Too little, too late
In their latest amendment to the American Health Care Act, House Republicans have created something called an “invisible risk sharing program.” The amendment is befuddling. The invisible program is a minor tweak that won’t improve the AHCA’s dismal coverage numbers. It’s not even really a program. If there’s any prospect at all of salvaging Republican-style repeal and replace, this newest amendment isn’t it.
The statutory text is spare. It appropriates $15 billion over nine years—or $1.67 billion each year—and tells the Secretary of Health and Human Services to use the money “to provide payments to health insurers with respect to claims for eligible individuals for the purpose of lowering premiums for health insurance coverage offered in the individual market.” The Secretary can supplement that funding with any money from the AHCA’s high-risk pools that states don’t find a way to use.
Beyond that, however, the statute tells us next to nothing about how the program is supposed to work. Hilariously, a section of the statute titled “Details of Program” contains no details. It says, for example, that the program should include “[a] definition for eligible individuals,” but leaves the defining up to HHS. So too with “[t]he identification of health conditions” that, if an eligible person has them, would qualify her insurer for extra payments.
Oh, and the program is supposed to be in place in time for the 2018 plan year.
Read generously, this newest amendment tells HHS to create a kind of reinsurance program for insurers who enroll high-cost individuals. The statute doesn’t use the word “reinsurance,” maybe because Republicans have spent years railing against the risk corridor and reinsurance programs as insurer bailouts. But if those were bailouts, then this is too.
Judging from the title, the program is supposed to look something like the proposal pioneered by Maine and described in this Health Affairs post. But Republicans are delusional to think that the Secretary can establish and implement a complex reinsurance-style program in time for the 2018 plan year. Insurers that want to participate on the exchanges have to submit bids to HHS by June 21. Even if the AHCA passed tomorrow—which it won’t—there’s no chance that Secretary Price could ramp it up in time.
Nor does the amendment explain how the new program is supposed to interact with the ACA’s risk adjustment program, which the AHCA leaves in place. The point of risk adjustment is to equalize risk across insurers: those with healthier-than-average enrollees have to pay into a central kitty, and those with sicker-than-average enrollees get some of that money. But if insurers get “invisible” risk sharing money for high-cost individuals, should they get less in risk adjustment money? The amendment doesn’t say.
In any event, the money is too insubstantial to make much of a difference. Sure, $1.67 billion per year sounds like a lot of money. But $1.67 billion is chump change compared to the subsidy reductions that are contemplated under the AHCA. It’s like using a band-aid to treat a gunshot wound.