Top Takeaway from this week – (1) Last Thursday, President Trump announced his decision to cut off payments for cost-sharing reductions immediately; (2) Senate HELP Committee Chair Alexander and Ranking Member Murray announced a market stabilization deal; and (3) President Trump has waffled on his support for the deal, sowing confusion.

Late last week, President Trump announced he had made the decision to end payments to issuers for cost-sharing reductions (CSRs), making good on his long-held pledge to “explode” the ACA’s Marketplaces. The ultimatum seems to have helped spur the leaders of the Senate HELP Committee to come to an agreement on bipartisan market stabilization legislation that would fund the CSRs through 2019 while providing greater flexibility for 1332s, among other provisions.

Although the bill is being cosponsored by two dozen bipartisan Senators, the legislation received mixed support from President Trump and a spokeperson for House Speaker Ryan (R-WI) noted that the Senate should “keep its focus on repeal and replace of Obamacare.”

Administrative Action –

Last Thursday, the Administration announced its decision to halt payments to issuers for cost-sharing reductions (CSRs) – a decision that took immediate effect. In a tweet Friday morning, President Trump noted, “The Democrats ObamaCare is imploding. Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!” He later added, “ObamaCare is a broken mess. Piece by piece we will now begin the process of giving America the great HealthCare it deserves!” HHS Press release: Memo from Attorney General Sessions:

The ACA authorizes payments to issuers to lower cost sharing for enrollees with incomes between 100 and 250 percent of the federal poverty level. Absent such federal payments, issuers will still be required to maintain the lower cost-sharing levels for enrollees, costing issuers an estimated $1 billion for the remainder of 2017.

In anticipation of the Administration’s decision, many states and issuers purposefully requested increased rates for plan year 2018 that would account for the loss in subsidy payments. However, not all of the states advised issuers on submitting rates for next year, which may lead issuers to either sustain losses or to withdraw from the market. CMS said in a statement that it is “working on a case-by-case basis with those states where regulators explicitly required insurers to assume CSR payments would be made.”

In response to the Administration’s decision, State Attorneys General in 19 states have announced their intention to file suit against the Administration to compel CSR payments, and that the Administration’s decision was based on a deliberate attempt to “explode” the ACA. Additionally, yesterday the Attorneys General filed a temporary restraining order in an effort to force continued CSR payments while the case continues through the court system. Fact Sheet: Suit:

Additionally, Democratic leaders from the House Committees on Energy & Commerce, Ways & Means, and Education & the Workforce, as well as Senate Committees on Finance, HELP and Aging sent letters on Tuesday to President Trump and HHS Acting Secretary Hargan requesting information and documents used to justify the Administration’s decision to terminate CSR payments, “including any analyses of the decision’s impact on consumer health insurance costs, access to health insurance, and federal spending.” Press release: Letter:

Meanwhile, yesterday the IRS announced in a notice that it will not accept electronically filed tax returns during the 2018 filing season from taxpayers who do not state whether they have health coverage or qualified for an exemption from the coverage requirement. Tax returns filed that omit such information will be rejected, requiring individuals to resubmit. This is the first indication that the Trump Administration may continue to enforce the individual mandate. Notice:

Today, CMS approved Oregon’s 1332 state innovation waiver, which would allow the state to use federal pass-through funding to establish a state-based reinsurance program. The waiver is effective through 2022. Approval letter:

Senate Action –

On Tuesday, Senate HELP Committee Chair Alexander (R-TN) and Ranking Member Murray (D-WA) announced they had come to an agreement on a deal that would fund CSRs for the remainder of 2017, as well as in 2018 and 2019, in exchange for greater flexibility under section 1332 waivers, among other provisions. Today, Sens. Alexander and Murray released bill text for the Bipartisan Health Care Stabilization Act of 2017, and announced that their bill has the support of 24 bipartisan cosponsors – 12 Republicans and 12 Democrats, a strong show of support for the long-embattled effort. Press release: Section-by-section:  Bill text:

