Stabilizing the Individual Market in Uncertain Times

PLEASE NOTE: This is an unedited transcript. Please refer to the video to confirm exact quotes.

SARAH DASH: Good morning everybody, or good afternoon rather. We are going to go ahead and get started in just a couple seconds.

Hi, so I’m Sarah Dash, I’m president and CEO of the Alliance for Health Policy and thank you all, and welcome. We are excited to be here today to talk about stabilizing the individual market in uncertain times.

Very briefly, for those of you who are not familiar with the Alliance for Health Policy, we are a non-partisan organization dedicated to advancing knowledge and understanding on health policy issues, and we are really glad you are here. Welcome also to those who might be following us on Twitter. The hashtag is #allhealthlive.

With less than two months to go before the open enrollment period begins for 2018 coverage, today’s briefing is going to explore the current individual market landscape, defining the current challenges, what we really mean by marketplace stability, and look at potential solutions. And for those who are interested, the Alliance has held several briefings on this topic throughout the past year, and you can find those archived on our website at We want to thank the Commonwealth Fund for their partnership in organizing today’s briefing, and we’re particularly glad you are here on a Friday which follows two days of committee hearings on this topic, and there will be additional committee hearings in the Senate as well next week. So, we hope that you learn something from today’s briefing, and I think you will, because we have a fantastic panel that I’m going to introduce. They are going to focus not only on the short time issues, but longer-term issues, and what areas for bi-partisan compromise might look like as well.

I’m going to go ahead and introduce them in speaking order. Sara Collins is Vice President of Health Coverage and Access at the Commonwealth Fund. She has lead the fund’s national program on health insurance since 2005. Next, Matt Eyles is Executive Vice President of Policy and Regulatory Affairs at America’s Health Insurance Plans, where he leads their government programs, state policy and product policy departments. Brian Webb, right to my left, is Assistant Director of Health Policy and Legislation at the National Association of Insurance Commissioners, or NAIC, and previously worked on Medicare and Medicaid policy for Blue Cross/Blue Shield Association. Next, Joe Antos is the Wilson Taylor Scholar in Healthcare and Retirement Policy at the American Enterprise Institute. Finally, Timothy Jost is the Robert Willett Professor of Law Emeritus at Washington and Lee University School of Law. So, we are really thrilled to have them all here, and I am going to go ahead and let Sarah start us off.

SARA COLLINS: Thank you, Sarah, and thank you so much to the Alliance and the panelists for joining us today. I’m going to provide some brief background and the current status of the marketplaces, and what we mean by the term “marketplace” stability, and then using some new findings out this week from the Commonwealth Fund’s tracking survey, I’m going to focus on two key characteristics of stable marketplaces: Affordable health plans, and steady enrollment growth.

At the beginning of this year, the marketplaces were widely viewed as stable or stabilizing in most states, for example, Standards and Poor’s projecting in April that 2018 premiums would increase by less than they did in 2017. Most counties would have at least one insurer, and more insurers would report positive margins next year. But S&P also cautioned that the marketplaces are still young, and insurers that are participating in them, need to have certainty that the rules of the market will stay largely the same over time. This certainty about what the rules are, enables insurers to accurately price their health plans year to year and commit to participating in them long-term. Right now, insurers are not getting that certainty. It’s unclear for example, whether the federal government will A, continue to fund the cost-sharing reductions that insurers are required to offer people under the Affordable Care Act; B, enforce the individual mandate, and C, commit to a strong outreach and enrollment drive for the 2018 open enrollment period. Because of this uncertainty, premium increases for 2018 are very likely to be higher than projected in many states, and fewer insurers are participating.

We are going to be talking about marketplace stability today, a lot, and you’ve been hearing the term in hearings this week, as Sarah mentioned. What exactly do we mean by that? Generally — and my colleagues will probably want to weigh in on this issue too, but stable markets can be characterized by plans that are affordable for all people who are eligible to enroll in them. Steady and predictable enrollment growth, a reasonable balance of healthy and less healthy enrollees, premiums that change year to year in predictable ways, rather than spiking, and relatively consistent year to year participation by insurers.

