Five governors — both critics and backers of the Affordable Care Act — called on Congress Thursday to bolster the insurance exchanges created under the law, challenging President Trump’s argument that those marketplaces are unsalvageable.
The state executives, from three distinct parts of the country, appeared before the Senate Health, Education, Labor and Pensions (HELP) Committee as its members try to craft a short-term fix to shore up the ACA’s federal and state exchanges for 2018. With continuing uncertainty over what sort of government subsidies will be available next year, many insurers have either pulled out of the exchanges altogether or proposed raising premiums by double digits in many places.
From Massachusetts to Utah, the governors agreed that guaranteeing payments to ACA insurers to help defray certain coverage expenses for consumers ranks as the most urgent step Congress should take. The cost-sharing-reduction subsidies, which reimburse insurers for discounts they must give roughly 7 million lower-income customers for health plans’ out-of-pocket costs, will total as much as $10 billion next year.
All of the governors urged the committee to extend these payments for longer than the one-year window favored by Chairman Lamar Alexander (R-Tenn.).
“I’d love to see three years,” said Montana Gov. Steve Bullock (D), who, like the others, argued that prices for ACA health plans will skyrocket otherwise. “You’re sending a message to the market there is going to be some stability there, and they can plan accordingly.”
Massachusetts Gov. Charlie Baker (R) said that insurers selling ACA coverage there — most of them nonprofit — have set premium rates for the coming year based on the assumption that the subsidies will continue. Were they to end, Baker said, insurers would revise their rates and probably raise them by about 20 percent.
Utah’s Gary R. Herbert (R), the most conservative state leader testifying, delivered an even blunter warning.
“It would be irresponsible to allow these markets to collapse simply because of [federal] inaction,” he said.
The testimony of the governors, who also included Tennessee’s Bill Haslam (R) and Colorado’s John Hickenlooper (D), came during the second of four hearings aimed at sketching out the policy options Congress has before 2018 insurance rates are finalized at the end of the month.
“It’s pretty easy to agree about cost-sharing,” Alexander told them, echoing a sentiment voiced by several other senators during the three-hour hearing. “We can argue about how long it should be.”
Afterward, Alexander reiterated that he favors extending the cost-sharing payments only through 2018 but added, “I’ve listened very carefully.”
He said he plans to confer with the committee’s ranking Democrat, Sen. Patty Murray (Wash.), and other members to try to craft a “consensus” plan within about 10 days.
All five governors also urged lawmakers to recreate a fund to help buffer insurers from the expense of covering customers with the highest medical expenses. That fund was phased out after the marketplaces’ first three years.
Bullock spoke at one point about how states’ ability to implement changes would depend on “adequate funding,” to which Sen. Bill Cassidy (R-La.) retorted that senators and governors might differ on that front. “My daughter and me, we have different definitions of adequate funding,” Cassidy said, prompting laughter.
And the governors prodded senators to give states more latitude to decide how their own ACA marketplaces can work best.
“I would urge Congress to get past the health-care impasse and delegate to states, the laboratories of democracy,” Herbert said. The states are best able to test “what policies work and what policies do not work,” he continued. “If you empower the states to determine their own health-care destiny … we’ll learn from each other and therefore improve.”
In particular, the group asked lawmakers to simplify the process for getting federal waivers from the ACA’s insurance rules and to allow them more flexibility over the benefits ACA health plans must cover.
Both the governors and members of the committee repeatedly made clear that they regard the attempt at short-term fixes to ACA marketplaces as merely a prelude to conversations about the broader and more significant issue: how to constrain the cost of health care in the United States, which is far higher than in other developed nations.
Sen. Michael F. Bennet (D-Colo.) said his constituents, regardless of whether they support or oppose the current law, “are deeply unhappy with the way they interact with the health care system … because our system is fundamentally broken, and they know that.”
As Republicans' drive to repeal and replace the ACA has stalled, governors have played an increasingly active role in working to shape national health care policy. Just last week, eight governors led by Hickenlooper and John Kasich (R-Ohio) proposed a plan that would guarantee the cost-sharing subsidies while also giving states more flexibility in how they implement the 2010 health-care law.
That plan calls on Congress to provide those payments for at least two years that help offset deductibles and other out-of-pocket expenses for lower-income customers. It also calls for a two-year federal fund to buffer insurers from customers with high medical costs and for the government to foster competition in ACA marketplaces by encouraging insurance companies to move into counties with only a single participating insurer.
Over time, the plan would give states the leeway to make changes in insurance subsidies, the penalties that consumers who drop coverage would face and other parts of the current system.