State of Play: Latest update on federal health reform efforts

After recent failed efforts to pass a health care repeal or replace bill, Congress spent much of last week re-grouping on a future healthcare strategy. While most current signals point to the likely end of a full ACA legislative repeal effort, there is pervasive recognition that there are issues that need to be urgently addressed by Congress and the Administration such as resolving the issue of funding for cost-sharing reduction (CSR) payments to issuers.

Below, we provide a recap of some of the major activity that occurred before Congress departed for the August recess.

Bipartisan efforts gain traction in Congress
Members of both the Senate and the House have taken efforts to advance bipartisan healthcare efforts.

In the Senate, Lamar Alexander, Chairman of the HELP committee, announced that the committee will hold bipartisan hearings during the week of September 4 to discuss solutions to stabilize insurance markets. The senator indicated that it is imperative for Congress to craft a short-term bill before September 27, the deadline for insurers to finalize premium rates for 2018. The committee has expressed interest in hearing from state insurance commissioners, patients, governors, health care experts, and insurance companies as part of these proceedings.

In the House, a bipartisan coalition of 43 U.S. House of Representative members led by Rep. Tom Reed (R-NY) and Rep. Josh Gottheimer (D-NJ) proposed a number of policy options designed to stabilize health insurance markets. The group, called the Problem Solvers Caucus, has offered the following ideas for consideration:

  • Fund cost-sharing reductions (CSRs) for health insurance marketplace plans. The proposal suggests that Congress should ensure there is mandatory CSR funding and should oversee and manage the appropriations process for the CSR payments (more information on CSRs below).
  • Create a stability fund. Funds would be available to states to manage costs associated with providing coverage for individuals with pre-existing conditions, to mitigate premium increases, and to minimize potential financial losses.
  • Limit employer mandate. The proposal suggests modifications to the mandate so that it would apply only to businesses with at least 500 employees, and change the definition of full-time employees from 30 hours to 40 hours per week.
  • Modify 1332 waiver regulations and encourage interstate sales of health insurance. The proposal suggests increased flexibility for 1332 waivers and recommends that the administration provide guidance to promote the establishment of health insurance compacts.
  • Repeal medical device tax.

Focus turns toward CHIP funding
Uncertainty remains over the future of the Children’s Health Insurance Program (CHIP) program, as states count down toward the September 30, 2017 federal funding deadline. Senate Finance Committee Chair, Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) reaffirmed support for the CHIP program on its 20th anniversary and Senator Hatch announced that his Committee plans on holding hearings related to the program when it returns in September. Meanwhile, states face critical decision points in anticipating potential future scenarios for the program if federal funding is not continued; details in this NASHP blog.

Graham-Cassidy Bill. Senators Bill Cassidy (R-LA) and Lindsay Graham (R-SC) are continuing to push their health care bill , including holding several meetings with Administration officials to pitch the bill as an alternate repeal strategy Congress could take up after the August recess. The bill proposes to end the Medicaid expansion and the ACA’s insurance affordability programs. Instead, states would receive block grants that can be used to fund high-risk pools, reinsurance programs, make direct provider payments, fund out-of-pocket costs for insurance, or provide wrap-around funds for individuals already on a state medical assistance program. The bill proposes to allocate $140 billion in 2020 for this fund with a required 3 percent match for states that apply for funds (match rises to 5 percent in 2026). The bill would also eliminate the individual mandate, preserve protections for those with pre-existing conditions, and repeal the medical device tax.

Uncertainty over CSR funding continues
Administration officials and the President himself have sent signals that a decision will come “soon” over continuation of CSR payments (payments provided to subsidize deductible and co-payment costs to certain marketplace consumers with income up to 250% of the FPL). As of now, it is unclear whether the Administration will continue payments, though a recent court ruling has strengthened state authority to contest elimination of the payments. The next round of CSR payments, is due to issuers on August 21.