Sen. Collins Discusses Legislation on Invisible High-Risk Pool or Reinsurance Programs

WASHINGTON, Oct. 18 -- Sen. Susan M. Collins, R-Maine, issued the following statement, which was published in the Congressional Record on Oct. 17, on legislation (S. 1868) to provide support to states to establish invisible high-risk pool or reinsurance programs:

Rising health care costs are a major concern for millions of Americans--whether it's expensive health insurance premiums, high out-of-pocket expenses, or soaring prescription drug costs.

In the individual market, where 11.5 million Americans who do not have employer-sponsored insurance have to go to buy their insurance - including the 78,000 individuals in Maine - premiums continue to rise exponentially.

With this in mind, I am introducing the Premium Reduction Act of 2019 with my good friend and colleague, Senator Joe Manchin. Leading health care experts at Oliver Wyman indicate that our legislation would lower average health insurance premiums for consumers in the individual market by as much as 30 percent.

In addition, more than a million more individuals would have health insurance that they now lack.

Data from the Kaiser Family Foundation show premiums for the benchmark "silver" plans under the Affordable Care Act (ACA) are nearly 75 percent higher than they were when the ACA went "live" in 2014. While individuals who are eligible for the ACA's premium tax credits are shielded from these increases, the price of these silver plans is out of reach for many who are not eligible for these tax credits.

Even "bronze plans" - the lowest cost individual market policies available through the ACA exchanges - have become unaffordable for those without subsidies. Bronze plan premiums have gone up so much that they now exceed those charged for silver plans in 2014, despite the fact that these bronze policies have far higher deductibles and out-of-pocket expenses.

Individuals who make 400 percent or less of the federal poverty level get a federal tax credit to help defray the monthly premium cost. But individuals who make just one dollar over that level get no help at all, and must pay the full premium on their own. These premiums are simply unaffordable for middle-income families.

The difference in premiums is shocking for many families. For example, in Aroostook County, Maine, a 60 year-old couple enrolled in a silver plan will pay about $6,500 for coverage if they earn 400 percent or less of the federal poverty level: in other words, as long as they earn less than roughly $66,000.

But if they earn just a dollar more, they will lose their eligibility for a premium tax credit, and will have to pay the entire premium themselves - an incredible $36,500!

One step Congress could take to help alleviate the rising cost of premiums in the individual health insurance markets is to provide States with additional flexibility and support to design State-based stabilization programs that would help offset the costs of covering consumers with high medical expenses.

Once these costs are covered, the premiums needed to provide insurance to the rest of the population can be set at a much lower level. Thus far, seven states - Maine, Alaska, Maryland, Minnesota, New Jersey, Oregon, and Wisconsin - have established such programs. According to the health care experts at Avalere, the programs in these seven states have reduced premiums in the individual market by 20 percent compared to what they otherwise would have been, and saved the federal government nearly $1 billion in funding in the first year, which was returned to the states in the form of "pass through" funding.

Under the Premium Reduction Act, $5 billion would be available annually over three years to support states that operate stabilization programs under section 1332 of the Affordable Care Act.

In addition, $500 million is provided to assist states with planning the design of their own stabilization program, and there is a "federal fallback" for 2021 to give states time to apply for waivers under section 1332. It is important to note that our proposal does not change in any way the ACA's essential benefits requirements or its protections for individuals with pre-existing conditions.

The bill provides three options for expedited review so that states could quickly stand-up their own programs using the existing waiver process under section 1332 of the Affordable Care Act:

First, a state can demonstrate that their program is an "invisible high-risk pool" in keeping with the design pioneered by Maine early in this decade and used as a template by Alaska more recently;

Second, a state can show that its program fits within the parameters of the ACA's transitional reinsurance program, which expired at the end of 2016; or

Third, a state can submit what can be described as a "copycat" application based on another state's program that has already received approval.

In lieu of these three expedited approval options, a state may seek approval of a program of their own design. Regardless of the option they select, all states operating qualifying stabilization programs would be eligible to receive an allocation from the funding provided by the bill. States may also add funds from other sources to the mix.

In addition, in 2021, states that do not wish to establish their own stabilization program may instead receive funding through the "federal fallback" that I described a few moments ago.

Finally, the bill would also extend the section 1332 "feedback effect" to states that receive funding through the federal fallback provision. This will ensure that the benefits of lower premiums are felt in all states as quickly as possible, giving states ample time to seek and obtain approval of their own programs under the waiver process.

In a recent letter to me endorsing our bill, the National Association of Insurance Commissioners stressed that "[action must be taken to make coverage more affordable or we will see even higher uninsured rates, more people move to less regulated plans, and sicker individual market pools." The NAIC's letter goes on to note the success of stabilization programs at the state level, stating that such programs are "a cost-effective way to significantly reduce individual market premiums" that can expand coverage and make it more affordable unsubsidized individuals and families. The NAIC closed its letter with a call to implement such programs nationwide.