I’m going to focus my remaining comments on the first two characteristics: Affordability and steady enrollment growth, using our new survey findings, and there is a report in your packet that provides the details. There are currently about 17 to 18 million people who are in the individual insurance market right now, including about 10 million people who are in marketplace plans. About 15 million people have gained Medicaid coverage as a result of the expansion, but about 28 million people remain uninsured. In the new survey, we wanted to know why so many people are still uninsured. We find that about half of uninsured working age adults, are likely eligible for either marketplace subsidies or Medicaid expansion in their state. About 15% are living in Medicaid non-expansion states and have incomes that are too low to qualify for premium subsidies. About 11% have incomes that are too high to qualify for premium subsidies, and about one quarter are likely not eligible for Medicaid, or the marketplace plans, because of their immigration status. In the survey, we asked adults several questions about why they were uninsured. We found that 40% of uninsured adults were not aware of the marketplaces. 59% of the uninsured adults who were aware of the marketplaces, said they hadn’t visited one because they didn’t think they would be able to afford a health plan. 74% of uninsured adults who did visit the marketplaces, said they couldn’t find an affordable plan. And while we don’t really know whether better information about cost and choices in the marketplaces would have encouraged these adults to visit them and enroll in the plans, the survey findings do indicate that assistance during the enrollment process matters a lot. Adults who receive some kind of personal assistance either from a broker, a navigator, a help line, were more likely to enroll than people who didn’t get assistance. In addition, we find that based on the views of adults who have marketplace plans, uninsured adults with lower incomes would likely have found the plans to be affordable had they enrolled in them. We find that most lower income marketplace enrollees paid premiums that were equal to or less than what people pay in employer based plans, but that higher income enrollees pay more. Lower income enrollees were more protected from premium increases than enrollees with higher incomes, and lower income enrollees were much more likely to view their premiums as affordable, then enrollees with higher incomes. Most lower income enrollees had lower deductibles than higher income enrollees. In terms of policy changes that would increase affordability, increase enrollment and increase marketplace stability, there are both short-term and long-term options. For the short term, it’s obviously very important that a permanent appropriation for cost sharing reductions be made, that there needs to be clear intent on the part of the administration to enforce the individual mandate, and there will need to be a strong outreach enrollment effort this fall.

To increase affordability and enrollment over the longer term, the findings point to making tax credits and cost sharing subsidies available to people with higher incomes. In 19 states that haven’t yet expanded Medicaid, could move forward, or Congress might consider marketplace subsidies for people under 100% of poverty in these states. There is consensus about the need for federal or state reinsurance programs, and a fallback health plan option in counties without participating insurers. Thank you and I will stop there, and turn this over to Sarah.

SARAH DASH: Thank you. So, we are just going to go right down the row, and I just want to kind of ask — since we are talking about the individual market, and Sara, most of your comments kind of focused on the marketplaces under the Affordable Care Act, but I just wonder if you could just briefly, before we let Matt dive in, you know, to what extent does the market, outside of the exchange — there is still an individual market that exists outside, and if you have any thoughts about the extent to which these polices or policy decisions effect both the inside of the marketplaces, and the so-called outside of the marketplaces.

SARA COLLINS: I think that’s a very good question, and it’s really important to remember that the reforms of the Affordable Care Act apply both to the plans that are being sold outside of the marketplaces, and about seven to eight million people may be enrolled in those plans, as well as to plans inside the marketplaces. So, pre-existing condition, exclusion restrictions, underwriting — the underwriting rules, all of those rules are the same regardless, but the tax credits are only available to people within the marketplaces. Another really important thing to remember, is that people who are not documented citizens, are not eligible to purchase plans in the marketplaces. They are not eligible for tax credits, and they are also not eligible for the Medicaid program. They can however buy a plan outside the marketplaces, so that’s also an important feature to remember. People above 400% of poverty, likely are buying plans both in the marketplaces and outside the market, where there are no subsidies available to them.

SARAH DASH: One last follow-up question, is it more likely for those people who are have incomes above 400% of poverty to be buying outside of the marketplaces, to your knowledge?

SARA COLLINS: We know that about 1.7 million people have incomes above the range in the marketplaces for subsidies, and I’m not sure what the breakdown is outside of the marketplaces.

SARAH DASH: Thank you. We will now turn to Matt Eyles from AHIP.

