Market. This is an hour and 45 minutes. Hello . Ok. Good morning, everyone. With the American Enterprise institute. I want to welcome everyone in our Conference Room and everyone watching through electronic means to a Conference Today addressing the general and specific questions, also of stabilizing the Health Insurance market on the Affordable Care act. Proposal made a by your group of eight governors who will be following the panel. Why we have the governor speaking after us. The reason is travel considerations. Fortunately, although this panel is not obligate it to can find , fortunately the governors to put out a letter last week that is easy to summarize. I will start by summarizing their points so everyone has a basic rounding on what the governors are talking about grounding on what the governors are talking about and what we will be talking about. Identify three categories of actions that could be taken. Actions toederal and than the markets other types of reforms that cost and whatge, they call the federal state is morehip which aggressive than a partnership i think. Having been an employee, we have dealt with state waivers and partnership wasnt always the word that came to mind when we negotiated with the state. Here other major proposals on stabilizing the individual or nongroup Insurance Markets. The market that is subsidized to the Affordable Care act through the exchange process. The major proposals are to come of the one that everyone says, fund cautionary reduction payments, trade a temporary stability fund, offer choices in underserved counties. A wayeans to come up with where there may be one or no health plan available to them, in rural counties. They also say they would keep the individual mandates until Something Better can down the road. Other proposals that are they talk about courage and more enrollments in the exchange plans. Everybody always talks about enrolling younger, healthier people. They dont really have a proposal for that. You have to make insurance more affordable, but they dont define that either. Promote appropriate enrollment. Ideas, a serious set of because it is something that the Insurance Companies dealing with the exchanges have been grappling with for several years now, and that has to do with the grace periods. People dont have premiums potentially for threemonth and other rules that have encourage some people to go in and out of insurance, stand continuously covered and paying premiums, which is the basis for insurance. If you can go in when you need it and come out when you dont, that is not insurance. That is a subsidy. Pools,tabilizing risk reducing costs through coverage , which i think theyre considering that states would do to modify some of the insurance rules. Finally, innovation waivers. Some people have argued that congress should require that hhs move quicker in improving waivers. I think that is part of this. That is basically the proposal. I think its interesting. A few quick remarks, then introduced the panel and we will take it from there. From anteresting that republican standpoint most of this year, the phrase was repeal and replace. Now, the phrase even among republicans is stabilize. What does stabilize me . Stabilize mean . It is correcting obamacare. Inot of the problems we see marketgroup or exchange is the direct consequence of the design of the Affordable Care act. Mistakes were made in drafting ll. T built that bi those mistakes have been retained. Even in situations where mistakes were finally realized, the Previous Administration fearing of political fallout, they chose not to go to congress to make adjustments that were needed and needed now and will be needed in the future. Furthermore, instability, we saw plans dropping out before this year. They were typically bigname plans in markets that they didnt previously operate in. Employerse big incialize in insurance sold large employers. If you are not in the individual market, you have to create a new set of financial and business relationships with health care providers, hospitals, so on. You have to figure out how to market. This is an entirely different situation. A lot of these plans realized this wasnt going to work for them, and they dropped out of. Any of the markets that meant losing money. This happened before. This is not an invention of republicans and wasnt anything that democrats wanted. Ais was a failure to design very complicated policy perfectly the first time. That is not a criticism. That is reality. It is difficult to get things right the first time. The feel your to accept the defects and deal with it in a way that might not have been leavesally advantageous us with something of a mess. We will address many of these issues. Im sure i have annoyed many of my colleagues here to my right. I am sure that was accidental. [laughter] i have my cheat sheet. Let me make sure i had everybody properly. Let me introduce the panel. I will introduce people in the order in which they will speak , she, we have cori uccello has an actuary and Senior Health fellow at the American Academy of actuaries. We have topher spiro. Finally, avik roy. With that, try to keep it to eight minutes, but if you go longer i will be clearing my throat. [laughter] good morning, everyone. I am going to step back a bit and set the stage. Few things,about a first, what is necessary to have a stable, sustainable individual market, then we will look at how well the current individual market is stacking up according to those criteria. Finally, i will talk about actions that can be taken to stabilize and improve the marketplace. What is necessary in order to have a stable, sustainable individual market . We need and roman is high enough to reduce random fluctuations we need enrollment is high enough to reduce random fluctuations and a balanced risk pool. We need to have enough Healthy People in the pool over which the cost of the sick people can be spread. Second, we need a stable regulatory environment. That means not only having a level Playing Field in which all of the insurers who were competing to enroll the same people operate under the same rules, we also need rules that are consistent over time and are known in advance. Think we have fallen short on a couple of those. Third, we need enough participating insurers and plan erings so there is ensure there is competition and choice. The majority of premium dollars go towards paying medical plans. We need to have slow spending growth and high quality of care. Im not going to talk more about that, that i think i am encouraged to see that is getting more attention. It is noted in the governors plan or proposal. The last two days, that issue has come up. Doing the current market according to those criteria . Enrollment in plans has been lower than expected, and the risk pool has been sicker than expected. Premiums being too low relative to claims. That led to insurer losses and, ultimately, to withdrawals from the market. Recent find suggest that the isket and insurer experience stabilizing and improving in some cases. Nevertheless, the market remains fragile. The big challenge is uncertainty. There are two sources of that. First, whether or not the cost sharing reduction payments will 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 more hesitant to enter or continue participating in the market. What are the challenges of those are the challenges. What can we do about them . The priority is to pay the cs ours, the cost sharing reduction payments, the reimbursements. Not paying them would cause premiums to go up on every 20 or more. Up 20 or more. The spending the government makes toward those amy m subsidies go up those premium subsidies would go up. Cbo estimates the increase in federal premium subsidies, the federal spending would go up if they are not paid, because the government would be paying more toward those increases in premium subsidies than they would be saving by not paying those cs ours. Srs. Hose c ,here seems to be consensus fairly broad consensus [laughter] ms. Uccello lets try to be optimistic. There is a bipartisan, i am going to call it consensus, lets make it so, that these need to be paid. The second thing but especially, again, with the preexisting conditions its important to encourage Healthy People to enroll in coverage. Mandate helps to do that. The w some alternatives to mandate are being explored, such continuing coverage. Concerns are that its not clear be difficult for continuous coverage requirements to do enough to encourage Healthy People to enroll sooner rather than later, while at the ame time continuing to offer the preexisting protections. Autoenrollment is another idea hat is getting attention and couraging othergrs, in particula 401k plans. More difficult to incorporate auto enrollment to reasons, t for several one of which i think that the logistical hurdles that would overcome would be difficult to do. Only do we need to at this the mandate, but it also needs to be publicized. The amongot of confusion consumers about if that mandate effect. Publicizing, getting the word out is an important part of the structure. And that leads me to the next can be taken and enrollmentmprovement outreach ed assistance. Publicizing, getting more consumers about their coverage options. The potential eligibility for subsidies. Helping them walk through the enrollment process itself. Things help to encourage enrollment and works ind in hand with the mandate terms of getting healthier people to enroll sooner rather later. Find a ple are going to way to get coverage. Its the Healthy People that we pool. O be sure get in the one thing to keep in mind, again, the monday eight and the they work as well as the premium subsidies, Work Together to encourage healthy enroll. O if you weaken one of those, you other. E the need for the so if you weaken the mandate, it an even more robust enrollment outreach and vice versa. Ideally, you would have both. The next thing, as the governors included, provide external instance, funding, for through a reInsurance Plan. Offset some of the enrollees. Ghcost and premiums would be lower. Nd that could entice more people to enroll. Federal government were to fund such a reinsurance fund, it would partly pay for itself. The oney going in to play reinsurance, again, would lower the premium subsidies, so lower outlay that the government would have to make for the premium subsidies. Finally, its important not only to do things that would the market. Tabilize its important to avoid things that would undermine or the market. So doing things like allowing the purchase of coverage across expanding the ability of Association Health plans, allowing more people to not complaint coverage like shortterm duration plans. Would those things the market. Who is left in the complaint plan . Sicker people. Happens . Premiums go up. And it would be more difficult affordable coverage. There and eave it turn it over. Incredible. Youre on time. We dont usually have that here. [laughter] that i would n make for people that dont spend washington, me in what you said is completely correct, but people that donted to this, theyre hearing if you spend money, it save money. Sounds like the perfect government policy. Just to understand what premium nism is, the subsidies dollar for dollar with premium increases. Think you d i dont explained this, but a quick thing here, but if stayed on time. The costsharing reduction is ents are not made, which billion, then inevitably the premiums go up. Subsidies. The so the people subsidizing will not see an increase in the pay. Iums they there are two losers in this. Here are people that are subsidized and they will drop out probably, more likely than not. And the other losers are always but lets forget about that. Want to thank t joe and a. E. I. For partnering center for American Progress on this important discussion. Of ink its an example people, organizations, working polarized a environment with different having an adult conversation. Can we call it that . Were over 21. Civil conversation. Governors pplaud hickenlooper. Theyve put politics aside. He biggest problem is policy uncertainty. And u look at the data evidence, whats been happening is that the market had been tabilizing, if you look at medical loss ratios and margins on the ers, they were upswing and that dynamic may not quickly happening as as we would like. So we would like to accelerate process, but then trump came along and started to markets. The and um not going to go through all the ways for which he has that, but thats the basic address. Were trying to kasichhickenlooper plan is a major step forward, because it problem like a aser beam without tax cuts for the rich. S the American Medical Association has pleaded with congress, first, do no harm. O theyre doing no harm and trying to solve the problem. Their plan includes the two pillars of any stabilization policy. Umber one, guaranteeing the costsharing reductions. And number two, reinsurance. Take those in turn. On costsharing reductions, nonpartisan expert who has cbo, k at this, including has said is that it would spike premiums by 20 the important thing to realize is that its not just eliminating the payments, the of doing so is. Aving an impact this week, Optima Health from ced its withdrawing the ma market in virginia, citing the uncertainty with costsharing. Insured have no plan to enroll in. Thats a big problem. That also this week said if ould pull out of maine the costsharing reductions are for 2018. Teed fully lic, i think, understands whats going on here. Theyve seen the threats from president trump. That republicans are the party in power. Republicans will be blamed if they dont govern here and to fix this problem. Its a technical of subsidizing the costs of highcost patients. A lot of sense because we know that the vast majority healthcare costs are concentrated with a sliver of population. Ent so it makes sense to try to that, spread out the costs. Its a solution thats been work in the real world maine and ska and those states are important because two senators sit on the committee. Reinsurance has already worked lower premiums significantly. Case of alaska, the Trump Administration put its seal of approval on reinsurance and provide funding for the states reinsurance program. A it doesnt have to be partisan thing. Example is in minnesota, where republicans in legislature were the nes that spearheaded the plan that was later signed by governor mark dayton, but it was spearheaded by just been and its put into place. Ts just lowered premiums by 20 . Works. Now this why wouldnt we do it . Alexander has raised a concern that it would be politically for him to add money to the bill hes working on. However, theres no reason why t needs to add money to the bill. It could easily be paid for. To lower e acts premiums and, there by, lower tax credits. Paper billion program on would actually end up costing billion and im confident that we could come up pay for that. N to so theres no reason why [laughter] unfortunately, were not congress. Not theres no reason to put it in the bill. Aside from costsharing reinsurance, if you want to go further, there is for an emergency policy for these people who virginia, randed in , its been suggested, into the to buy federal health program. Policy that of would work to fill immediate gaps until the other policies to improve e underlying market dynamics. In the bipartisan earings this week, the governors and Insurance Commissioners have consensus policies, the basic pillars that i mentioned. We know they work. C. B. O. Would say they work. Expertsthat nonpartisan say they work. Theres no reason not to do them. Term, this is our immediate focus, to bring the inty and stability to markets. This plan, its not what i would see over the long term. Why we es no reason should let that prevent us from provide rward to immediate relief to patients who in fear ally living right now. So thats got to be our focus. Ate im willing to put aside what i think should be done over the that erm plan and i hope republicans and conservatives are willing to do the same. Over the next 22 days, the between two oice paths. One path is what is perhaps the severe repeal plan that which would cut 2026. Funding by 1 3 by 2027. Zero in the other plan is this approach. And i really think its the right way to go. Republicans would avoid the political fallout of insurers immediately withdrawing markets. Number two, its what the American People want. After poll, t poll vast majorities want republicans democrats to Work Together. Half of the Trump Supporters agree with this. Number three, if both arties are invested in a soluti solution, they both have work. Ive to make it imagine how healthy this would be. For uld be healthy democracy. It would be healthy for the senate. Be healthy for public discourse. Using e could stop healthcare as a political weapon. Would, of course, be healthy for the markets and for American People. Thank you. Preventive pporting healthcare then, right . Sure. Okay. Of all, let me thank today. Having me here its particularly a pleasure to my new think e tank was inspired in large part brooks, the president of a. E. I. , would has called on all think tank scholars to focus every day on how we can make a difference for people who are poor, lower income, and the economy we find ourselves in today. Of thats a Central Mission the foundation for re search on equ equal opportunity. Every scholar we hire and white paper we publish has to Center Policies that can move the needle for people with below net worth. Mes or and healthcare is a natural us, because there are few issues where the economic and stagnation is most by than or impacted healthcare. The biggest of problems . There are two big problems with healthcare. The first is that for tens of millions of americans, they can insurance or lth costly theyre str