My thoughts on the Kasichlooper Proposal

(I stole "Kasichlooper" from Zachery Tracer)

Right on top of the letter sent by all twelve state-based exchange heads to the Senate HELP Committee comes a similar open letter signed by eight sitting Governors to all four Congressional leaders (McConnell/Ryan & Schumer/Pelosi). It includes 5 Democratic Governors, but also 2 Republicans and one Independent.

The effort was spearheaded by Republican John "Yeah, he's definitely primarying Trump in 2020" Kasich of Ohio and Democrat John Hickenlooper of Colorado, but also includes Brian Sandoval (GOP, NV); Tom Wolf (Dem, PA); Bill Walker (Indy, AK); Terry McAuliffe (Dem, VA); John Bel Edwards (Dem, LA); and Steve Bullock (Dem, MT).

Here's a partial version of the letter with the meat of the asks:

Immediate federal action to stabilize markets.

  • Fund cost sharing reduction payments. The Trump Administration should commit to making cost sharing reduction (CSR) payments. The National Association of Insurance Commissioners (NAIC), National Governors Association, and United States Chamber of Commerce have identified this as an urgent necessity. The Congressional Budget Office (CBO) estimates not making these payments would drive up premiums 20-25 percent and increase the federal deficit $194 billion over ten years.

    Also, Congress should put to rest any uncertainty about the future of CSR payments by explicitly appropriating federal funding for these payments at least through 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.

CSR appropriation, of course, is the very first item on my "If I Ran the Zoo" list. I'd prefer it if CSRs were funded permanently, and don't really get the 2-year limit since a future Congress could always scrap them whenever they wish via new legislation anyway if they wanted to, but if kicking the can down the road on this issue is what it takes to get it done, fine; the 2018 Open Enrollment Period is bearing down on us too quickly to fart around on this particular issue.

  • Create a temporary stability fund. Congress should create a fund that states can use to create reinsurance programs or similar efforts that reduce premiums and limit losses for providing coverage. The House and Senate each recently proposed $15 billion annually for states to address coverage and access disruption in the marketplace with a goal of lowering premiums and saving money on premium subsidies. We recommend funding the program for at least two years and fully offsetting the cost so it does not add to the deficit.

Again, the 2-year sunset is irritating, but understandable under the circumstances. This, combined with CSR appropriations, should keep the individual market at least reasonably viable to get everyone over the midterm hump, which is what this is really about for most members of Congress anyway. Reinsurance is #13 on my list (although they're not entirely in top priority order).

It's also worth noting that not only was $15B/year for reinsurance already included in both of the Republican repeal/replace bills, but so was a 2-year CSR appropriation. Kind of hard to argue against either of these when they were already included in both of their own bills (not that hypocrisy has ever stopped the GOP before when it comes to the ACA). I admit the "fully offsetting the cost" part is a bit concerning depending on where that $30 billion actually came from...

  • Offer choices in underserved counties. Congress should foster competition and choice in counties where consumers lack options because there is only one carrier on the exchange. We ask Congress to encourage insurance companies to enter underserved counties by exempting these insurers from the federal health insurance tax on their exchange plans in those counties. We also ask Congress to allow residents in underserved counties to buy into the Federal Employee Benefit Program, giving residents in rural counties access to the same health care as federal workers. While these proposals may be temporary solutions, they will help provide Americans with additional choices until other policies have improved the market dynamics.

The 2-3% health insurance carrier tax was in place in 2014-2015, was waived for 2016-2017 and is scheduled to be reinstated starting in 2018. I know the carriers and conservatives want to scrap the carrier tax altogether, of course, but this is the first time I've heard anyone propose waiving it specifically for certain counties (I actually didn't know that was doable legislatively, which shows how naive I am about such things). I suppose this makes sense, but it also sounds like it'd create a paradox: If a county only is underserved with only one carrier (thus triggering the tax exemption), that would encourage additional carriers to jump in...but if they do so, it's no longer underserved, and thus the exemption wouldn't be triggered, right? Perhaps I'm misunderstanding how it would work, though--the goal here might not be so much to encouarage participants as to shave 2-3% off of premiums for the enrollees in those counties.

A different variant of the FEBP buy-in proposal was previously made by Democratic Missouri Senator Claire McCaskill, although in her case, she was specifically calling for bare county residents to enroll via the DC SHOP exchange. I already laid out some serious logistical/technical barriers to her specific idea back in May, but those only apply specifically to members of Congress and their staff, not other federal employees, so the FEBP route could be far more practical/feasible. I don't know too much about how FEBP works, though, so I'll reserve judgement.