MATT EYLES: Good afternoon, everyone, thanks so much for having me here, and it’s great to be on such a strong panel, especially with people I’ve worked with in the past, and this panel is about stability and I will open with one thought: When you are on a rollercoaster ride, it’s really hard to find stability. And that’s sort of the way that the individual market has functioned over the past couple of years, and actually, it even pre-dates the Affordable Care Act.

The individual market has always been a challenge, it’s still a challenge, and you might ask yourself, well, we know a lot of the reforms that were put in place under the Affordable Care Act, you know, are designed to promote a long-term, stable individual market, and we think that it’s possible to get there. But there are clearly some fixes that need to happen. It’s not a fruitful exercise to sort of look back historically and say, well, how did we get here, only to say that there have been decisions that were made in the past — over the past couple of years, and more recently, that have contributed to the instability and the individual market, and as a result, we’ve seen some things like higher than expected premiums, fewer plan choices, lower enrollment, than expected, and some big instability, especially in certain markets and states.

But to Sara’s point, it’s also important to recognize that we have an additional ten million people who have coverage as a result, just for the individual market, setting aside Medicaid, which has expanded coverage further. But what really characterizes the individual market today is uncertainty. For those of you who work in healthcare or who have worked in other markets or other segments and sectors, you all know that markets don’t like uncertainty. It doesn’t matter whether you are talking about health insurance, flood insurance, financial markets, uncertainty, and having uncertainty as a characteristic of a market, just creates instability. We were very heartened and encouraged by the efforts by Senators Alexander and Murray over the past couple of days, and we know that there are additional hearings that are coming up, and I think what was remarkable over the past couple of days, was sort of the violent agreement that we saw across what needed to be done, particularly in the short term, whether it was from insurance commissioners and governors, and I expect we will hear a lot of the same next week about what do we need to provide some greater stability to the individual market. And this action is really important right now, particularly as insurers are filing and getting final rate approvals. Insurers who want to participate in the marketplaces, particularly in the federally facilitated marketplace, need to sign agreements, currently as of September 27, and that is right around the corner. If you think about where we are today, you know, less than three weeks from when those agreements need to be signed, there are still a lot of decisions that haven’t been made.

We’ve really focused on short-term options that the Congress can pursue to help provide stability, and there is a brief two-pager in the packet that was handed out there, and I will just tick through the list of the ones that are the highest priorities that we think would really provide stability in the short-term, that would be a building block for longer term stability. The first one of course, that everyone hears about, is funding the cost-sharing reduction benefits that are provided to low-income individuals. Remember, these are payments that reduced the co-pays and deductibles and out-of-pocket maximums for those individuals with low and modest incomes below 250% of the poverty level. It’s also important to note that these are not a bail-out for insurers. Actually, the only payments that get made to insurers at the end of the day, are when patients get and use care. So, when the payments are made, again, it’s always as a result of someone going to fill a prescription, go to the hospital, or see their physician, and that’s the only time that those payments are actually made. There isn’t some other funding that sits out there, and plans really pass through and facilitate that much in the way — if you are familiar with the Medicare Part D program, that the low-income subsidy works for lower income seniors. We believe that funding needs to occur for at least two years, and for funding to be continuous.

If you think about where we are in terms of the cycle, both in terms of insurance rates and just thinking about 2019 — and it’s hard to think about that here in September of ’17, but open enrollment starts in just a couple of weeks, November 1st. We have plan year starting January 1st, and then this whole cycle starts again. So, funding that only lasts for one year, would mean that we would have to be right back at it, having this kind of discussion and it turns into sort of a new SGR.

The second area that we have been focused on is some sort of premium stabilization program, whether it be in the form of re-insurance or other sort of risk mitigation measures. This could have a substantial downward impact on premiums, depending on the size of the funding. It could be in excess of 10 or 15% downward pressure on premiums. It also has the benefit of not costing the entire amount, because you’ve got an offsetting reduction in terms of the premium tax credit. So, it’s not a dollar for dollar trade. Getting rid of some of the taxes and fees, like the health insurer tax that are added to the premium.

The fourth area is state flexibility, and we are supportive of improving the process by which Section 1323 waivers would be approved to make it a little easier for states to do it. We want to keep a number of the guard rails in place, but to the extent that approvals happen with other waivers, there should be an expedited process going forward for other states that want to adopt similar approaches. Also, maybe some flexibility so that state legislators don’t necessarily have to act in advance of that.

