Sens. Alexander and Murray Reach ACA Deal

October 25, 2017

On Oct. 19, a group of 24 senators—12 Republicans and 12 Democrats joined Senate Health Committee Chairman Lamar Alexander (R-Tenn.) and Ranking Member Patty Murray (D-Wash.)—to release a short-term bipartisan legislation to stabilize premiums and access to insurance in individual health insurance markets.

There is no assurance that the agreement will get to the Senate floor, however, as Senate Republicans have said it is up to the White House to decide whether the bipartisan Patient Protection and Affordable Care Act (ACA) deal can move forward.

President Donald Trump has repeatedly expressed support for the bipartisan negotiations led by Sen. Lamar Alexander (R-Tenn.), but has sent mixed signals on whether he supports the agreement that the senator reached with Democrats. Without Trump’s support, it is unlikely the bill can pass. The White House has sent a list of changes it would like to see made to the health-care bill, but some Republicans say the White House should negotiate directly with Democrats.

The bill language is here. A section-by-section summary is here.

A critical component of the Alexander-Murray deal is its extension to ACA cost-sharing reduction (CSR) subsidies through 2019, which would counter President Donald Trump’s decision last week to immediately halt supplementary payments to insurers for the discounts they provide to eligible individuals to control their out-of-pocket costs. These eligible enrollees buy coverage under the ACA exchanges and have incomes between 100-250 percent of the federal poverty level.

While this move would terminate one form of subsidy, the other form under the ACA — premium tax credits — would remain. Premium tax credits control the amount an individual or family must spend on their monthly premium payments for health insurance, and eligible enrollees can receive their tax credit in advance or claim it when they file their taxes. In August, the Congressional Budget Office issued a projection that terminating CSR payments would increase premiums by 20 percent in 2018. This would consequentially increase premium tax credits, thus increasing the federal deficit by $194 billion through 2026. This is meaningful in light of the bipartisan deal: If the savings restored by extending CSRs for two years equates to the cost of terminating CSRs, the bipartisan deal reached by Sens. Alexander and Murray could be largely self-funded.

Another component of the deal is its simplification to the process states must complete to obtain state innovation waivers under Section 1332 of the ACA. The application requirements for 1332 waivers currently include explicit legislative approval, public comment, detailed actuarial and economic analyses and a lengthy review process. Of the six states that have submitted 1332 waivers, only one — Hawaii — received approval, according to Kaiser Family Foundation. The stabilization bill would shorten the review process for waiver applications and allow for an expedited review of waivers for states in emergency circumstances or those using waiver proposals already approved in other states.

The deal also would give states more flexibility in how they design their Section 1332 waivers. Language in the draft bill allows states to offer plans of “comparable affordability” to those offered on the individual exchanges, while maintaining protections for low-income Americans and those with serious health conditions. The length of waivers would be extended beyond five years, and they would be assessed for budget neutrality over that entire period, rather than year by year. However, it would notably not allow states to drop the law’s minimum requirements for what a health insurance plan must cover.

Additional changes proposed by Sens. Alexander and Murray would extend the availability of catastrophic health plans to Americans over age 30, and would call for regulations on the sale of health insurance across state lines. Interstate health compacts were included in a provision under the ACA, but the Obama administration did not issue regulations on it.

As for the Senate, Majority Leader Mitch McConnell (R-Ky.) has been noncommittal and has shifted decision-making to the White House, and has said he will only bring a bill to the floor if he knows President Trump would sign it. Some feel the White House should sit down with Democrats and discuss their asks and negotiate, however, Democrats are pushing back on the idea of additional talks, saying they already negotiated a fair deal.