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Kasich-Hickenlooper is No Cure, But Could Keep ACA Alive

Analysis  |  By Gregory A. Freeman  
   September 20, 2017

A healthcare reform proposal from two governors could improve the Affordable Care Act, but it won't cure what ails the insurance market. It might, however, be the best option for now.

All eyes are on theGraham-Cassidy proposal to dismantle the Affordable Care Act, but a healthcare fix proposed by two of the nation's highest-profile governors is also in the offing.

While the joint plan includes solid proposals it isn't enough to save the floundering Affordable Care Act, one analyst says. Still, the proposal might be enough to keep the ACA alive until a cure comes along.

Colorado Governor John Hickenlooper, a democrat, and Ohio Governor John Kasich, a republican, hope their proposal will get bipartisan support in Congress.

They propose keeping the ACA's individual mandate, which fines Americans who go without insurance the greater of 2.5% of income or $695, calling the mandate a "major factor in encouraging healthy young people to get coverage and avoiding a collapse in the marketplace."

Kasich and Hickenlooper are also calling for President Trump to continue funding the cost-sharing reduction (CSR) subsidies that reimburse insurers for covering certain out-of-pocket costs for low-income people. They also propose allowing states greater flexibility in "pursuing innovative strategies to preserve coverage" by seeking waivers from ACA rules.

Related: CSR Loss, Rising Employment May Hurt Health Plans

Some parts of the proposal are necessary to prop up the ACA while other improvements are contemplated, notes Michael Abrams, managing partner with Numerof & Associates, a strategy development and implementation consulting firm.

Real reform will require tackling the deeper issue of why healthcare is so expensive and reworking how providers are reimbursed for value and quality, he says.

"People are talking in terms of stabilizing the insurance market for the next two years. It's the 11th hour and we're just looking for ways to keep this thing alive a little longer."

"It's disappointing that we've come to this point and only now are we talking about meaningful changes. But better late than never, and maybe this will keep the thing alive long enough for Congress to get its act together and come up with something else."

Make it a 'Broadly Attractive' Product

Some components of the bill, such as the governors' call for more federal and state outreach efforts to encourage younger, healthier people to enroll, are no-brainers, he says.

"If you want to keep this individual market alive even for another year or two, you need to have more than just the sickest of the sick trying to join," Abrams says.

"It only makes sense to renew efforts to make this product more broadly attractive beyond those people who find this their last best hope."

Abrams also sees value in the proposal to fix the tax code so that families eligible for tax credits under the ACA can still obtain those tax credits when purchasing an employer-sponsored health plan.

The Kasich-Hickenlooper plan also calls for cracking down on those who game the system, through methods such as shortened grace periods for non-payment and better verification of special enrollment eligibility.

Help Needed for States

The governors also call for Congress to create a fund that states can use to create reinsurance programs or similar efforts to reduce premiums and limit losses for providing coverage. Abrams doubts that would significantly improve the insurance market.

"When the federal government steps in to take some of the risk off the plate of the insurance company, sure that lowers the premium, but it's just another way to spread the cost of premiums around to the taxpayer," he says.

"That's almost an open checkbook, an invitation to push the costs of health insurance plans off on the public without it being particularly visible. That won't encourage lower premiums."

The Kasich-Hickenlooper proposal calls for allowing states to pursue alternatives to the ACA's essential health benefits, as long as they don't reduce competitiveness or affordability of coverage, and Abrams expects that to gain support from some legislators.

"There is an appetite out there among the states to try innovative approaches and streamlining the state innovation waiver procedure is entirely appropriate," Abrams says. "The federal level has not been successful with coming up with a one-size-fits-all model."

Gregory A. Freeman is a contributing writer for HealthLeaders.


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