  • Keep the individual mandate for now. Finally, to prevent a rapid exit of additional carriers from the marketplace, Congress should leave the individual mandate in place until it can devise a credible replacement. The current mandate is unpopular, but for the time being it is perhaps the most important incentive for healthy people to enroll in coverage. Until Congress comes up with a better solution – or states request waivers to implement a workable alternative – the individual mandate is necessary to keep markets stable in the short term.

Over the past 7 months, much of the public has received a crash course in how the ACA actually works (or at least in how it's supposed to work). The individual mandate has been, bar none, the single most hated/reviled (and misunderstood) provision of the ACA since day one...which is why it's actually heartening to see that one of the positive developments of that crash course is that far more people now seem to understand the purpose of the individual mandate. The Dems didn't add it to the mix because they wanted to lose the House of Representatives over it in 2010; they added it because if you're going to use the "3-legged stool" model, one of those legs has to be a strong incentive for people to sign up, period. For all their crowing about "killing the individual mandate", the truth is that both of the Republican repeal/replacement bills (AHCA/BCRAP) included their own version of exactly that.

Responsible reforms that preserve coverage gains and control costs.

  • Maximize market participation. Approximately 22 million people now purchase coverage through the individual market, but another 27 million remain uninsured. Increasing coverage uptake among the uninsured would improve the risk pool and set in place a virtuous cycle of lower premiums leading to higher enrollment.

This is a rather curious error to include in such a high-profile letter which has otherwise obviously been subject to a lot of review: The total individual market (including on-exchange, off-exchange, grandfathered and transitional enrollees) was more like 18 million people as of March 2017. I'm not sure where they got the 22 million figure--I used to think it was that high myself a couple of years back, but it turns out it peaked at around 20 million a year or two ago...and that includes BHP enrollees in NY/MN, who may or may not count depending on your POV.

First and foremost, encouraging younger, healthier people to enroll in insurance and educating Americans about the importance of coverage can help improve the risk pool. The federal government should continue to fund outreach and enrollment efforts that encourage Americans to sign up for insurance. Many states invest in similar efforts, and all states need the federal government's support to maximize participation from younger, healthier people.

Yeah, that's not likely to happen, if today's NY Times article is anything to judge by.

Also, making insurance more affordable is a key part of increasing participation in the marketplace. For example, current law includes a glitch that makes some families who can't afford insurance through their employer ineligible for tax credits on the exchange. Congress should fix the “family glitch” and give more working families access to affordable coverage.

Nice to see #3 on my "If I Ran the Zoo" list get a shout-out. Sen. Al Franken proposed a bill to fix this issue 3 years ago, but it's been gathering dust ever since.

  • Promote appropriate enrollment. Some consumers choose to 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 – all of which drives up costs in the individual market. Congress and individual states can reverse this effect, for example by 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.

I wrote a lot about these issues last year. It's never been clear to me just how major a factor SEP abuse/system gaming actually is, but it's clearly causing some risk pool issues. I suggested knocking the 90 day grace periods down to 60 days, and (possibly) knocking 60 day periods down to 30 if necessary, although that might be pushing it. I also recommended requiring verification of SEP eligibility by requiring some type of documentation, as long as it's done in as painless/simple a way as possible (a smartphone app which takes/uploads a photo of your termination letter/marriage license/etc should do the trick). started doing exactly that last year and has supposedly completed the process this year.

  • Stabilize risk pools. The ACA created several risk sharing programs to help effectively manage the risk of the individual insurance market. However, the federal government has gone back on its commitment to these programs, in some cases refusing to fully fund risk sharing programs. Congress should modify and strengthen federal risk sharing mechanisms, including risk adjustments and reinsurance. This commitment to federal risk sharing will augment the state efforts that are supported by the stability fund.

This is partly a rehash of the "$15B/year reinsurance" bullet above, but it seems to also be referring to the deliberately-sabotaged risk corridor program (#2 on my list), which doesn't get much attention these days even though it was one of the biggest causes of the individual market's current woes.

  • Reduce cost through coverage redesign. States have an important but limited role in selecting essential health benefits (EHB). The Secretary of Health and Human Services (HHS) should allow states more flexibility in choosing reference plans for the ten EHB categories than are currently allowed by regulation. HHS should give states that develop alternatives to EHBs that meet the requirements of Section 1332 of the ACA the opportunity to pursue and implement innovative approaches.

OK, this one sets of a potential warning bell: We have to be very careful about anything that involves messing/screwing with the EHB requirements. The bold-faced section tries to acknowledge this danger, but it's still something to proceed with caution on.

An active federal/state partnership.

  • Improve the regulatory environment. The ACA created a greater role for the federal government in state health insurance markets, but retained states as the principle regulators of those markets. Recognizing the need for some common federal standards, the federal government should not duplicate efforts or preempt state authority to regulate consumer services, insurance products, market conduct, financial requirements for carriers, and carrier and broker licensing in states that already effectively perform these functions. Also, federal agencies should review the list of regulatory reforms identified by NAIC to stabilize markets.