  • 1332 State Innovation Waivers – As part of the deal, 1332 waiver proposals will still be required to maintain equivalent standards for comprehensive coverage and the number of people enrolled in coverage, but states will have new flexibility in assessing whether the coverage offered is of comparable affordability and in calculating their proposals’ deficit neutrality. The bill also allows states to pursue waivers for six years, rather than the current five-year demonstration period, and it expands the types of pass-through payments that can be used to fund 1332s to include savings accrued to a state’s Basic Health Plan. Further the bill streamlines and expedites the waiver application process and requires HHS to create a menu of waiver options to allow for quicker approval.
  • CostSharing Reduction Payments – Appropriates funds for 2017 as of the date of enactment and provides funding for plan years 2018 and 2019.
  • Outreach and Enrollment Activities – The bill redirects the use of $106 million from exchange user fees for outreach and enrollment activities for 2018 and 2019, in an effort to limit the impact of the Administration’s Navigator funding cuts.
  • Copper Plans – The bill expands eligibility for catastrophic coverage to all, rather than limiting such coverage solely to those under the age of 30.
  • Offering Plans Across State Line – The bill directs the Administration to issue regulations implementing section 1333 of the ACA, which provides for interstate health compacts allowing plans to be offered across state lines.

In response to the announcement, the President initially said that he would support the deal, calling it a “short-term solution so that we don’t have this very dangerous little period” for insurance companies. However, later on Tuesday evening, President Trump noted at a Heritage Foundation event, “While I commend the bipartisan work done by Senators Alexander and Murray – and I do commend it – I continue to believe Congress must find a solution to the Obamacare mess instead of providing bailouts to insurance companies.” Sen. Alexander noted on Wednesday morning that President Trump had called him to say he wanted to be “encouraging” of the bipartisan deal but was still reviewing the details. Hours later, President Trump tweeted, “I am support of Lamar as a person & also of the process, but I can never support bailing out ins co’s who have made a fortune w/ O’care.”

Additionally, House Speaker Ryan (R-WI) spoke out against the bill yesterday, arguing that the Senate should keep its focus on the repeal and replacement of the ACA.

Despite the strong bipartisan showing of support, the bill’s path forward may be extremely difficult without the support of the President and the Speaker. Several Republican Senators have reportedly lobbied President Trump in recent days to gain his support, arguing that while they support a more robust effort, like the Graham-Cassidy bill introduced last month, the markets need short-term stabilization.

Sen. Alexander projected confidence of the bill, noting “we have strong language in the Alexander-Murray agreement that says the cost-sharing payments are for the benefit of consumers and not insurance companies” and adding, “I don’t usually predict what will happen in the Senate, but my guess is that this will become law by the end of the year one way or the other.”

In an additional nudge, a bipartisan group of 10 Governors wrote to Congressional leadership yesterday urging them to give the bipartisan stabilization legislation a vote in both Chambers. Press release with text of letter:

Meanwhile, on Tuesday, Sens. Toomey (R-PA) and Cotton (R-AR) introduced the Mandate Relief Act of 2017 (S. 1967), which would provide additional exemptions to the individual mandate for individuals who earn less than the national median household income, whose state’s average premium increased by more than 10 percent, and who live in a county with only one health insurance issuer. Press release:

And Sens. Bennet (D-CO), Kaine (D-VA), and Feinstein (D-CA) introduced the Medicare-X Choice Act of 2017 (S. 1970), which would build on the Medicare framework to establish a public insurance plan offered on the individual and small business health exchanges. The Medicare-X plan would initially be available in areas where there is a shortage of insurers or higher health care costs due to less competition, but would expand everywhere by 2023. Press release: Summary: Bill text:

Yesterday, Sens. Heitkamp (D-ND), Shaheen (D-NH) and Donnelly (D-IN) introduced a bill to delay the annual fee on health insurance providers until 2020 and to make the fee tax-deductible. Press release: