About how to stabilize the individual health care market. His is just under two hours. Good morning everyone. Im with the American Enterprise institute and welcome everyone here in our Conference Room and everyone watching through electronic means to a conference today, addressing the general and very specific question, also of stabilizing the Health Insurance market under the Affordable Care act and in particular, some proposal made by a group of eight governors who will actually be following the panel. Now you may wonder why we have the governors speaking afterwards and the answer is travel considerations. But fortunately, although this panel is certainly not obligated to confine their remarks solely to the governors proposal. The governors did put out a letter last week that is quite easy to summarize. Everyone has a basic grounding in what the governors are talking about and to some extent and grounding and what we will e talking about as well. We identify really three categories of actions that could be taken. Immediate federal actions to stabilize the market. Nd then and other types of reforms that address that address coverage, costs and what they call very politely the federalstate partnership which oftentimes is a bit more aggressive relationship than a partnership. Having been an employee of what is called the center for medicare and Medicaid Services. Partnerships werent always the words that came to mind when we negotiated for the states. Here are the major proposals on stabilizing the individual or nongroup Insurance Market. The market that is subsidized through the Affordable Care act through the exchange process. So their major proposals are to the one that everyone says, fund cautionary payments create a temporary Stability Fund, offer choices in underserved counties and what that means is to come up with a way to give people an insurance option where it may be none or only one health plan available to them. Those are often Rural Counties and then they also say they would keep the individual mandate until Something Better came down the road. Other proposals that are a , they it longer term talk about encouraging more enrollments in the exchange plans. Everybody always talks about enrolling more healthier younger people. They really dont have a proposal for that and make insurance more affordable, but they dont define that either. Create appropriate enrollment. This is a serious set of ideas because its something that the Insurance Companies have been dealing with the exchanges have been grappling with for several years now. And that has to do with the great periods people dont have to pay premiums potentially for three months and other kinds of rules that have encouraged people to go in and out of insurance and continue paying their premiums. If you can go in when you need it and come out when you dont, thats not insurance, thats just a subsidy and stabilizing risk pools, reducing costs through coverage redesign, which i think they are considering what states would do to modify some of the insurance rules as well as the federal government would do. And then timely some old gems, lets improve the Regulatory Environment. Thats always a great idea. Support state innovation waivers. Theres a Waiver Authority in the Affordable Care act and some people have argued that congress should require that h. H. S. Move quicker in approving waivers. And i think thats part of this and then various ideas for the cost containment. Thats basically the proposal. A few quick remarks and then introduce the panel and well take it from there. I think its kind of interesting that at least from the republican standpoint most of this year, the phrase was repeal and replace and now the phrase even among republicans is stabilize. But what does stabilize mean . Its the political correct term for repairing obamacare. Thats basically the story. A lot of the problems that we see in the Exchange Market is the direct consequence of the design of the Affordable Care act. Mistakes were made in drafting that bill eight years ago or seven years ago and those mistakes have been retained. Even in situations where mistakes were finally realized, the Previous Administration fearing i guess the political fallout chose not to go to congress to make adjustments that clearly are needed, are needed now and in the future if theyre not made fairly soon. Furthermore, instability, we saw plans dropping out before this year. They were typically were the big named plans in markets that they didnt previously really operate in. Many of the big employers specialize in insurance sold through large employers. And if youre not in the individual market, you have to create a whole new set of financial and business relationships with Health Care Providers and hospitals and so on. You have to figure out how to arket because its an entirely different situation. Some plans realized this wasnt going to work for them and dropped out of the markets which meant losing a tremendous amount of money. This happened before. This was not an invention of republicans and wasnt ning that democrats wanted. This was basically a failure to design a very complicated policy perfectly for the first time. Thats not a criticism but a reality. And so the failure to accept the did he effects and deal with it a way that might not be politically advantageous leaves us with frankly of a mess in this particular market. We will address many of these issues. Im sure i have annoyed many of my colleagues here to my right. And im sure that was accidental, wasnt it . [laughter] get my cheat sheet and make sure i identify everyone properly. Let me introduce the panel and introduce people in the order in which they will speak. She have cory, who is a Senior Health fellow at the American Academy of actuaries. And next we have Vice President of