Opinion

Let’s Keep the ACA Market Stable — the Same Way Republicans Have in the Past

Compromise is hard. It’s harder in the United States Senate, especially when you are faced with people trying to constantly undermine your efforts.

Last month, Sens. Alexander (R-Tenn.) and Patty Murray (D-Wash.) were diligently working on legislation that would stabilize parts of the Affordable Care Act’s health exchanges.

Those talks broke down, partly because of a last-ditch attempt to pass the Graham-Cassidy bill. With that fiasco behind us, it’s time to return to the negotiating table.

For negotiations to succeed this time around, we also must dispense with the arguments that seek to undermine the Alexander-Murray stabilization package – namely that it would prop up the ACA or would amount to a bailout for insurers.

These arguments make little sense in light of public policy positions Republicans have traditionally supported.

It is true, the bipartisan efforts in Congress are focused on crafting a collection of bite-size fixes that, in part, would have funded what are known as cost-sharing reduction payments.

These payments are woven into the fabric that help make the ACA work. Without the payments, costs go up for everyone: the government, insurers and consumers.

It is worth pointing out that the payments are only controversial in conservative circles.

A fix is only needed because of Republican-led efforts to sow doubt about whether the payments would continue as Congress intended when it passed the ACA.

Since coming into office, the Trump administration has kept insurers in suspense; making decisions about whether they will continue to fund the payments on a month-to-month basis.

This has led health plan executives to pull out of some markets or raise premiums — their rationale being that they could face higher costs should the Trump administration decide one day, willy-nilly, to halt the payments.

Alas, if we only had someone in the Oval Office who came from the business world and understood its penchant for certainty.

Enter the conversations on Capitol Hill. Alexander and Murray are once again discussing a package that would fund these payments for a set number of years.

A longer funding period means more certainty for insurers. More certainty results in more insurers selling plans, which fuels a competitive environment that ultimately benefits consumers.

But there are those who continue to argue against the payments, suggesting they are government handouts to health insurers.

These arguments ignore the role the federal government has typically played in stabilizing and incentivizing other health insurance markets.

Consider the system where most Americans get their health insurance – their employer. According to the nonpartisan Congressional Budget Office, approximately 156 million people will obtain healthcare coverage through their workplace this year.

Employers do not offer this coverage out of the kindness of their heart. There are a number of reasons why it makes good business sense to offer workers health benefits.

One reason is finding talented people to employ and retaining them. But another reason is the massive tax break employers receive from the federal government to incentivize businesses to provide workers with health coverage.

Payments made by a business for workers’ health insurance coverage are a form of compensation, but unlike cash compensation, those payments are excluded from income and payroll taxes.

In other words, thanks to this tax exclusion, it’s cheaper for a company to spend $1 on an employee’s health benefits than it is to pay that employee a dollar in cash or wages.

How much might this sort of incentive or subsidy to businesses cost the federal government?

According to Congress’ own Joint Committee on Taxation, subsidies for work-related coverage will total $287 billion in 2017 and cost $3.9 trillion between 2018 and 2027. By comparison, the amount needed for cost-sharing reduction payments next year is an estimated $7 billion to $10 billion.

The subsidy to employers is not the only example. The government also provides payments to private health insurance plans participating in Medicare, a policy Republicans have typically supported.

Under Medicare Advantage – a program that provides private healthcare coverage to Medicare beneficiaries – the government pays insurance plans based on the demographics and health status of the people enrolled in that plan.

This risk adjustment payment is meant to help protect health plans from the costs associated with providing health benefits to an older and potentially sicker population.

This sort of subsidy to health plans also exists under the Republican-designed Medicare Part D program, which provides prescription drug coverage to Medicare beneficiaries.

The truth is the federal government has long played a role in keeping health insurance markets stable through the power of its purse. And it is also true that Republican’s haven’t always balked at this kind of role.

The result of these government programs – if done right – are more durable and competitive markets that provide quality and affordable healthcare coverage to consumers.

The notion that funding the cost-reduction payments are some sort of bailout for insurance companies defies not only the historical role that the federal government has played in health insurance markets, but also the very programs that Republicans themselves have put in place.

These arguments are nothing more than another attempt to undermine the Affordable Care Act and deny millions of Americans the benefits of their own tax dollars to access healthcare coverage; the same way millions of other Americans have benefited from the federal government’s use of tax dollars to support employer health coverage or public programs such as Medicare.

Those in Congress trying to craft a stabilization package should pay no mind to these arguments, which were designed only to derail their bipartisan efforts.


Bobby Clark is co-founder of Concordis: Strategy and Analytics and previously served as a senior health policy adviser for the House of Representatives and the Department of Health and Human Services during the Obama administration.

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