The stakes for Obamacare stabilization just got a whole lot higher

If lawmakers thought they could skate by this month without doing anything on Obamacare, the past 24 hours have provided a brutal wake-up call.

After Senate Republicans failed to pass a full repeal of the health care law in July, attention on the Hill has turned to tweaking the Affordable Care Act in ways that might pass with Democratic votes. The Senate health committee is undertaking hearings this week and next week in the hopes of crafting a narrow package that would provide more certainty to the marketplaces. But skepticism abounds, given the fierce emotions lingering after an exhaustive fight over the law.

While no quick fix would address all the issues for Obamacare, the immediate goal is mitigating the risk of premium hikes at the last minute or something worse. A big motivation for the Republicans working actively to pass a stabilization bill is preventing any more insurers from pulling out of the market. For now, a stabilized marketplace would be one in which every county has insurance options and insurers decide they don’t need additional double-digit premium increases to cover their risks.

Top Republicans like Sen. Lamar Alexander (R-TN), who is leading the talks with Democrats, know the law needs some additional support, particularly as the White House continues to sow uncertainty about how much it will try to sabotage the law.

More news Wednesday and Thursday underscored the stakes and should remind lawmakers that tens of thousands of Americans could be left without health insurance options if they don’t act and the Trump administration continues to lean toward sabotaging rather than implementing Obamacare.

Uncertainty could still drive insurers out of Obamacare’s marketplaces

First, Optima Health announced it would stop selling Obamacare plans in some Virginia counties in 2018, citing in part uncertainty around the health care law’s cost-sharing reduction payments. President Donald Trump has repeatedly threatened to cut off those payments, which help insurers reduce copayments and deductibles for low-income consumers.

Insurers are required to offer that financial help with or without the subsides, but Trump could cut them off due to an ongoing lawsuit that claims the payments are illegal without explicit further approval from Congress. Premiums could spike by 20 percent or more if he did, as insurance companies seek to account for the losses. Or they could pull out altogether.

Optima’s exit is expected to leave tens of thousands of Obamacare customers without insurance options, unless a new carrier steps in.

Then on Thursday, it was reported that Anthem would leave Maine’s marketplaces if the cost-sharing reduction payments were not guaranteed for 2018. According to Vox’s tally, that would not leave any counties bare, but it would reduce the number of plans that customers in the state could choose from.

The uncertainty over the cost-sharing reduction payments isn’t solely responsible for the health care law’s troubles. The marketplaces have broadly failed to attract as many young and healthy customers as insurers hoped, which has led to premium increases or to companies exiting the market altogether.

However, there is evidence that insurers, on a national scale, are seeing improving returns on the marketplaces, which should help stabilize them over the long term.

But any positive momentum in the market has been undercut by steps the Trump administration has taken.

First, Trump has repeatedly threatened to cut off the cost-sharing reduction payments, which has led insurers to propose either bigger premium hikes or to threaten to leave the markets altogether.

The administration has also sown doubt about how much it will enforce Obamacare’s individual mandate, which insurers say is essential to bringing younger and healthier customers into the market.

Lastly, the Trump administration recently announced it would cut advertising for Obamacare open enrollment by 90 percent and funding for navigators who help people sign up for coverage by 40 percent.

There is empirical evidence that less advertising and outreach leads to less engagement during open enrollment and likely fewer sign-ups.

“The surest way to kill the exchanges is to keep them a secret,” Tim Jost, a health law professor at Washington and Lee University who is generally supportive of Obamacare, told me recently. “Sick people will find them, but getting younger and healthier people enrolled is the problem.”

Congress could take steps to stabilize Obamacare — if they want

So Obamacare had endured some struggles on its own, though there were signs of stabilization, and then the Trump administration has made the situation worse by its own actions to undermine the law.

Congress does have the power to provide certainty that the White House will not, which is why Alexander and Democratic Sen. Patty Murray are leading an effort to pass some stabilization plan before the end of the month.

Lawmakers have a hard deadline: Insurers have to sign contracts by September 27 to sell plans through Obamacare in 2018. Alexander has cited the risk of premium hikes or exiting plans in pressing for action.

“I propose that we come to a consensus by the end of next week when our hearings are complete so that Congress can act on it before the end of September,” he said to open a hearing with insurance commissioners this week. “Otherwise we will not be able to affect insurance rates, and the availability of insurance, for next year.”

The basis for a stabilization package would likely be funding for the cost-sharing reductions, which should assuage insurers like Anthem in Maine and prevent double-digit increases that some plans have proposed if the payments were not made. Trump’s threat would be off the table.

In exchange, Republicans want to relax some of the requirements for Obamacare’s 1332 waivers, which allow states to set up their own health care programs under the law, with some restrictions. Alexander has cited expediting the waiver process — both by speeding up the timeline and allowing governors to pursue waivers without approval from their legislatures — and combining 1332 waivers with Medicaid waivers as some possible options. Democrats are wary of undermining Obamacare’s core protections for people with preexisting conditions through the waiver program.

Democrats and state officials would pursue a more robust stabilization plan, with additional steps like a reinsurance program to compensate insurers for their high-cost patients and more funding for enrollment. But Alexander and Republican aides have made clear that they believe cost-sharing reductions plus changes to 1332 waivers is the only plan that could pass by the end of the month.

Even that could be tricky. Republicans are still licking their wounds from the failed crusade to repeal and replace Obamacare. Asking rank-and-file lawmakers to take any step to stabilize the law they fought so desperately to undo could be a tall order. And Democrats, fresh off that victory, are reluctant to give too much to help Republicans undermine the law in exchange for payments they believe are already authorized in Obamacare’s text.

But this week’s news is a stark reminder of the stakes.

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