US Senate Republicans have offered only temporary, Band-Aid fixes to try to reassure holdouts on their tax bill like Maine’s Senator Susan Collins. These proposals will not fully heal the wound inflicted on the health care system by repealing the individual mandate, a critical piece of the Affordable Care Act. Despite this, Senate Republicans are pushing ahead with their tax overhaul which is expected to explode the deficit, worsen income inequality, damage local services, overlook millions of poor children, and worsen the health of millions of Americans.
After meetings Tuesday, Republican leaders offered two proposals to attempt to stabilize the health insurance market in the wake of expected turmoil following passage of the tax bill. One is a bill sponsored by Senators Alexander and Murray which would restore the Cost Sharing Reduction (CSR) payments that the White House abruptly ended in September. The other is Senator Collins’s own proposal to fund “high risk pools”, also known as “reinsurance programs” for individuals with expensive medical conditions. Neither is enough to completely offset the premium increases and coverage losses expected if the individual mandate is repealed.
Restoring the CSRs is urgently needed to avoid additional premium increases in 2019, and to restore functionality to the insurance exchanges. However, the existing estimates of the damage caused by repeal of the individual mandate already assumed that CSRs would be restored. In other words, the Alexander-Murray legislation would prevent further harm, but not reduce the number of Americans (13 million) or Mainers (50,000) who would lose insurance coverage. Nor would it reduce the 10% projected premium increase (up to $3,000 in Maine).
Similarly, reinsurance programs are not bad policy, but they are inadequate for the scale of the problem. Maine’s reinsurance program, the Maine Guaranteed Access Reinsurance Association (MGARA) has been held up as a model for this proposal. MGARA, which was operational from 2012-13, did have some limited success in reducing premiums, but this came at the expense of reduced benefits for those Mainers in the scheme (including 30% coinsurance costs, no maternity benefits, and annual benefit caps). Many of those benefit restrictions are now prohibited under the ACA.
Reinsurance is also expensive. MGARA spent roughly $20 million per year to insure just over 3,000 Mainers. Estimates, including those by the Congressional Budget Office previously indicated that it would cost $10 billion annually to offset a 10% increase in premiums like that threatened by the tax bill. Senator Collins’s proposal offers just $5 billion in annual funding, and only for 2 years. Not only is this just half of what is probably needed, but as a temporary measure, it’s unlikely to add stability in the eyes of most insurers.
Reinsurance also has limited impact in getting more people covered by insurance. A study by the Commonwealth Fund found that a federal reinsurance program would increase coverage by just 1.2 million people, less than one in ten of the projected 13 million losing coverage under the tax plan. This is consistent with Maine’s experience. Data show that during the MGARA era (2012-13), 87% of nonelderly Mainers had health insurance – a slight decline from the 88% who were insured before MGARA was operating (2010-11). Only the full implementation of the ACA in 2015 had a real positive impact on insurance rates, increasing the rate to 90%.
Senator Collins should not be reassured by these half measures. Repeal of the individual mandate will push 50,000 Mainers out of the insurance market, causing premiums for older sicker Mainers left in the market to rise steeply – and these latest “fixes” would do very little to mitigate that damage.