The Affordable Care Act — the much loved but also deeply reviled federal health-care law that very nearly saw its demise last year — turns eight today.
Looking back, former U.S. Health and Human Services Secretary Kathleen Sebelius said the country made a “major step” toward affordable, universal health care when President Barack Obama signed the bill into law eight years ago but that “we’re still not quite there.” But the efforts by Republicans in Congress last year to repeal and replace the law — and now the failure to stabilize it — will cause people to lose coverage and rates to skyrocket, she said.
Sebelius, who served as secretary from 2009 to 2014 under Obama, said Congress’s lack of action on funding so-called cost-sharing reduction payments will continue to harm those who don’t qualify for federal subsidies and have to pay full price for health insurance on the individual marketplace. Similarly, no reinsurance funding, which subsidizes insurance plans with the most pricey patients, means more instability in the marketplace, particularly for rural areas and smaller states, she said.
Cost-sharing reductions and reinsurance funds are part of an Affordable Care Act stabilization effort spearheaded by Republican Sen. Lamar Alexander of Tennessee and Democratic Sen. Susan Collins of Maine. Congress’s $1.3 trillion omnibus spending bill was considered a likely vehicle for stabilization, but the bill unveiled Wednesday and passed by the Congress on Thursday included no such measures.
Meanwhile, Nevada’s Silver State Health Insurance Exchange put out a request for proposals this week to develop a state-run platform that officials say will not save the state money but allow the exchange to know who is actually purchasing plans through the exchange and better target their outreach. Sebelius said such a proposal comes with a high price tag, but that having states running their exchanges was the original intent of the law.
“Certainly the framework of the law was designed so every state could, should, would have their own marketplace,” Sebelius said.
The Nevada Independent spoke with Sebelius by phone on Thursday afternoon to talk about the Affordable Care Act ahead of its eighth anniversary. This interview has been edited for clarity and length.
The Nevada Independent: To start, you oversaw the department when the Affordable Care Act was being implemented. From where you sit now, how does the health-care landscape look today compared to where it was when you started as secretary?
Sebelius: Well I think there’s no question that in the last eight years since the president signed this bill, some real progress has been made. Millions of people have affordable coverage both with states like Nevada and 31 others that expanded Medicaid — so the lowest income workers now have access to affordable health care — but also millions more. At the end of last enrollment, there were just under 10 million in the marketplaces around the country. We have some of the lowest uninsured rates we’ve ever seen in the country. Medical bankruptcies have dropped dramatically because now when people buy health insurance, they're actually getting health insurance, and it pays their bills and lowers their out of pocket costs. We’ve seen some progress in some of the areas around preventive care, access to contraception, access to screenings, cancer, diabetes, various things have gone way up. We've got more kids insured in this country than ever before. I would say we’ve made a major step toward affordable, available health care for everybody, universal care. We’re still not quite there.
Then, unfortunately over the last year or so since the Trump administration began, we’ve begun to take steps back into, I’d say, the old days where — in spite of the Republican Congress not being able to repeal this law that they promised to repeal and replace for years — they are now taking a variety of executive actions to try and sabotage and undercut the law. I think the unfortunate result of that will be people will lose coverage and rates will skyrocket.
In the coming weeks, the Labor Department is expected to release a final rule that will expand the use of association health plans. Another rule would extend the length of time short-term health plans can be used. Our insurance commissioner expressed concern last year about the impact of plans on “already fragile markets,” such as Nevada’s. How much more instability will these rule changes inject into the marketplace?
In one of my former lives, I was for eight years the insurance commissioner of Kansas, and I can tell you that we constantly saw in our consumer protection division battles with insurance companies where people thought they had health insurance only to find out their so-called policy really didn’t cover the cost of doing much of anything, leaving them with thousands of dollars in medical bills and often causing medical bankruptcy or skipping treatments or a variety of things. This is enormously concerning. Not only will, I think, potentially younger, healthier people opt out of comprehensive coverage and think they have some kind of back-up plan only to find out, you know, if they tear their ACL on a ski slope or are involved in a car accident that they really have something that doesn’t cover anything. But if you begin once again to segment the market — if you take out people who think they're not going to get sick or don’t have to have ongoing medications or ongoing treatment — and put them in a different market, what you do is very quickly raise the rates for those people who need the comprehensive coverage and don't drop out. It has two impacts. You put the people who are in the so-called junk policies in pretty dangerous situations if they have any kind of health crisis or diagnosis or accident, because what they have is a piece of paper that will not pay benefits that they need. On the other hand, you can dramatically raise rates for those people who are already consumers of health care and some of them will eventually have to drop their coverage just because they won't be able to afford it.
But we're looking at double-digit increases both with the junk policies and I would say with the elimination of the individual mandate, you really have started to shoot big holes. The whole idea of a market and a pool is some people are healthy some people are sick and they don’t all use it at the same time. That’s really the balance that you need in insurance. If you take out anyone who is not currently ill and put them someplace else or just let them drop coverage, then you are really left with a very expensive pool of people and rates will skyrocket.
During the repeal-and-replace conversations last year, there were concerns about the administration’s decision to end cost-sharing reduction payments, which helped make insurance affordable for lower-income Americans. But now, others are worried that restoring the payments would actually make health insurance more expensive for some people. The funding for the cost-sharing reduction payments wasn’t included in the omnibus bill passed by Congress on Thursday, but what kind of an impact do you think funding them would have?
Right now, first of all, I don’t think the CSRs are going to be funded. What happened was the way the law was written, the subsidies increased if the premium price increased. That really helped about 80 percent of the individuals in the market. Now, the people without subsidies are really in terrible shape because their premiums keep going up and they’re paying 100 percent out of pocket, and they are in very dire situations. Even though the Republican Congress says they care about those folks, they have done absolutely nothing but make their policies much more expensive.