This sounds reasonable on the surface...I don't know enough about this to comment further.

  • Support state innovation waivers. Section 1332 of the ACA permits a state to request permission to waive specific provisions of the ACA, including the individual and employer mandates, as well as requirements for qualified health plans, essential health benefits, tax credits and subsidies, and exchanges. A state may not waive community rating requirements, prohibitions on preexisting condition exclusions, lifetime maximum coverage limits, preventive care mandates, or coverage for adults as dependents through age 26. To obtain a waiver, a state must demonstrate its plan would not increase the federal deficit, would not reduce the number of people with health coverage, and would not reduce the affordability or comprehensiveness of coverage.

    Many states view Section 1332 as an opportunity to strengthen health insurance markets while retaining the basic protections of the ACA. We recommend HHS streamline and coordinate the waiver submission and approval process, including an option for states to easily build on approved waivers in other states, and an option to fast-track waiver extensions. We also recommend HHS rescind its 2015 guidance on Section 1332 and clarify that states may combine waivers into a comprehensive plan and measure deficit neutrality across the life of the waiver and across federal programs.

This also all sounds reasonable, but again, proceed with extreme caution when it comes to messing with the ACA "guard rails". Andrew Sprung of Xpostfactoid explores this in further detail.

  • Control cost through payment innovation. Coverage is important, and coverage reforms can help contain costs, but eventually our nation needs to confront the underlying market dynamics that are driving unsustainable increases in the cost of care. With the support of the federal government, states are resetting the basic rules of health care competition to pay providers based on the quality, not the quantity of care they give patients. This is true in our states, where we are increasing access to comprehensive primary care and reducing the incentive to overuse unnecessary services within high cost episodes of care.

I don't know a whole lot about this, but the gist of it is that instead of paying doctors/hospitals based on a "fee for service" model (paying them for every test/procedure), they get paid based on outcome...that is, whether or not the patient actually, you know, becomes healthier as a result of those tests/procedures. Makes sense, although it's also pretty obvious why some doctors/hospitals oppose it....along with many drug companies, medical device makers, etc etc...

Congress and the Administration should make a clear commitment to value-based health care purchasing. For example, Medicare and other federal programs should be allowed to participate in multi-payer State Innovation Models. The Administration should align priorities for value-based purchasing across all federal agencies, including HHS, CMS, SAMHSA, CDC, VA, AHRQ, HUD, DOL, OMB and others. Payment innovation projects should be funded through the Centers for Medicare and Medicaid Innovation and expanded to more states.

I'm outside of my wheelhouse.on this one.

Empowering consumers with information about the cost and quality of care can help to drive competition that will lower costs. New tools should be developed to provide consumers with better information about how much health services cost or which providers offer the best quality of care. For example, the federal government should work with states to promote consumer-facing websites and apps that let consumers shop for health care based on quality and cost. Many states have developed all payer claims databases to provide greater transparency for consumers, and should be allowed to include claims information from federally regulated ERISA plans in these databases.

Austin Frakt summed this one up best back in December:

Price Transparency Is Nice. Just Don’t Expect It to Cut Health Costs.

...improved transparency isn’t working as well as hoped. Health care pricing apps and websites don’t always help patients spend less.

That’s the conclusion from a study published this year in The Journal of the American Medical Association. It investigated the effect of the Truven Treatment Cost Calculator, a website available to more than 21 million workers and their family members. It provides users with the costs — both the total price and the portion the user would be responsible for — from over 300 services, including various sorts of imaging, outpatient operations and physician visits.

The researchers compared outpatient health care spending of about 150,000 employees who had access to the website with that of about 300,000 comparable employees who didn’t. (They did not examine inpatient spending because it is dominated by nonelective procedures that are not amenable to shopping.)

Despite its features, the cost calculator wasn’t popular. Though 60 percent of employees with access to it faced a deductible over $500, only 10 percent used it in the first year of availability and 20 percent after two years. The study found that price transparency did not reduce outpatient spending, even among patients with higher deductibles or who faced higher health care costs because of illness.

Study after study has showed the same thing. Health plans report that use of their price transparency tools is limited, with many enrollees unaware they exist. The vast majority of plans now provide pricing information to enrollees, but only 2 percent of them look at it. Aetna offers a price transparency tool to 94 percent of its commercial market enrollees, but only 3.5 percent use it.

In short, I agree with just about all of the bullet points these 8 Governors are suggesting; there's a couple I'm not familiar enough with to comment on, and a couple (wich relate to Essential Health Benefits and state waivers) which I'd be very cautious about embracing...but otherwise, it all sounds good to me.