Health Policy and senior fellow for center of American Progress. And then we have the founder of the foundation for research and equal opportunity formerly with the manhattan institute. So with that, try to keep it to eight minutes, but if you go a little bit longer, i will be clearing my throat. Thank you, joe. And good morning everyone. Im going to step back a bit and set the stage and talk about a few things. First ill talk about whats necessary to have a stable and sustainable individual market. Then well look at how well the current individual market is stacking up according to those criteria and talk about some actions that can be taken to stabilize and even improve the marketplace. So whats necessary in order to have a stable and sustainable individual market . Well, first we need enrollment thats high enough to reduce random fluctuations and balanced risk pool. The a. C. A. Has preexisting conditions protections we have to have healthy pool in the pool over which the cost of the sick people can be spread. We need a stable Regulatory Environment that sometime you lates competition. Not only having a level Playing Field making sure that people operate under the same rules, we also need to have rules that are consistent over time and are known in advance. And i think we can be a little short on a couple of those. Third, we need enough participating insurers and plan offerings so that spurs competition and Consumer Choice and finally we need because the majority of premium dollars go toward pay ping medical claims. We need high quality of care. And i think im encouraged to see thats getting a lot more attention. It is noted in the governors plans or proposals and that issue has come up a lot. How is the current market doing according to those criteria . Enrollment in plans has been lower than expected and the risk pool in general. That led to especially in the early years, premiums being too low relative to claims, which led to insurer losses and then ultimately as joe mentioned to withdrawals from the market. Recent signs suggest that the market that ensure experience is stabilizing and even improving in some cases. Nevertheless the markets remain fradge i will. The big challenge right now is uncertainty and there are two sources of that uncertainty. Whether or not the cost sharing reduction payments will be made to insurers and two, whether the individual mandate will be enforced. Both of these are causing uncertainty for insurers which is causing premium increases as well as insurers being hesitant to enter or continue participating in the market. Those are the challenges. What can we do about them . The first thing and the priority and i would call the number one, two and three priority is pay the cost sharing reduction reimbursements to insurers. Not paying them would cause premiums to go up on average 20 or even more. And with those premium increases, the federal premium subsidies, the spending that the government makes towards those premium subsidies would go up. And c. B. O. Estimates that the increase in federal premium subsidies, the federal funding would go up if c. S. R. s are not paid because the federal government would be paying more than they would be saving by not paying. And i think the good news there does seem to be broad consensus broad consensus. There is some bipartisan im going to call it consensus that make it so that these need to be paid. Second thing that can be done is to enforce the individual mandate. I know thats not a popular thing to say, especially again with the preexisting condition protections its important to have Healthy People enroll. I know some atlantatives to the mandate are being explored which is requiring continuous coverage. Concerns about that is that its not clear and may be difficult for continuous coverage payments to do enough to encourage Healthy People to enroll sooner rather than later while at the same time continuing to offer those precondition protections. Auto enrollment has been successful in encouraging enrollment in other programs in particular, 401k plans and it is difficult to incorporate auto enrollment in the individual market for several reasons. I think the logistical hurdles that would need to be overcome would be pretty difficult to do. Not only do we need at this point to enforce the mandate, but it also needs to be publicized. At this point, there is a lot of confusion among consumers about whether that mandate is still in effect. So publicizing that and getting the word out is an important mandate structure. And leads me to the next action that can be taken and that is continued and improved enrollment outreach and assistance. Publicizing and getting more information to consumers about their coverage options, their potential eligibility for premium subsidies, helping them walk through the enrollment process it self works hand in hand with the mandate in terms of getting healthier people to enroll sooner rather than later. Sick people are going to find a way to get coverage. Its the Healthy People we want to make sure get in the pool. And one thing to keep in mind, the mandate and this outreach as well as the premium subsidies all Work Together to encourage Healthy People to enroll. If you weaken one of those, you increase the need for the others. So if you weaken the mandate, it requires an even morrow bus enrollment outreach and vice versa. I dealy you would have both. The next thing about possible improvement and the governors have included provide some Stability Funding, for instance through a reinsurance plan. It would offset some of the costs of an high cost of enrollees as a result of that offset. Premiums would be lower. Lower premiums could entice more people to enroll. And if the federal government were to fund such a reinsurance program, Stability Fund, it would partly pay for itself because the money going in to pay the reinsurance would lower the premium subsidies and lower what the government would have to make for the premium subsidies. And timely, its important not only to do things that would improve or stabilize the market, its important to avoid things that would underminor deteriorate the market. So doing things like allowing the purchase of coverage across state lines and expanding the ability of Association Health plans, allowing more people to buy noncompliant coverage such as shortterm duration plans. The Healthy People would go to these noncompliant sources. Whos left in the compliant plans . The sicker people. What happens . Premiums go up. People with preexisting conditions either now or who obtained it in the future could find it more difficult to find affordable coverage if they decide to withdraw. Ill leave it there and turn it over. Thats incredible. You are on time. We dont usually have that here. One observation i would make for people who dont spend their time in washington, what you said is completely correct. But i think people who dont pay much attention to this theyre aring the government says so i dont think you explained this, but just a quick thing here. Thats what i spent my time. If the cost sharing reduction payments are not made which is around 8 billion a year or Something Like that, that inevitably the premiums have to go up, but when the premiums go up, so do the subsidies. The people who are subsidized will not see increases. There are two losers, there are those who are subsidized and they are going to drop out, more likely than not. And the other losers turn out to be the taxpayers. Well, first, i just want to ank joe and a. E. I. For partnering on this important discussion. Its an example of people, organizations working together in a polarizing environment with different perspectives having an adult conversation can we call it an adult conversation civil conversation. Thats better. I want to applaud governors from ohio and colorado for their leadership. They put partisan politics aside for the moment. And they have really identified the problem and are targeting solutions to fix that exact problem. The basic problem is one of policy uncertainty and if you look at all the data and evidence, whats been happening is that the markets had been abilizing if you look at margins of insurers, they were on the upswing. And that dynamic may not have been happening as quickly as we would like, so we would like to accelerate that process, but then trump came along and started to sabotage the markets and im not going to go through all the ways he has done that. But thats the basic problem that were trying to address. The governors plan is a major step forward because it targets that problem like a laser beam without massive cuts to medicaid, without tax cuts for the rich. And as the American Medical Association has pleaded with Congress First do know harm. So theyre doing no harm and trying to solve the problem. The plan includes the two basic lars of any stable isation stabilization policy. Im going to take those on turn. On costsharing reductions, every nonpartisan expert who has ooked at this, including c. B. O. , Kaiser Family foundation has estimated that eliminating those payments would spike premiums by 20 . And the important thing to realize here, its not just those payments, the mere threat s having an impact this week already in fact. Optima health has said it is withdrawing in the market in virginia and cited overpayments and 70,000 virginians are left in the lunch and have no plan as of right now to enroll in. And thats a big problem. Another is s week pulling out of maine if the costsharing reductions are not guaranteed for 2018. The public, i think, fully understands whats going on here. They have seen the threats from president trump. They know that republicans are the party in power and republicans will be blamed if they do not govern here and fail to fix this problem. Insurance, it is a technical term for subsidizing the cost for highcost patients. This makes a lot of sense because we know that the vast majority of Health Care Costs are concentrated among a tiny sliver of the enrollment population, so it makes sense to try to address that spread out those costs. Its a solution that has been proven to work in the real world in both alaska and maine. And those states are important because two senators sit on the health committee. Reinsurance has already worked to lower premiums significantly. And in the case of alaska, the Trump Administration actually put its seal of approval on reinsurance and agreed to provide funding for the state reinsurance program. So it doesnt have to be a partisan thing. The most recent example is in minnesota where republicans in the state legislature were the ones actually who spearheaded the plan and later signed by permission to address the house for one minute. Cat governor mark dayton. But it was spearheaded by republicans and has been put into place. It has just lowered premiums by 20 . So we know this works. Why wouldnt we do it . Senator alexander has raised the concern that it would be difficult politically for him to add money to the bill that hes working on. However, theres no reason he needs to add money to the bill. It could easily be paid for. Reinsurance acts to lower premiums and there bep by lower premium tax credits. 15 billion program on paper would end up costing only 4 billion and im confident that joe and i could come up with 4 billion to pay for that. [laughter] theres no reason not to put it in the bill. Aside from cost sharing reductions and reinsurance, if you want to go further, there is a need for an emergency policy for these people who might be stranded in virginia. People in bare counties and we have suggested the governors today in the