But if you look at folks who are in the subsidized group, people under 400 percent of poverty, even without the cost-sharing reductions, which really covered out of pocket costs, they may be better off with the way that insurance companies redesigned the plans, because they loaded a lot of the increases into the level of plan that triggers the subsidy percentage, and many people ended up with more generous subsidies and could shop then for a different plan. On balance, I think the people who are subsidized, who are below 400 percent of poverty and don’t have affordable coverage in their workplace, actually have been kind of held harmless by what was attempted as a real part of the destruction of the Affordable Care Act. It didn’t work so well.
But the people who are not in a subsidy market — who are over 400 percent, have been the ones complaining loudly all along that their premiums are too expensive, they don’t have availability of any subsidies, they don’t want this kind of comprehensive coverage — and now these activities of the Republican Congress will make them even more expensive. I really have no idea what the majority in Congress is trying to do, but what they’re doing is causing a lot of harm to people who are trying to keep their own health coverage in place and don't qualify for the subsidies.
Another part of the Affordable Care Act stabilization proposal that wasn’t included in the omnibus bill was funding for reinsurance programs, which effectively subsidize the cost of covering expensive patients for insurers. How critical are those funds to ensuring insurance companies continue to participate in the individual market?
I don't think there’s any question in areas of the country — and there are a number of them — where the markets are not robust, there are not a lot of companies participating, reinsurance funds would help dramatically to encourage companies to come in. The combination of reinsurance which was in the original bill and the Republicans refused to fund and some risk-sharing subsidies so that if you as an insurance company get a larger than average pool of sicker customers you have a way to balance that for the first couple of years, both of those features were part of the original law. They’re both part of classic health insurance principles that you wait for a few years, you let the market stabilize, you have some ability to do some rebalancing along the way and — because this law was a partisan battle from day one — the Republican Congress took away funding for the risk corridors and reinsurance pools right away. Everyone looking at the market several years in said, "Oh, well a reinsurance pool would really be helpful." Yep, that's why it was in the law. But not funding that, again, helps to further erode the areas where there isn’t enough competition and therefore prices are higher.
One of the things we know about health insurance after years and years and years is the best way to lower health insurance premiums is to have competition, is have consumer choice, let private companies compete against one another for price and service and sure enough consumers will be the beneficiaries. They will get better services and they'll get better prices. So the reinsurance pool is particularly important in areas of the country — and often they are rural areas or smaller states where there is just not enough companies participating — and you could actually encourage more companies to come in my assuring them they wouldn’t necessarily lose money and not having a reinsurance pool will again leave the markets pretty unstable.
Here in Nevada we had 14 rural counties last year that weren't going to have any carrier offering insurance on the individual market until Centene subsidiary SilverSummit stepped in. With the individual mandate gone next year and an already shaky market, what do you think we’re going to see insurance companies do?
Again, I think it’s a very dedicated sabotage effort because ironically, by the end of 2016, what you had at that point were three years of good enrollment data, companies were able to adjust their rates, they knew what their pool looked like, they were beginning to have stable markets, and what we saw actually were additional companies coming into the market and participating, people who were reluctant as the initial rollout began were then interested.
What’s happened since President Trump was elected, the new administration has come to town, not only were they unsuccessful in their last and comprehensive repeal and replace series of efforts, but then they’ve taken, failing that, rather than saying, "Okay, this is the law, we weren’t able to replace it, let's make sure it works for everybody, let's lower rates, let's get the companies to play," they’ve now used administrative authority to go after pieces of the law — get rid of the individual mandate, make it very uncertain what the rules will be about rates and subsidies going forward, cancel the cost-sharing subsidies. I think it’s a real question.
There are some companies now making money in those markets and have figured out ways to sell insurance. But my guess is they’re not really eager to expand because there is such a level of uncertainty around what is likely to happen next. Lots of insurance executives who I’ve worked with for years have said to me very similar things. "Just tell us what the rules are. Leave them in place, and then we can sell products in that market. But if we don't know what the rules are, or if the rules change on a daily basis, then we’re much less likely to take a financial risk and go into a marketplace."
I think the situation has been created that is very, very unstable. What you have is still millions of people who desperately need insurance but every year with every activity their rates are going to go up, they're going to have fewer choices. I don’t know where this administration tends to end up, but I think we’ve seen the popularity of the Affordable Care Act in fact increase over this period of time and voters seem to be very determined that they send a message to their members of Congress that they’d like this law fixed and not replaced.
Nevada’s state-based marketplace has been using healthcare.gov for a few years now. They’re now in the process of soliciting bids for a state-run platform, which they say will save money and allow them to better target their outreach. How do you view such a proposal amid some of the tumult that still exists?
The law was designed actually in the hopes that every state would run their own marketplace, because insurance is still regulated at a state level. The insurance commissioner in every state really makes the decisions. The Nevada market looks different than the California market or the Arizona market or the Kansas market. So I’m a big believer that state control, state-decision making is essentially the law of the land. What I think now is problematic for a lot of states is that they did not build the infrastructure to run the marketplace in the first place. The feds, we stepped in and built an infrastructure that everybody can use. Taking back the framework into a state is not harmful to anybody but it is going to cost the state a bunch of money to put together the technology that already exists.
The first several years that the law was passed and not fully implemented, states had an opportunity to draw down almost 100 percent of the cost of putting their own marketplace together. That is no longer available, so this is just going to be an additional expenditure. I think it’s up to the Legislature, the governor, the citizens of Nevada to decide if that extra expenditure — what's the value added and is it worth the money? — but certainly the framework of the law was designed so every state could, should, would have their own marketplace.