Some states could keep their federally funded insurance exchange with consumer protections intact under a proposal unveiled Monday by two Republican U.S. senators.
Sen. Bill Cassidy (R-La.) and Sen. Susan Collins (R-Maine) said their proposed legislation would allow states that embraced the Affordable Care Act to keep operating under many of the current federal rules.
Another option is for states to pursue a less-regulated alternative to Obamacare under the Patient Freedom Act. Or they could reject federal dollars completely in favor of a new state solution for health coverage.
“We give states the option,” Sen. Cassidy said at press conference Jan. 23.
Some health law supporters say the Cassidy-Collins proposal, one of several in the GOP-controlled Congress, could represent a lifeline for states such as California that have invested heavily in expanding coverage under the ACA.
But many Democrats at the state and national level criticized the plan as potentially harmful to millions of Americans who rely on the health law because it does not promise sufficient funding and consumer protections.
“It provides a somewhat illusory option to stay in the ACA without the guarantee of federal assistance necessary to allow states to maintain the level of coverage they are currently providing,” California Insurance Commissioner Dave Jones, an elected Democrat, said in an interview.
California fully implemented the health law by expanding Medicaid coverage to millions of low-income people and creating its own insurance exchange, which ultimately covered 1.3 million enrollees. Supporters have held the state up as proof that the health law can work as intended – and as a counterpoint to Republican contentions that Obamacare is collapsing nationally.
Sen. Cassidy said his legislation promotes the Republican doctrine of states’ rights while avoiding the one-size-fits-all approach from Washington.
Sen. Collins echoed that sentiment, saying she favors letting states that had success with the health law maintain the status quo. She described it as “reimplementation of the ACA” in those states.
“If a state chooses to remain covered by the ACA, exchange policies will continue to be eligible for cost-sharing subsidies and advance premium tax credits,” she said in a Senate floor speech Jan. 23. “The insurance market will still be subject to ACA requirements, and the individual mandate and employer mandate will also remain in place in that state.”
Sen. Cassidy and Sen. Collins acknowledged that details of their bill haven’t been worked out, nor is it clear how it will mesh with other proposals. Competing plans in Congress don’t envision these state options, and it’s unclear what approach President Donald Trump and his nascent administration will take in crafting a replacement plan.
Still, some industry experts and analysts say the Cassidy-Collins proposal is intriguing.
“The advantage to a state like California is we could protect what we have accomplished already,” said Howard Kahn, former chief executive of L.A. Care Health Plan, an insurer on the Covered California exchange. The large managed care plan serves patients in Medi-Cal, the state’s Medicaid program.
“Cassidy’s proposal could work for California better than other alternatives in the short term. The question is whether they maintain federal funding for the longer term,” Mr. Kahn said. “My feeling is you do have to engage with the rational Republicans who are trying to find something that doesn’t tear it all apart.”
Federal funding is a key issue for states. In a summary of the bill posted by Sen. Collins, it said states choosing to retain Obamacare or pick the Republican alternative could receive “funding equal to 95% of federal premium tax credits and cost-sharing subsidies, as well as the federal match for Medicaid expansion.”
Dylan H. Roby, of the department of health services administration at the University of Maryland School of Public Health, College Park, said “California would still have to absorb a 5% cut, at least, in the premium tax credits and cost-sharing subsidies.”
Republicans will need 60 votes in the U.S. Senate to pass a full replacement for the ACA. Sen. Cassidy said his compromise approach is designed to win over some Democrats and reach that 60-vote majority.
In her speech on the Senate floor, Sen. Collins said children could still stay on their parents’ health plans until they are 26 years old. There would be no discrimination against preexisting conditions and no caps on annual or lifetime coverage, she said.
Other key features of the legislation include a provision allowing states to automatically enroll eligible people in health plans unless they opt out. The plan also promotes health savings accounts and price transparency requiring hospitals and other providers to disclose costs so consumers can shop around for the best price.
This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.