House Energy & Commerce Committee Issues Report on State Health Care Premium Reduction Act

WASHINGTON, March 11 -- The House Energy and Commerce Committee issued a report (H.Rpt. 116-414) on the State Health Care Premium Reduction Act (H.R. 1425), which amends the Patient Protection and Affordable Care Act to provide for a Improve Health Insurance Affordability Fund to provide for certain reinsurance payments to lower premiums in the individual health insurance market. The report was advanced by Rep. Frank Pallone Jr., D-New Jersey, on March 9.

Excerpts of the report follow (with changes to the law omitted, and available at https://www.congress.gov/congressional-report/116th-congress/house-report/414/1?s=1&r=2)

I. Purpose and Summary

H.R. 1425, the "State Health Care Premium Reduction Act," was introduced on February 28, 2019, by Reps. Craig (D-MN) and Peters (D-CA) and referred to the Committee on Energy and Commerce.

The goal of H.R. 1425 is to provide $10 billion annually to States, with the option for States to establish a state reinsurance program or use the funds to provide financial assistance to reduce premium costs and out-of-pocket costs for individuals enrolled in qualified health plans. The legislation further requires the Centers for Medicare and Medicaid Services (CMS) to establish and implement a reinsurance program in States that do not apply for federal funding. The legislation sets a State's allocation amount based on the State's share of claims of high-cost enrollees.

II. Background and Need for Legislation

The Affordable Care Act (ACA) established a transitional reinsurance program that provided payments to individual market health plans for high-cost enrollees with significant medical needs. The reinsurance program, which sunset in 2016, helped reduce premiums for all enrollees in the individual market.

The Administration has issued several regulations and implemented policy changes that have resulted in an increase in premiums./1/ A study by the Kaiser Family Foundation estimates that 2019 premiums are 16 percent higher than they otherwise would be due to the Administration's actions to eliminate the law's cost-sharing subsidies, expand the availability of short-term limited duration insurance (STLDI), and the repeal of the individual mandate./2/

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/1/The Brookings Institution, How Would Individual Market Premiums Change in 2019 in a Stable Policy Environment? (Aug. 2018) (www.brookings.edu/wp-content/uploads/2018/08/Individual-MarketPremium-Outlook-20191.pdf).

/2/Henry J Kaiser Family Foundation, How Repeal of the Individual Mandate and Expansion of Loosely Regulated Plans are Affecting 2019 Premiums (Oct. 26, 2018) (www.kff.org/health-reform/issue-brief/howrepeal-of-the-individual-mandate-and-expansion-of-loosely-regulatedplans-are-affecting-2019-premiums/?utm_campaign=KFF-2018-OctoberHealth-Costs-ACA-Premiums-Marketplaces).

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The Administration's regulatory and policy changes have contributed to an increase in health care costs for individuals who are not eligible for the ACA's tax subsidies and has caused a significant decrease in enrollment among this population./3/ Premiums in the individual market increased approximately 17 percent in 2018 versus 2017, and unsubsidized enrollment outside the ACA marketplaces decreased by 2.3 million./4/

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/3/Centers for Medicare & Medicaid Services, Trends in Subsidized and Unsubsidized Individual Health Insurance Market Enrollment (July 2, 2018) (www.cms.gov/CCIIO/Programs-and-Initiatives/Health-InsuranceMarketplaces/Downloads/2018-07-02-Trends-Report-2.pdf).

/4/Kaiser Family Foundation, Data Note: Changes in Enrollment in the Individual Health Insurance Market (July 31, 2018) (www.kff.org/ health-reform/issue-brief/data-note-changes-in-enrollment-in-theindividual-health-insurance-market).

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H.R. 1425 would provide $10 billion annually to States to re-institute the ACA's reinsurance program and reduce health care costs for enrollees in the individual market.

III. Committee Hearings

For the purposes of section 103(i) of H. Res. 6 of the 116th Congress, the following hearing was used to develop or consider H.R. 1425:

On March 6, 2019, the Subcommittee on Health held a hearing on H.R. 1425 entitled, "Strengthening Our Health Care System: Legislation to Lower Consumer Costs and Expand Access." The Subcommittee received testimony from the following witnesses: Peter Lee, Executive Director, Covered California; Audrey Morse Gasteier, Chief of Policy, Massachusetts Health Connector; and J.P. Wieske, Vice President, State Affairs, Council for Affordable Health Coverage.