When we think about the longer term, there are a lot of issues related to affordability. Making sure that an alternative, if the mandate were ever eliminated, we think it’s important to have a continuous coverage requirement, and other measures. But I will just leave you with the thought that we know how to fix the problem. It requires some will, it also requires some funding and recognize the difficulty that lies ahead. But we think we can find a path to stability and hopefully get off this rollercoaster. Thanks for your time today.

SARAH DASH: Thanks, Brian.

BRIAN WEBB: “Fix” is a strong word. I don’t know if we can fix it all, but we can certainly make it a lot better, can’t we? I represent the National Association of Insurance Commissioners. They are the ones that regulate in each of your states. I wanted to just remind you first of all, that healthcare is very local. When we talk about all of these things up here about markets, each state’s market is very different. Different characteristics, different pools, different people, different problems, different issues. So, I strongly encourage you to contact your insurance commissioner, find out what is going on in your state, find out what the challenges are there, and make sure you are working with them to try to find the fixes that will actually help them meet.

When we talk about stability, there is the stability of the overall market. You want a market that is working, is operating, that has competitors, that has good information going out to everybody. But really, the bottom line is, you want something that works for consumers. What consumers are looking for is basically every year, their insurance company is going to be there. The same plans are generally there. Your cost sharing is about the same. Rates are going up at — they are going to go up, but a measured way that you can understand, and without tremendous spikes. You can go to your providers. Your providers for the most part are still part of the network, and you can go to them. That’s the kind of stability we need to get to. We have that in small group market, large group market. We have tremendous amount of stability. We are not there yet in the individual market. Some states are better than others. But for the most part, we are still struggling to get carriers to participate on an ongoing basis to have the same plans from year to year, that have basically the same coverage, and the same networks. But this is just the situation that we’re in. We knew we were going to have this problem. It’s just going on longer than we expected. Action is needed right now. We would agree — you heard five commissioners go before the Senate Help Committee this week; they were all very clear. Number one is you have to pay the cost sharing reduction payments. As Matt said, this is not a bailout. I don’t know how you could say that. I pay my mortgage, it is not a bailout to the banks. I owe them. That’s basically what cost sharing reductions are. Carriers, to participate on the exchange, have to offer these lower cost-sharing plans, and anybody eligible for them, can buy them. The law says, “The Secretary shall, in a timely manner, reimburse the plans for those different costs.” That’s what it says. And it’s time to just not — month to month, wondering, am I going to get paid? I’m sure all of you like getting paid every month, amen? They like getting paid and know they are going to get paid, and when you are talking about insurance and you are trying to figure out your rates for next year, you have to know that each one of those months, what you are going to get paid. Because stability, certainty, is important. We look at stability in terms of stability in revenue — you know what’s going to be coming in, how it’s going to be coming in. It’s stability in risk. You know who you are going to be covering. And it’s stability in regulations. And we have not reached any of those yet in the individual market, so we have to move.

On the revenue side, cost sharing reductions is number one. Make sure they are being paid. Not just for 2018, but for 2019 too, so everybody knows what the rules are as they prepare their plans the first quarter of next year.

Second of all goes to risk. We do fully support some kind of reinsurance stability funding. We do believe the federal government, like they did in 2014 through 2016, with the temporary reinsurance program, can provide that kind of funding. We’ve suggested 15 billion dollars a year for at least 2018 and 2019, to try to bring some stability. Just to know what we are trying to do here. Again, the individual market is a volatile market. There are people on there who have claims of nine million dollars. Drugs that they are taking that cost $3,000 a month. Some are $30,000 a year in costs. You as an insurer, you don’t know who those people are. You’ve got to cover them. And that kind of uncertainty is what’s keeping a lot of carriers from participating. That’s the bottom line.

