Some Senate Republicans embraced the idea of adding more funding for Obamacare insurers to help cover the most expensive customers in an effort to lower premiums.
But a top Democrat was skeptical that adding funds for a reinsurance program could offset the impact of repealing the law’s individual mandate, which is included in the Senate version of Republicans’ tax reform legislation.
Sen. Susan Collins, R-Maine, said reinsurance funding should be added to a bipartisan Obamacare stabilization deal to blunt the impact of repealing the requirement that everyone buy insurance. Some Republicans are open to the idea but face stiff resistance from conservatives and President Trump, who have labeled other stabilization efforts as “bailouts.”
Reinsurance funding would help Obamacare insurers cover the cost of enrollees with the sickest claims, leading to lower premiums for everybody else. Collins told Axios that she wants an amendment from her and Sen. Bill Nelson, D-Fla., to be approved that would add $4.5 billion in funding to help states adopt reinsurance programs.
The idea of reinsurance had support from some Republicans, but not necessarily in their tax legislation.
Sen. Mike Rounds, R-N.D., said he liked the idea of reinsurance funding but was skeptical whether it would fit into a bipartisan stabilization deal.
“I would most certainly support a plan that would include that,” he told the Washington Examiner Monday.
Rounds is a co-sponsor of a deal brokered by Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., to stabilize Obamacare’s exchanges. It would make cost-sharing reduction payments to Obamacare insurers for two years in exchange for giving states more flexibility to bypass the law’s insurer regulations.
The deal has enough support to pass the Senate, but Trump and House Speaker Paul Ryan oppose it. Trump has called the payments “bailouts,” even though they reimburse insurers for a requirement to reduce out-of-pocket costs for low-income Obamacare customers.
Sen. Bill Cassidy, R-La., also lauded the idea of reinsurance, noting that it was included in the Obamacare replacement bill he led with Sen. Lindsey Graham, R-S.C., that senators rejected in September.
“In general if it passes as part of Alexander-Murray that would also be a good thing,” he said. But Cassidy added that he hasn’t thought about it too much.
Sen. Roger Wicker, R-Miss., said he wasn’t opposed to reinsurance but was skeptical about whether “it would fly.”
A reinsurance program would require new funding for insurers initially. However, over time it could lower the income-based tax credits paid out to Obamacare enrollees if reinsurance lowered premiums.
The Trump administration has worked with some states to approve reinsurance programs but has not devoted new federal funding for them. For instance, it approved a state-run reinsurance program in Alaska this year.
But Murray is skeptical that adding reinsurance to Alexander-Murray is enough to blunt the effects of repealing the mandate that forces everyone to buy health insurance or pay a penalty.
“I support reinsurance, but it won’t solve the problem they created,” she said.
Murray cited figures from the nonpartisan Congressional Budget Office that repealing the mandate would lead to 13 million fewer people having insurance over a decade. It also would cause premiums to rise by double digits as insurers would lose an incentive for younger and healthier people to sign up for insurance and buffer the costs of sicker enrollees.
But other estimates have downplayed the impact of repealing the mandate.
An analysis from the financial services firm Standard & Poor’s estimated that three to five million people would forego insurance. It would save up to $60 billion over the next decade as opposed to $330 billion projected from the CBO, according to the analysis.
Collins has been skeptical of adding mandate repeal to tax reform.
It also is not clear about the House’s appetite to add a reinsurance program if there already is no desire to continue funding cost-sharing payments. Rounds said, in response to the “bailout” label, that reinsurance helps to lower premiums.
“What you are doing is laying out a plan on which you take care of individuals that are driving up the prices for everybody else,” he said. “If you can assist to broaden the base to assist at a time you are doing a good job of keeping the prices for everybody else down.”
