Speeches & Floor Statements

Opening Statement: Stabilizing Premiums and Helping Individuals in the Individual Insurance Market for 2018: State Flexibility

Posted on September 12, 2017

This morning we are holding our third of four hearings on stabilizing the cost of premiums and ensuring that Americans are able to purchase insurance in the individual health insurance market for 2018.

This is the market where six percent of insured Americans, that’s 18 million people, buy their insurance—those who don’t get insurance from the government through Medicaid or Medicare or on the job.

For the past few years, the cost of premiums in the individual market, co-pays and deductibles have been skyrocketing in many states. Half of these 18 million Americans have government subsidies to help cushion the blow of these rising prices. Many of those who find themselves in the other half are being priced out of the insurance market. They simply can’t afford it.

That is why these hearings have a narrow objective: What Congress and the President can do between now and the end of the month to help limit premium increases in 2018 and begin to lower premiums after that.

We heard in our hearings last week that there also is a danger that if we do not act -- Americans in some counties literally will have no insurance to buy because insurance companies will have pulled out of collapsing markets.

The other reason we have a limited objective is that while this committee has been able to resolve contentious differences on a great many issues, we have been stuck in a partisan political stalemate for seven years on health insurance. A small bipartisan step would break this stalemate and hopefully lead to other steps.

This morning we will hear from experts who work in or with states as they develop plans to stabilize their individual market or implement other, broader health care reforms.

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

The focus of today’s hearing is this: How can Congress give states more flexibility in approving health insurance policies as one way of creating better coverage, more choices, and lower prices for consumers?

Despite our partisan differences, our two hearings last week demonstrated a real hunger by many senators on both sides of the aisle to come to a result.

Between the meetings held before last week’s two hearings and the hearings themselves—for two consecutive days, half of the members of the United States Senate attended.

I had expected there would be two themes to our work, but during those hearings, three themes emerged that I believe represent a working consensus for stabilizing premiums in the individual insurance market in 2018:

• The first theme—Congressional approval of continued funding of the cost-sharing payments that reduce co-pays and deductibles for many low-income Americans on the exchanges
I have recommended that we continue the payments through 2018.

This theme is promising because cost-sharing reductions subsidies were created by the Affordable Care Act and because temporary cost-sharing payments were a part of both the Senate and House Republican bills to repeal and replace the Affordable Care Act.

• The second theme—Senators from both sides of the aisle suggested expanding the so-called “copper plan” already in the law so anyone—not just those 29 or under—could purchase a lower premium, higher deductible plan that keeps a medical catastrophe from turning into a financial catastrophe. By providing a choice of lower-cost plans to everyone, we would give young and healthy people more options to buy insurance.
• The third theme – advocated by state insurance commissioners, governors, and senators from both sides of the aisle—is to give states more flexibility in the approval of coverage, choices, and prices for health insurance

That third piece is what we are discussing today.

Most of the discussion about flexibility has centered on giving states greater flexibility by amending section 1332—the state innovation waiver provision that is already in the Affordable Care Act.

We heard from virtually every witness last week that an application for the section 1332 waiver is too cumbersome, inflexible, and expensive for states. Some 23 states have taken steps to start the process so far; two have succeeded.

There was no shortage of suggestions about how to make section 1332 work better—but they basically come down to this: Let’s ease the process of applying so that more states can do what Alaska has done, but faster, and let’s give states actual flexibility in their approaches, like Massachusetts requested.

What Alaska has done, and what Minnesota, Iowa and Maine are considering doing, is to use the section 1332 waiver as a way to take care of higher cost individuals and lower premiums without using additional federal funds.

This may include reinsurance, stability funds or invisible high-risk pools to help individuals with complex and chronic medical conditions.

To help states do this, the recommendations from witnesses also include:

• Reduce the six-month application review period
• Allow 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?”
• Allow the governor 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
• Extend the waiver length
• Fast track process for emergency waivers
• Define budget neutrality as over entire term of waiver rather than one year
• Eliminate the so-called “firewall” between the section 1115 waivers and the section 1332 waiver
• Eliminate the 2012 regulation and 2015 guidance, which will make these process suggestions work better

We also heard from several witnesses—including the governor of Massachusetts –that the current rules on what types of health insurance can be offered under 1332 waivers are so rigid that a state essentially can’t offer anything but an existing Affordable Care Act exchange plan.

Real state flexibility means giving states more authority to offer a larger variety of health insurance plans with a larger variety of benefits and payment rules.

This type of approach to insurance allows individuals the opportunity to have a more personalized health insurance plan. It’s an approach that can benefit healthy individuals, as well as those with complex and chronic medical conditions.

For example, as Governor Baker of Massachusetts testified: “Greater flexibility is also needed around benefit design. Value-Based Insurance Design approaches to benefit design seek to align patients’ out-of-pocket costs, such as copayments and deductibles, with the value of services.”

“Massachusetts is committed to providing access to quality, affordable health insurance for our residents; rather than walking away from that commitment, we believe that increased flexibility would allow us to meet that commitment in more effective ways.”

While there was much consensus last week, I could caution members that there still are significant differences to deal with and a true compromise requires Democrats to accept something Republicans want—more flexibility for states—and Republicans to accept something Democrats want—continued funding for cost sharing payments in the Affordable Care Act. Both sides have been supportive of the so-called “copper plan.”

As an example, the Chairman of the Finance Committee, Senator Hatch, a former Chairman of this committee, on Friday questioned continuing cost sharing without significant structural reforms in the Affordable Care Act.

On the other hand, several Democratic members have insisted that what they call “guardrails” in the law must not be changed.

As for guardrails, I want to be clear that I am not in any way proposing that we change the patient protection guardrails already written in section 1332: including that nobody can be charged more if they have a pre-existing condition; the requirement that everyone is guaranteed to be sold insurance; the requirement that your insurance policy can’t be rescinded; those under 26 may remain on their parents’ insurance; and there may be no annual or lifetime limits on your health benefits.

And, as for the essential health benefits, states already may waive them under the express provisions of section 1332 in the Affordable Care Act.

The guardrails that need examination are the severe restrictions on benefit design that Governor Baker was talking about that affect the result that would be achieved when the U.S. Department of Health and Human Services approves a state waiver application under section 1332. That is where we need to have further discussion.

Under the section 1332 waiver rules, the result achieved under a waiver has to be a plan that is “as comprehensive” in benefits, actuarial value, and out of pocket cost as an Affordable Care Act exchange plan, cover a “comparable” number of individuals, at roughly the same cost to individuals, and no increased cost to the federal government.

This essentially means that no other type of benefit design for health insurance plans is allowed.

This would be like a restaurant menu with only one item, or a travel agency with only one destination, or if Dr. Seuss had written a book titled “Oh, The Place You’ll Go.”

Today’s witnesses have extensive experience in helping states design policies of approving insurance and we look forward to their advice about how to give states real flexibility in ways that increase coverage, choices, and lower prices.