So, what do you do? Through reinsurance, what you are doing, is you are taking the volatile risk of the individual market, and you are sharing it beyond the individual market. Things like risk adjustment stuff, you are just moving things around in the market. We’ve got to get some of that risk outside of that market, either through shifting it like the temporary reinsurance program shifted it to the large group markets and the large group market, or you shift it to tax payers, or somebody else. You try to take that risk out of there. That way, carriers have some assurance of what that risk is going to be. Then they can price appropriately, and then they can participate. That’s what we are looking for. Now, the suggestion has been, well, why don’t states do that? We do have two states right now, Alaska and Minnesota, through a Section 1332 waiver, are doing that. They have the luxury of already having the revenue in place through their old high-risk pool program. They already have the mechanism in place through their high-risk pool program. I will tell you right now, most states don’t have that. But then to set up their own reinsurance program is going to take at least until 2020 in most states. That’s why we are saying, can we get something to stabilize this market now, as we move to that, and states move to that later on.

We do agree that the health insurance taxes, the Section 9010 taxes, just add to cost. That’s just a reality. I don’t know if you realize that, but corporations don’t really actually pay taxes, they just shift them to somebody else. They raise prices, they do that, and the same here. So, if you want to bring down prices, you can get rid of that. Continue that moratorium, that was 2017, just continue that in the out years. Then as we move forward, these are the immediately things you can do. These are things that can impact rates in 2018, right now. But as we move forward, we do agree that the section 1332 waivers need to be made more flexible, more certain, really. Every state we talked to is — let me get this straight, I have to go, I have to develop something and I have no idea whether it even meets any requirements, whether it’s good or not, will it be accepted or not. I’ve got to go to my legislature, I have to try to get something passed through legislature and you guys know how hard it is to get anything passed through any legislature. I have to get something passed not knowing even if it’s going to be acceptable, if it’s within the guardrails, or anything like that. That’s where we need to have more certainty about what is allowed, what is not allowed. We need good timing. Not 120 days for the secretary to review. We need a shorter time frame for reviews so that we get answers back quickly, and something like, allowing governors and insurance commissioners to be more in control of the process when it’s not talking about state money, would be much more helpful, and we can move much more quicker to meet the needs of each state’s populations.

Finally, I just want to note that things aren’t going to get better unless there is action. There are a couple things coming down the road such as — how many are familiar with the transition plans? Some states have large pools of transition plans, these grandmother plans, pre-ACA, non-compliant plans that continue to be renewed. As of right now, those are no longer allowed past 2018. That means all of them are going to change, or not change, I don’t know, we don’t know what’s going to happen. That’s an uncertain pool of people that’s coming down the road, we have to deal with. And then you also have to remind yourself that the states are going to have to start paying out more money for Medicaid expansion too. And what are states going to do then? So, that’s a couple things down the road that will create more instability. So, let’s do what we can do now to stabilize the market, and then let’s keep working together to make sure we stabilize it for down the road. Thank you.

SARAH DASH: Before we move on to Joe and Tim, I just want to ask a couple of technical questions for those who maybe haven’t been following this in as much detail. Brian, you talked about re-insurance, and several others have mentioned it, and I expect it’s going to keep coming up in the conversation. You explained the concept of re-insurance, but could you just go back and kind of explain what was the temporary re-insurance that was set up under the Affordable Care Act? Are the re-insurance proposals that are being discussed now, similar? Not similar? And is this a new idea? Is this something that happens in other insurance markets too? Or is this just specific to the individual market?

BRIAN WEBB: Yeah, the temporary re-insurance program has set aside a certain amount of money each year. 2014 there was 10 billion, and it’s going to strain my memory, it was six and five — well, some went to Treasury. So, there is a certain amount each year, and it came down. The 10 billion dollars, the first year, it came from the insurance industry. It came from them, again, trying to spread that risk across a larger pool of people. And it came and basically what they did, is the federal government paid any claims above an attachment point. So, any claims that exceeded a certain amount of the claims, the federal government would then pay a percentage of claims up to a cap. That’s a way to re-insure. Now, some states like Alaska, and their re-insurance program, they are doing more of seeding risk. Where people who have certain illnesses, certain needs, the company seeds over their coverage, basically. Companies still pays for — you know, still does that, but they are seeding over the cost of that person over to the high-risk pool and the re-insurance entity, where they pay all their claims. So, that’s another way to do it, that’s the way Maine did it as well, before the ACA. So, there are different ways to do it, but basically what you are doing is you are seeding a certain amount of high cost claims to somebody else, to where they will help pay those.

SARAH DASH: Not to put too fine a point on it, but we’ve heard of virtual high-risk pools before, is that the idea behind a virtual high-risk pool?