Also, a consortium of health care providers, insurers, and stakeholders--joined by the U.S. Chamber of Commerce--circulated a letter recently to Senate and House leadership urging them to adopt a proposal like the one we are introducing as a "commonsense solution to significantly lower premiums."

In their letter, they stressed that premium reduction programs can "help cover the costs of people with significant health care needs and improve the affordability of health care coverage," especially for those who are not eligible for subsidies.

Mr. President, I ask that these letters be entered into the Record immediately after my remarks.

Efforts at further reform of America's health care system have been the source of frustration and division in this chamber. At the same time, many members of both parties are committed to reducing health care costs and expanding access to quality, affordable coverage. The programs adopted by seven pioneering states have a proven track-record in reducing premiums for consumers and would make policies in the individual market more affordable. The bill Senator Manchin and I are introducing today would help extend and fund these successful models to every state that chooses to participate, helping to reduce premiums for the 11.5 million Americans who get their insurance in the individual market nationwide. I urge my colleagues to support our bill.

May 28, 2019.

Dear Leaders McConnell and Schumer, Speaker Pelosi and Leader McCarthy:

As providers of health care and coverage to hundreds of millions of Americans, we write to you to urge prompt action to lower health insurance premiums. The individual market is a critical source of coverage for millions of Americans, helping them to access care. Unfortunately, however, individual market premiums are often unaffordable for many middle class families who do not receive any financial assistance. With health insurers finalizing their premium rates for 2020, the time is now for Congress to establish a premium reduction/reinsurance program to help cover the costs of people with significant health care needs and improve the affordability of health care coverage.

A reinsurance program is a commonsense solution to significantly lower premiums, which would greatly improve access to coverage and care. Independent analyses, including ones by Oliver Wyman and Avalere Health, show that a premium reduction/reinsurance program could reduce premiums by up to 20% while preserving the comprehensiveness of coverage, primarily helping those who are not subsidy eligible.

We understand that there are numerous efforts in Congress underway to establish a premium reduction/reinsurance program, and we are happy to work with all parties towards a final bill that will improve the individual market for 2020 and beyond.

We urge you to deliver on the promise to reduce premiums for millions of deserving Americans and their families so they can access the care they need. We look forward to working with you in support of this promise.

Sincerely,

America's Health Insurance Plans.

American Academy of Family Physicians.

American Benefits Council.

American Hospital Association.

American Medical Association.

Blue Cross Blue Shield Association.

Federation of American Hospitals.

U.S. Chamber of Commerce.

* * *

National Association of Insurance Commissioners and The Center for Insurance Policy and Research, June 12, 2019.

To: Hon. Susan Collins, Senator, U.S. Senate, Washington, DC.

Dear Senator Collins:

On behalf of the members of the National Association of Insurance Commissioners (NAIC) we write to express our support for your continued efforts to help improve the individual health insurance markets in our states through the funding of state stabilization programs.

While many states have seen more stable premium rates and carrier participation over the past two years, the fact remains that in all states premiums continue to be significant for those who do not receive federal subsidies. This has resulted in shrinking individual markets and less stable risk pools. Action must be taken to make coverage more affordable or we will see even higher uninsured rates, more people move to less-regulated plans, and sicker individual market pools.

This is why commissioners from across the political spectrum have contacted their congressional delegations, testified before House and Senate committees, and urged federal policymakers to take immediate action to stabilize the individual health insurance market. In particular, we support your proposal to provide federal funding for state stabilization programs, as well as for grants to help states develop innovative solutions through Section 1332 waivers. We also support the creation of a federal program to assist consumers in states unable to implement their own program quickly.

State reinsurance programs and invisible high-risk pools have already proven their effectiveness. According to a recent Avalere study, the seven states that have already implemented a program through a Section 1332 waiver using state funds have reduced premium by almost 20%. Additional federal funding, as outlined in your bill, would provide even more benefit to consumers, and extend the benefits to all states.

Creating a federal market stabilization program is a cost- effective way to significantly reduce individual market premiums, thus making coverage more affordable to unsubsidized individuals and families and growing the individual market pool. We have seen it work in the handful of states that have implemented such programs; it is time to implement it nationwide.

Sincerely,

Eric A. Cioppa, NAIC President, Superintendent, Maine Bureau of Insurance.

Raymond G. Farmer, NAIC President-Elect, Director, South Carolina Department of Insurance.

David Altmaier, NAIC Vice President, Commissioner, Florida Office of Insurance.

Dean L. Cameron, NAIC Secretary-Treasurer, Director, Regulation, Idaho Department of Insurance.

TARGETED NEWS SERVICE, Harwood Place, Springfield, Virginia, USA: Myron Struck, editor; 703/304-1897; [email protected]; https://targetednews.com