Alexander-Corker Bill Would Likely Reduce, Not Expand, Consumers’ Health Insurance Options
End Notes
[1] S. 761, The Health Care Options Act of 2017, as introduced by Senator Lamar Alexander (R-TN) and Senator Bob Corker (R-TN), March 29, 2017, https://www.congress.gov/bill/115th-congress/senate-bill/761/text?q=%7B%22search%22%3A%5B%22health+care+options%22%5D%7D&r=1.
[2] Non-ACA-compliant plans include “grandmothered” or “transitional” individual-market plans, which pre-date the ACA but which federal guidance has allowed insurers in some states to continue providing to current enrollees. (They currently can’t be sold to new individuals.) Non-ACA plans also include short-term plans or other types of limited coverage that can be sold to new customers. In addition to being exempt from most ACA benefit standards and consumer protections, non-ACA plans aren’t part of the ACA’s “single risk pool” or subject to its risk-adjustment program.
[3] Non-ACA-compliant plans that can be sold to new enrollees generally are exempt from the ACA’s medical-loss ratio requirement, under which individual-market plans must spend at least 80 percent of what they collect in premiums on medical claims and health care quality improvements, rather than profits and overhead. If an insurer fails to meet the threshold, it must pay back the difference to individuals. Being exempt from this ACA requirement gives these types of plans additional room to increase premiums and profits.
[4] Under current law, an important reason for consumers not to purchase certain non-ACA-compliant coverage (such as short-term plans) is that they would still have to pay the penalty for not having health insurance. But the Alexander-Corker bill would exempt everyone in a bare county from the individual mandate. This exemption, along with the availability of tax credits, would enable insurers to build a thriving, lucrative alternative to offering ACA-compliant coverage.
[5] The Alexander-Corker bill also allows tax credits to be used for “a not-for-profit membership organization organized under State law and authorized under State law to accept member contributions to fund health care benefits for members and their families.” This appears to allow tax credits in a bare county to be used for a variety of plans offered by the Tennessee Farm Bureau or similar associations that may exist in other states. Enrollment in Tennessee Farm Bureau plans has rapidly increased in recent years, with as many as 73,000 people enrolled in individual health plans that do not comply with ACA standards, according to one report. Like other non-ACA-compliant plans, Farm Bureau plans likely attract healthier-than-average enrollees, because insurers can exclude people with pre-existing health conditions or charge much higher premiums to those in poorer health. With about 230,000 people enrolled in Tennessee’s ACA marketplace, the diversion of those 73,000 people from the ACA risk pool already is likely driving up per-enrollee costs and premiums for marketplace plans, and appears to be one of the factors discouraging participation by insurers in the marketplace. Offering a tax credit to enroll in such plans would likely make them even more popular and further destabilize Tennessee’s ACA-compliant individual market. See Kevin Lucia and Sabrina Corlette, “What’s Going on in Tennessee? One Possible Reason for Affordable Care Act Challenges,” Georgetown University Health Policy Institute Center on Health Insurance Reforms, April 11, 2017, http://chirblog.org/whats-going-tennessee-one-possible-reason-affordable-care-act-challenges/.
[6] “Health Insurance Marketplaces 2017 Open Enrollment Period: January Enrollment Report,” Centers for Medicare & Medicaid Services, January 10, 2017, https://downloads.cms.gov/files/final-marketplace-mid-year-2017-enrollment-report-1-10-2017.pdf.
[7] Congressional Budget Office, “American Health Care Act, Budget Reconciliation Recommendations of the House Committees on Ways and Means and Energy and Commerce, March 9, 2017,” March 13, 2017, https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/americanhealthcareact.pdf.
[8] Sarah Lueck, “Commentary: How the Trump Administration Might Sabotage ACA Insurance Markets,” Center on Budget and Policy Priorities, April 4, 2017, https://www.cbpp.org/health/commentary-how-the-trump-administration-might-sabotage-aca-insurance-markets.
[9] Aviva Aron-Dine, “To Help Stabilize the Individual Health Insurance Market, Take ACA Repeal Off the Table,” Center on Budget and Policy Priorities, April 4, 2017, https://www.cbpp.org/research/health/to-help-stabilize-the-individual-health-insurance-market-take-aca-repeal-off-the.