IV. Committee Consideration

H.R. 1425, the "State Health Care Premium Reduction Act," was introduced on February 28, 2019, by Reps. Craig (D-MN) and Peters (D-CA) and referred to the Committee on Energy and Commerce. The bill was then referred to the Subcommittee on Health on March 1, 2019. Following a legislative hearing, the Subcommittee met, pursuant to notice, in open markup session to consider H.R. 1425. Mr. Pallone offered an amendment in the nature of a substitute (AINS) to the bill. Mr. Burgess offered an amendment to the Pallone AINS, which was defeated by a roll call vote of 12 yeas to 17 nays (roll call # HE--3). A vote occurred on the Pallone AINS, which was agreed to by a roll call vote of 18 yeas to 12 nays (roll call # HE--4). The Subcommittee on Health then agreed to a motion by Ms. Eshoo, chairwoman of the subcommittee, to forward favorably H.R. 1425, amended, to the full Committee by a record vote of 18 yeas to 13 nays (roll call #HE--5).

On April 3, 2019, the full Committee on Energy and Commerce met, pursuant to notice, in open markup session to consider H.R. 1425, as amended by the Subcommittee on Health. Mr. Burgess offered an amendment, which was subsequently withdrawn.

Mr. Pallone offered an amendment that was agreed to by a voice vote. Mrs. Rodgers offered an amendment that was defeated by a voice vote. The full Committee then agreed to a motion by Mr. Pallone, chairman of the committee, to order H.R. 1425 favorably reported to the House, amended, by a record vote of 30 yeas to 22 nays, a quorum being present (roll call # 20)Final Passage.

V. Committee Votes

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list each record vote on the motion to report legislation and amendments thereto. The Committee advises that there were 5 record votes taken on H.R.

1425, including three record votes taken during subcommittee markup, and a motion by Mr. Pallone during full Committee markup ordering H.R. 1425 reported favorably to the House, amended. The motion on final passage of the bill was approved by a record vote of 30 yeas to 22 nays. The following are the record votes taken during Committee consideration, including the names of those members voting for and against: VI. Oversight Findings

Pursuant to clause 3(c)(1) of rule XIII and clause 2(b)(1) of rule X of the Rules of the House of Representatives, the oversight findings and recommendations of the Committee are reflected in the descriptive portion of the report.

VII. New Budget Authority, Entitlement Authority, and Tax Expenditures Pursuant to 3(c)(2) of rule XIII of the Rules of the House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by the Director of the Congressional Budget Office pursuant to section 402 of the Congressional Budget Act of 1974.

The Committee has requested but not received from the Director of the Congressional Budget Office a statement as to whether this bill contains any new budget authority, spending authority, credit authority, or an increase or decrease in revenues or tax expenditures.

VIII. Federal Mandates Statement

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office pursuant to section 423 of the Unfunded Mandates Reform Act.

IX. Statement of General Performance Goals and Objectives Pursuant to clause 3(c)(4) of rule XIII, the general performance goal or objective of this legislation is to provide $10 billion annually to states, with the option for states to establish a state reinsurance program or use the funds to provide financial assistance to reduce costs for individuals enrolled in qualified health plans. The bill further requires CMS to establish and implement a reinsurance program in states that do not apply for federal funding.

X. Duplication of Federal Programs

Pursuant to clause 3(c)(5) of rule XIII, no provision of H.R. 1425 is known to be duplicative of another Federal program, including any program that was included in a report to Congress pursuant to section 21 of Public Law 111-139 or the most recent Catalog of Federal Domestic Assistance.

XI. Committee Cost Estimate

Pursuant to clause 3(d)(1) of rule XIII, the Committee adopts as its own the cost estimate prepared by the Director of the Congressional Budget Office pursuant to section 402 of the Congressional Budget Act of 1974.

XII. Earmarks, Limited Tax Benefits, and Limited Tariff Benefits Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the Committee finds that H.R. 1425 contains no earmarks, limited tax benefits, or limited tariff benefits.

XIII. Advisory Committee Statement

No advisory committee within the meaning of section 5(b) of the Federal Advisory Committee Act was created by this legislation.

XIV. Applicability to Legislative Branch

The Committee finds that the legislation does not relate to the terms and conditions of employment or access to public services or accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act.

XV. Section-by-Section Analysis of the Legislation Section 1. Short title

Section 1 designates that the short title may be cited as the "State Health Care Premium Reduction Act".

Sec. 2. Improve Health Insurance Affordability Fund Section 2 amends Subtitle D of title I of the Affordable Care Act (ACA) by inserting a new subdivision, Part 6--Improve Health Insurance Affordability Fund. As part of the new subdivision, section 2 adds the following new sections to the ACA, sec. 1351, sec. 1352, sec. 1353, and sec. 1354. The new subdivision and the new sections are as follows:

PART 6--IMPROVE HEALTH INSURANCE AFFORDABILITY FUND

Sec. 1351. Establishment of program

Section 1351 establishes the "Improve Health Insurance Affordability Fund" to be administered by the Secretary of Health and Human Services (HHS) to provide funding to States and the District of Columbia beginning on January 1, 2020.

Sec. 1352. Use of funds

Section 1352 establishes the purpose for the use of funds.

This section allows states to use the funds to establish a state reinsurance program and provide payment to insurers for high-cost individuals enrolled in health insurance coverage in the individual market. States may also use the funds to provide financial assistance to reduce costs for individuals enrolled in qualified health plans. The section excludes the use of funds for grandfathered plans, transitional plans, and student health insurance coverage.

Sec. 1353. State eligibility and approval; Default safeguard Section 1353 establishes the application process and timeline for States to apply for the funds. This section requires States to apply to the CMS Administrator and allows States to receive automatic approval for a period of five years. For 2020, States are required to apply no later than 90 days after the date of enactment, and for subsequent years, no later than March 1 of the previous year. This section requires CMS to implement a default federal reinsurance program in states that do not apply for federal funding. This section allows for state funds to be revoked if a state fails to use the funds for the intended purpose described in the legislation. The section also allows the HHS Secretary to make an adjustment to the allocation formula if total eligible claims for states exceed the amount calculated for a year.

Sec. 1354. Allocations

Section 1354 appropriates $10 billion annually and establishes the allocation methodology. This section requires the HHS Secretary to allocate funds to a State based on the estimated expenditure on attachment range claims for individuals in that state if such State used the funds for the purposes of administering a reinsurance program. For 2020, the HHS Secretary is required to notify States of the allocation amount 45 days after the date of enactment, and for subsequent years, no later than January 1 of the previous year. This section provides the HHS Secretary the authority to establish the attachment range claims and requires the Secretary to set the attachment range claims in a manner to ensure that the amount of expenditures equals the amount appropriated for such year. The section also allows the funds allocated to a State for a year to remain available through the end of the subsequent year.

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XVII. Dissenting Views

This bill provides $100 billion over 10 years for States to establish reinsurance programs strictly for individuals enrolled in the Patient Protection and Affordable Care Act's (PPACA) qualified health plans (QHPs). The bill is not paid for, nor does it contain a State match or State allocation formula, delegating the latter to the Secretary of the Department of Health and Human Services (HHS) like the transitional reinsurance program did. Finally, the bill does not include language affirming the long-standing consensus that Federal dollars should not pay for abortion services.

Congress has taken recent steps to provide States with reinsurance opportunities. In the 115th Congress, the House passed H.R. 1628, the American Health Care Act of 2017, included the Patient and State Stability Fund. This provision would have provided States with the flexibility and resources to cut out-of-pocket costs like premiums and deductibles, promote access to health care services, and repair insurance markets. For States that chose not to access the available funding, the Federal government would have established and implemented a reinsurance program. In addition to reinsurance, the Patient and State Stability Fund's uses of funds included: helping high-risk individuals enroll in health insurance coverage; promoting participation in the individual market and small group market; and providing assistance to reduce out-of-pocket costs, such as co-payments, coinsurance, premiums, and deductibles. The fund included a modestly phased-in State match, as well as a State allocation formula based on each State's previously incurred claims. The Patient and State Stability Fund was fully paid for and included language affirming the long-standing consensus that Federal dollars should not pay for abortion services.

Greg Walden, Republican Leader, Committee on Energy and Commerce

Michael C. Burgess, M.D., Republican Leader, Subcommittee on Health, Committee on Energy and Commerce

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The full text of the report is found at: https://www.congress.gov/congressional-report/116th-congress/house-report/414/1?s=1&r=2

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