred every year since ACA enrollment peaked at 12.7 million in 2016. That is because the overwhelming majority of enrollees are federally subsidized and don’t bear much or any cost for their plans.
“The exchanges are actually becoming less and less markets,” Moffit said. “More and more, they are starting to look like risk pools for lower-income people and for people who are in disproportionately bad health—older and sicker people.”
One tweak that Jennings suggests could bolster ACA marketplaces is the increased use of state waivers to create reinsurance programs—like those of Maryland and Alaska. But a federal backstop may be needed for those waivers.
To overcome the “subsidy cliff,” wherein that federal premium assistance ends for any enrollees earning more than 400 percent of the federal poverty level, Jennings suggests the ban on insurers charging poorer customers premiums amounting more than 10 percent of their incomes should be extended to all enrollees.
If Congress is able to move beyond repeal and replace, it’s possible we will start seeing some thoughtful and creative ideas about how to achieve these market fixes, Jennings said.
Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare
