Earlier this year, Mainers were justifiably proud of Senator Susan Collins for standing strong in the face of efforts to take health care away from tens of thousands of Mainers. Unfortunately, the tax bill making its way through Congress will have the same effect if passed. While Senator Collins has attempted to mute these adverse consequences by offering a separate proposal in conjunction with Senator Nelson of Florida, the reality is that passage of Collins-Nelson proposal (for which there is no guarantee) would not come close to offsetting the damage caused by the Senate tax bill’s repeal of the Affordable Care Act’s (ACA) individual mandate.
The Collins-Nelson proposal provides funding for state-based reinsurance programs. These programs are intended to limit the financial impact of high cost patients on the overall insurance market helping to keep premium costs from escalating for everyone. New analysis by MECEP that draws on earlier analysis by the Commonwealth Fund indicates that the Collins-Nelson proposal will fall far short of offsetting either the coverage losses or insurance premium hike predicted by the Congressional budget office as a result of the ACA mandate repeal.
As shown in earlier analyses, plenty of studies have concluded that the individual mandate is the linchpin of the ACA. Its repeal as part of the Senate’s tax overhaul bill threatens to unravel much of the health care law, especially in the individual market. The Congressional Budget Office predicts that 13 million fewer Americans would have health insurance coverage if the mandate were repealed, and premiums in the individual market would increase by 10% each year above existing projections.
In contrast, analysis by the Commonwealth Fund using the RAND modeling software shows that a reinsurance program on the scale of the Collin-Nelson proposal would lower premiums by just 6.2% and entice only 1.3 million Americans to remain in the market. MECEP’s analysis shows that if this were applied to Maine’s insurance market, the reinsurance program promoted by Collins-Nelson would reduce the coverage losses by a little over 4,000 individuals, a small fraction of the nearly 50,000 who are expected not to have coverage as a result of mandate repeal. Likewise, the Collins-Nelson proposal would offset less than 2/3 of the rate increase expected from individual mandate repeal. As a result, a 60-year-old individual in Washington County could still expect to pay an additional $1,000 by 2024.
Another study released today by health consulting firm Avalere found that the Collins-Nelson bill would have even less impact; reducing premiums by just 4% and offsetting coverage losses by 244,000 nationwide (the equivalent of around 1,000 individuals in Maine.
Source: MECEP analysis of Commonwealth Fund data; Congressional Budget Office data; Maine State Economist population projections; Healthcare.gov and US Census Bureau insurance enrollment data. Analysis assumes additional enrollment of 60,000 in Maine’s expanded Medicaid program.
These findings are broadly consistent with Maine’s experience with a reinsurance program in 2012-2013. While the state’s reinsurance program is thought to have reduced premiums by more than 10% in Maine, the association’s directors recently observed that its effect would be “substantially reduced” if it were reactivated under the ACA as some of those prior savings were achieved by reducing key benefits and imposing caps that would not be allowable under the ACA.
There’s a lot uncertainty around the Collins-Nelson proposal. It is modeled on two short-lived state policies (in Maine and Alaska). Nevertheless, there’s nothing to suggest that it can replace the impact of the repeal of the individual mandate, and our best estimates suggest it will fall far short.