Speeches & Floor Statements

Opening Statement: Stabilizing Premiums and Helping Individuals in the Insurance Market: Governors

Posted on September 7, 2017

The Senate Committee on Health, Education, Labor and Pensions will please come to order.

This morning, we are holding our second of four hearings on stabilizing premiums and ensuring access to insurance in the individual health insurance market for 2018. We have 5 governors with us this morning.

Ranking Member Murray and I will each have an opening statement, then we will introduce our 5 witnesses. After their testimony, senators will each have an opportunity to ask the witnesses 5 minutes of questions.

I want to first thank the witnesses for coming. We just left a meeting where the governors met with senators not on our committee. We had 30 senators there, similar to yesterday – when we had the state insurance commissioners here. We had 31 senators – most of them not on the committee – meet for an hour, and, then, at our hearing, we had 22 of our 23 committee members.

So, for two consecutive days, we’ve had half of the members of the United States Senate focus in a bipartisan way on a single, narrow objective: what can we do in the next couple of weeks that the Senate can pass, the House can pass, and the president will sign that can help 18 million Americans who are in the individual insurance market in the year 2018.

The individual insurance market is 18 million Americans – it’s just 6 percent of those who have insurance – and about half of those don’t have any government help to buy insurance. And it’s those Americans who are getting hammered the most by the higher premiums and the higher copays and deductibles.

Our goal is to get a result in a very short period of time on a 2018 stabilization package that is small, bipartisan and balanced.

Tennessee’s insurance commissioner –who testified yesterday--has described the state’s individual market as “very near collapse.” At the end of September last year Blue Cross—our largest insurer--pulled out of the individual market in Knoxville, Nashville and Memphis, not just for Tennesseans with ACA subsidies—but for everybody. 

And just yesterday, an insurer in Virginia announced it will pull out of parts of the state for the 2018 plan year – leaving 62,000 Virginians facing the very real prospect of having zero options for insurance next year.

That could happen again at the end of this September—if Congress doesn’t act.  And if it happens again, up to 350,000 Tennesseans and millions of Americans could be literally left with zero options to buy insurance in the individual market.

If Congress does act, we can limit increases in premiums in 2018; continue support for co-pays and deductibles for many low-income families; make certain that health insurance is available in every market; and lay the groundwork for future premiums decreases.

What this committee heard at yesterday’s hearing with 5 state insurance commissioners was focused and helpful. We had a focused hearing on a narrow part of the market where we have most of the problems—this is the individual market, where only 6% percent of the insured get their insurance. 

We asked our witnesses, as we do today, to focus on the individual market and what we could do to help keep premiums down in 2018.

I heard three things mostly: addressing high-cost individuals through reinsurance or some other model, continuing the cost sharing reduction payments, and more flexibility for states in the law’s 1332 waivers. 

One important discussion is how to address the high cost of care for the sickest population.

Seems to me, senators on both sides of the aisle understand how that discussion is likely to be part of any long-term solution because we’ve got a very small individual insurance market with some exceptionally sick people in it, and finding a way to deal with complex cases helps us reduce rates for everybody else.

Some senators have suggested new federal programs. But under the Minnesota and Alaska plans, the states use some of the federal money they’re already getting to set up reinsurance programs through 1332 waivers.

We heard a number of good ideas for the short term yesterday, and one of the things I would like to know from you is: is there anything we could do to section 1332 in September to make it easier for more states to do what Alaska and Minnesota are doing with their reinsurance programs?  

Let me say, as a former governor, with respect to these five governors – unless the Affordable Care Act is changed, over the next 10 years, according to the Congressional Budget Office (CBO), the federal government will be spending about a trillion new dollars on Medicaid expansion – and about $866 billion new dollars to subsidize the individual insurance market.

That number, according to CBO, comes out to about $4,200 per subsidized individual.

And the federal government currently has a $20 trillion debt. So the question arises – if we need to address complex health issues – or reinsurance, why don’t the states themselves do it?

For example, Alaska came up with its own state funds to help with its plan – it’s using some of federal dollars – $ 48 million –  it was already getting in premium subsidies and re-designating them for reinsurance.

Minnesota came up with even more money – and it’s planning to use the roughly $135 million in federal funds it was already getting.

Maine did it a different way, by adding a $4 charge per health insurance policy per month.

So, as we think about the need for more funds to deal with complex health cases – whether it’s reinsurance or an invisible high risk pool or a stabilization fund – we need to think about what the state share of that should be.

At yesterday’s hearing, we also heard several suggestions for the short term for improving the 1332 waiver that ought not be too controversial, including reducing the six-month waiting period and allowing a copycat application—if Washington state gets something approved, why can't Tennessee come along and say, “We want to do what Washington state did with one change”? That ought to speed things up. 

Another idea is to allow just the governor or perhaps the insurance commissioner to apply for a waiver and not wait for the legislature to have to pass a law, since some state legislatures only meet every two years. 

I was intrigued with the suggestion about making sure we calculate the budget neutrality requirement in a common-sense way to support state’s long-term plans.

And is there a way to combine the state innovation 1332 waiver with the state Medicaid 1115 waiver so that a state could share any savings it has across the two interconnected markets?

I know that New Hampshire has tried to do some things in that area and even though the Democratic governors and Republican governors both support it, they are not able to do it according to both the Obama and Trump administrations. 

Another possibility mentioned by several senators would be allowing lower-cost “Copper” plans to be sold—plans that are often more appealing to younger and healthier people that the insurance commissioners said we need in the markets to bring down premiums.

So that's a short list of some things that might make some real difference in the 23 states that have actually started the process for applying for a 1332 waiver.

I'm hopeful that maybe some combination of continuing cost sharing for a period of time and significant changes in flexibility for states—probably, mostly through changes to section 1332 since it's already in the Affordable Care Act—might provide a basis for action we can take this month, and then if we act, then we'll count on the House of Representatives and the president to take advantage of that, and my hope is that they would. 

This action wouldn’t end the process—that would only be step one and then we’d go pretty quickly to step two on a long-term strong vibrant individual market and I hope we can begin to spend most of our time on the larger issue of healthcare costs. 

I also mentioned this yesterday – but I think it’s worth repeating today: for seven years we've been stuck in this partisan stalemate on health insurance with most of the argument—not all of it , but most of it— about 6 percent of insured Americans who buy their insurance on the individual market when we really should have been spending more time on the fundamental problems with the American health care system that have caused it to grow from consuming 9 percent of the gross domestic product in 1980, about 40 years ago, to nearly 18 percent in 2015 and a predicted 20% in 2025.

At the same time, we have this phenomena of 5 percent of those who received health care consuming 60 percent of the costs.

So, we should be doing more on the larger question about addressing health care costs.

There's no question about that. Look at what we pay to visit the doctor, how to get a test at the hospital, what we spend on prescription drugs, how much excessive paperwork and administrative burdens increase our costs.

What more can be done to encourage wellness? What can be done to prevent more serious illness and disease and the high costs that come from being ill? We should be looking at the real ways to bring down cost of health care, which is the best way to reduce cost of health insurance.