What States Need to Know About the Alexander-Murray Insurance Stabilization Bill

Last week, Sens. Lamar Alexander (TN) and Patty Murray (WA) released a bipartisan bill designed to bring short-term stability to the health insurance markets. The bill is co-sponsored by 22 senators — 11 Democrats, 11 Republicans, and one independent.

While there are indications that Alexander and Murray secured the 60 votes needed for passage in the Senate, it faces an uncertain fate in the House and with the President. It is also possible that the bill could get attached to another legislative vehicle, such as funding for the Children’s Health Insurance Program (CHIP) that Congress is currently debating. Even if sufficient political support is mustered, it is unlikely that the bipartisan bill would be enacted before December.

The bill proposes several changes that could affect health insurance markets beginning in 2018, including an appropriation for the cost-sharing reduction (CSR) program, changes to the 1332 waiver program, and funding that could help states conduct enrollment outreach. Below is a summary of provisions of great interest to states.

Appropriates CSR payments for 2017, 2018, and 2019. The bill provides a short-term appropriation for the CSR program. Payments covering the remainder of 2017 would be effective upon passage of the bill, meaning that insurers would still bear the full cost of CSR payments from October 2017 through the date of this bill’s passage. (Read more: The Administration Ends CSR Subsidy Payments—What Comes Next).

States and insurers have already locked in their 2018 insurance rates. Most states “loaded” or increased rates on the assumption that CSR funding would end, which led to significant premium increases in several states. However, a proportionate increase in advanced premium tax credits (APTC), which are calculated based on local premium rates, will offset those increases for qualifying consumers.

As rates have already been set, the bipartisan bill provides flexibility for states to address availability of the CSR funds with their insurers in 2018.
One option allows states to direct their insurers to reject the CSR payments. This option allows states whose insurers “loaded” rates to maintain the loaded rates planned for 2018, rather than readjusting rates to take into account the reinstated CSR payments.
The second option requires state insurance departments to develop a rebate strategy to avoid any “double-dipping” by insurers who raised their rates to account for CSR losses, but then ultimately received CSR payments.
States have broad discretion over the design of these strategies to accommodate the appropriated CSR funds, and these strategies must be developed within 60 days of enactment of the bill. The rebate strategy must be incorporated into calculations relevant to APTC, the medical loss ratio—which mandates that insures spend 80 percent of premium dollars on medical services—and other relevant calculations that affect the price of coverage sold on the health insurance marketplaces.

Changes to the 1332 waiver program. The bill proposes a series of mostly administrative changes to the 1332 program, including changes intended to expedite and ease the process for states to apply for and achieve approval of these waivers. This bill would:

  • Expedite the timeline under which the US Department of Health and Human Services (HHS) must issue waiver approvals;
  • Establish an expedited waiver process for waivers that are similar to those that have been previously approved for other states and those requested to address “emergency” situations, such as escalating premium increases or the existence of bare counties;
  • Allow states to apply for waivers without state legislation if the state’s Governor submits a certification for the waiver; • Lengthen the term of waivers to six years;
  • Enable states to calculate budget neutrality (ensuring it does not cost more than is currently budgeted) based on the term of the waiver, instead of year-by-year;
  • Enable states to include federal funds from other programs when making budget neutrality calculations (e.g., Medicaid); and
  • Require HHS to issue model waivers as examples for states.

The bill also proposes a change to the comparability standard required under current law. Instead of being “at least as affordable,” the bill stipulates that any coverage offered under a state’s 1332 waiver must be of “comparable affordability” for low-income individuals, individuals with serious health needs, and other vulnerable populations. This could provide states with additional latitude to make changes to cost-sharing and benefit design under a 1332 waiver. The bill nullifies any previously existing regulation relevant to 1332.

Expansion of catastrophic (“copper”) plans. The bill eliminates restrictions in place under the Affordable Care Act that limited availability of copper plans to individuals under age 30 or those who did not otherwise have access to affordable coverage. It also eliminates the requirement that these plans cover at least three primary care visits per year per enrollee and adds a requirement that copper plan enrollees be included as part of the single individual market risk pool. (Currently, they can be separated from the risk pool). The changes may broaden access to lower-cost, lower-value plans to consumers, while also minimizing any negative repercussions that would have resulted if these consumers were able to exit the risk pool.

Funding for outreach and enrollment in 2018 and 2019. The bill dedicates $105.8 million from what is collected in insurer user fees for outreach and enrollment activities for plan years 2018 and 2019. Funding is earmarked for activities relevant to the Federally-Facilitated Marketplace (FFM, HealthCare.gov) and may be given directly to states through contracts.

Public reporting of marketplace data. This requires HHS, for plan years 2018 and 2019, to issue biweekly public reports during open enrollment in the FFM and the Federally Facilitated Small Business Health Options Program (FF-SHOP). Each report shall include a summary and state-by-state information (as available) on a series of defined metrics to monitor utilization and enrollment in the FFM and FF-SHOP. Within three months of the end of open enrollment, HHS must publish a report about enrollment data, information on Navigator performance, and advertising and outreach performance.

Regulation pertaining to health insurance compacts. This requires HHS to issue regulations related to the establishment of multi-state insurance compacts, which were originally proposed under the ACA to allow the sale of insurance across state lines.