trending Market Intelligence /marketintelligence/en/news-insights/trending/GAgnUTa_i9ELXWuOfwupnA2 content esgSubNav
In This List

GOP senators' healthcare stabilization proposal would significantly cut premiums

Blog

A Pharmaceutical Company Capitalizes on M&A Activity with Brokerage Research

Blog

2021 Year in Review: Highlighting Key Investment Banking Trends

Blog

Insight Weekly: US stock performance; banks' M&A risk; COVID-19 vaccine makers' earnings

Blog

Global M&A By the Numbers: Q3 2021


GOP senators' healthcare stabilization proposal would significantly cut premiums

A healthcare market stabilization proposal being promoted by Republican Sens. Lamar Alexander of Tennessee and Susan Collins of Maine would cut individual plan premiums by an average of 10% in 2019, and 20% in 2020 and 2021, according to early estimates from congressional analysts.

The projections in the summary document being circulated on Capitol Hill, which was obtained by S&P Global Market Intelligence, were based on preliminary estimates from the Congressional Budget Office, or CBO, a nonpartisan entity that provides financial analyses to Congress.

Alexander, the chairman of the Senate Health, Education, Labor and Pensions, or HELP, Committee, and Collins are hoping to get the legislative package, which is aimed at shoring up the individual market for plans sold under the Affordable Care Act, or ACA, into the Senate's omnibus government funding bill.

The U.S. government will shut down March 24 if Congress fails to pass a new funding measure — either an omnibus package that would carry federal spending through the remainder of fiscal 2018 or another short-term continuing resolution.

The current market stabilization package was based on bills earlier proposed by Alexander and Sen. Patty Murray, D-Wash., the ranking member on the HELP Committee, and Collins and Sen. Bill Nelson, D-Fla.

New funding

The Alexander-Collins package includes funding for the cost-sharing reduction, or CSR, subsidies, which help eligible low- and moderate-income Americans cover their out-of-pocket costs for prescription drugs and doctor visits.

President Donald Trump ended the payments in October 2017.

Alexander and Collins have proposed providing the payments going back to October 2017 through December 2017, and for certain plans for all of 2018, as well as for all plans from 2019 through 2021.

The package also includes federal reinsurance funding at $10 billion per year over three years.

The reinsurance funds are aimed at off-setting the anticipated premium increases triggered by the Republicans' repeal of the ACA's individual mandate tax penalty in December 2017.

Alexander's and Murray's previous bill included only two years of CSR funding and the earlier Collins-Nelson reinsurance measure proposed $10 billion split over two years.

The CBO is still reviewing the Alexander-Collins proposal, but it estimated that with only $5 billion in funding, 50% of Americans would live in states that would get an ACA 1332 innovation waiver in 2020 and 75% in states that would get a waiver in 2021, according to the summary document.

In a separate analysis published on March 12, analysts from Oliver Wyman estimated that if three years of CSR funds and $30 billion over three years for reinsurance was enacted, individual market premiums could be reduced by as much as 40%.

They also estimated that an additional 3.2 million individuals would be covered by health insurance under such a proposal.

"This analysis from the experts at Oliver Wyman further demonstrates that our bipartisan proposals will help drive down premiums in the individual market and make health insurance more affordable for millions of Americans," Alexander and Collins said in a joint statement.

The Alexander-Collins proposal would also permit anyone in the individual market to purchase a catastrophic plan, often called copper plans, which are currently limited to Americans under 30 years old.

Those plans are intended to have lower premiums costs, but a person would pay for a greater percentage of their costs for care up front, such as for deductibles.

Alexander presented the market stabilization proposal on March 13 to the Washington lobbying group, America's Health Insurance Plans, telling its leaders that if Democrats support the bill, it will be law by the end of next week, according to a Senate aide.

Disagreement

But in a March 14 Fox News op-ed, Republican Sens. Ted Cruz of Texas and Mike Lee of Utah and House Republican Congressmen Mark Meadows of North Carolina and Jim Jordan of Ohio argued that their party was closer than ever before in sending the ACA to the "ash heap of history" and proposals like the one from Alexander and Collins would "snatch defeat" of the law "from the jaws of victory by shoveling billions of additional dollars in deficit spending into the pockets of insurance companies."

"We need to do away with this massive, expensive and unfair government program, instead of throwing money at a handful of corporations to tolerate it," the four conservative Republicans wrote.

The CSRs and reinsurance, they insisted, would be nothing more than "flagrant bailouts" for insurance companies.

They called on their Republican colleagues to reject the plan.

"If we ignore the years of promises we made to the people on Obamacare, the voters would, quite rightly, distrust Republicans for years to come," they said.

ACA support

An exit poll from Public Policy Polling, however, found that healthcare weighed heavily in Democratic candidate Conor Lamb's win over Republican Rick Saccone in the special election for Pennsylvania's 18th congressional district, with 53% of voters disapproving of the Republicans' efforts to repeal the ACA, versus 39%.

The district is considered heavily Republican.

In a separate op-ed published March 14 in The Hill, John Arensmeyer, CEO of the advocacy organization Small Business Majority, said that if nothing is done to stabilize the individual markets, the "future for small businesses is grim."

"Premiums could become so high that many small business employees would be unable to access coverage, while solo entrepreneurs will be forced to go work for someone else just so they can access affordable health benefits," Arensmeyer wrote. "If we truly value entrepreneurship, we will not let this happen."