Gov. Kasich teams with Colorado to stabilize individual insurance markets

Written on Sep 08, 2017

Ohio Gov. John Kasich and Colorado Gov. John Hickenlooper and governors in six other states have sent a letter to congressional leaders outlining a bipartisan proposal aimed at stabilizing the federal individual health insurance markets.

The two governors have been working on bipartisan proposals for reforming the Affordable Care Act (ACA) and announced that they had agreed on a set of suggestions aimed at stabilizing the exchanges. On Aug. 31, they outlined their recommendations, including that the federal government should take immediate action to stabilize insurance markets; institute responsible reforms that preserve recent coverage gains and control costs; and foster an active federal/state partnership that is based on innovation and a shared commitment to improve the overall health system performance.

The two governors were joined in signing the letter by Nevada Gov. Brian Sandoval (R), Pennsylvania Gov. Tom Wolf (D), Alaska Gov. Bill Walker (I), Virginia Gov. Terence McAuliffe (D), Louisiana Gov. John Bel Edwards (D) and Montana Gov. Steve Bullock (D).

To immediately stabilize the individual markets, the governors said the Trump administration should commit to continue making cost sharing reduction payments, which give insurance companies subsidies for offering coverage on the marketplaces. They noted that ending the payments, a move President Donald Trump has threatened, would drive up insurance premiums 20 to 25% and increase the federal deficit $194 billion over 10 years. They also said that Congress should end uncertainty over the payments by explicitly appropriating federal funding for the payments through at least 2019.

“This guarantee would protect the assistance working Americans need to afford their insurance, give carriers the confidence they need to stay in the market, increase competition, and create more options for consumers. Because the cost of this initiative is already included in the budget baseline, the appropriation would not have budget consequences,” the governors said in the letter.

They also recommended that Congress create a temporary stability fund that states can use to create reinsurance programs or similar efforts that reduce premiums and limit losses for providing coverage. There should be at least two years of funding for the program and the cost should be fully offset so it does not add to the deficit. Additionally, Congress should encourage insurance companies to offer health exchange plans in underserved counties by exempting insurers from the federal health insurance tax on exchange plans in those counties. They also recommended Congress keep the individual mandate until it can devise a credible replacement.

Among suggestions to lower cost and preserve coverage gains, the governors said the federal government should continue to fund outreach and enrollment efforts to encourage Americans to sign up for insurance, especially younger and healthier people.

They said Congress should fix the “family glitch” that leaves some families who can’t afford insurance through their employer ineligible for tax credits on the exchange.

Congress and individual states should take steps to reverse the effect of consumers who may enroll in a plan only when they need health care, stop paying premiums at the end of the year or purchase exchange plans even though they are eligible for Medicare and Medicaid, the governors said. Examples could include shortening grace periods for non-payment of premiums, verifying special enrollment period qualifications and limiting exchange enrollment for those who are eligible for other programs.

Other suggestions include stabilizing risk sharing programs and reducing costs by giving states more flexibility in choosing reference plans for the 10 essential health benefit categories than are currently allowed by regulation.

Kasich and Hickenlooper said states can pursue health reforms without federal assistance, but in some cases are constrained by federal law and regulation. They suggested improving the regulatory environment by not duplicating state efforts or preempting state authority to regulate consumer services, insurance products, market conduct, financial requirements for carriers and other carrier and broker licensing in states that effectively perform these functions.

They also urged support of state innovation waivers and for Congress and the administration to make a clear commitment to value-based health care purchasing.

“We strongly encourage that Congress and the administration take immediate action to stabilize the individual health insurance marketplace. If there is a clear signal to consumers and carriers that the individual market is viable, then additional state-based reforms will be more manageable and we can succeed in preserving recent coverage gains and controlling costs. As we move beyond the immediate crisis, the real challenge over time will be to confront the underlying cost drivers of health care spending, and reset incentives to reward better care for individuals, better health for populations, and lower cost,” the governors wrote.

The letter was praised by U.S. Sen. Sherrod Brown (D-OH), who said that he still needed to review the details of the plan, but said he appreciates the bipartisan work of the governors.

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