BRIAN WEBB: That’s a seeding. When you say “virtual”, you are talking about seeding that risk to some other entity, where they cover all of those costs.

SARAH DASH: Thank you. And I think for those who want more information on the re-insurance and the risk corridors and the risk adjustment, the three R’s, there is lots of background on that, and the Alliance is always happy to provide background on that. Okay, we are going to move on to Joe Antos, and then to Tim.

JOE ANTOS: Okay, great. Thanks for inviting me to meet with you today.

I think Brian’s distinction about short term and long term is very important. There are some things you can do, or should do — maybe you can’t do them — but you should do them in the short term. But you should have a longer-term perspective. If it’s just a matter of plugging the immediate hold in the dam, the dam is going to break somewhere else. You really have to take the longer run perspective, and you have to think about what the deficiencies are in this non-group market. What the deficiencies are in the ACA rules that run that market. And what the connection is between all of that, and the whole rest of the health insurance system, which I think is often overlooked. People have a tendency to say, oh, we’ve got this crisis, let’s focus on that. But as Brian kind of indicated, the money doesn’t just stop right there. Often times, those of you, presumably everybody in this room who has employer sponsored coverage, is also absorbing some of the cost through premiums, and also, we are certain absorbing quite a bit of the cost through — I don’t want to say taxes, I want to say increased debt, which some future generation will end up paying. But so far, we are not. Eventually it will all come home. So, it does boil down to money. The kinds of things that you need to do, clearly, I think everyone has agreed on a technical level, that if the government imposes a new requirement on an industry to do certain things that are costly, it’s a new requirement, and it in essence disrupts the business of that industry in some ways; good ways or bad. Then, somebody’s got to pay for it. In this case, the ACA changed the rules very dramatically. So, by establishing a new social norm, not a business norm, a social norm, that insurance companies have to cover everybody, that means that people previous who weren’t insured, who had expensive conditions or whose conditions were not fully covered by insurance, they were coming into the market. And since we decided that, as a Congress, as a president, and I think as a people as well, then we are under some obligation, if we want the insurance industry to operate as a business, then you have to find the money or find the mechanisms by which to finance those additional people and those additional costs.

I think that is one of the many problems with the ACA. The focus was on expanding coverage, and less so on, how would that market work over time?

As I said, short term or long-term issues. Clearly resolving the cost sharing subsidies problem, is something that ought to be done quickly, but beyond that, there are a whole bunch of other issues that people talk about. For example, there is always talk about a stability fund, which is just another way of saying, put more money into the insurance industry to pay for these extraordinary costs of people who are now in the system, who weren’t there before. That really amounts to kind of the same things. I think other issues that are, to me, a lot less plausible, have to do with this idea that there are some counties and the number varies from “a lot” to “none”, to potentially a fair number. Some counties that are going to go bare. That at one point, Ohio had, I believe, 20 counties that were going to go bare. The dropped to 19, thanks to the intervention, largely, of the state insurance commissioner, who exerted a little pressure. I’m sure it was gentle pressure, as it always is. And there was one county left over, and I think that one county that was left over is very instructive, because that was a county — I didn’t bother to look at a map, but apparently that is a county where people get their healthcare in another state. So, it’s very hard to create a provider network when you’re being regulated in one state, but basically all the services are being delivered in another state. And somehow, that was resolved. But whatever that resolution was, it has to be a temporary solution. It really isn’t going to last very long, unless we address more fundamental problems with the way insurance is regulated.

The answer in my view is not just pouring more money into it, but reforming some of the rules and getting used to the idea that things are going to be unstable when you change the rules. So, it’s the learning process. Anything that could pass this year, is not going to resolve the problem. This is something that is going to take quite a few years, as we’ve learned more about how these markets work, how the subsidies work, what people are willing to put up with, what people are willing to pay. As far as the individual mandate is concerned, I’m a graduate of CVO. CVO puts way too much stock in the individual mandate. What brought people into that market, I think was several things. Certainly, the marketing was very, very important. The theory that you might be penalized — yeah, maybe, but most people don’t understand that there is a penalty, unless they see somebody being penalized. That didn’t happen in the first year. That has really not happened very much on a punitive basis. People have volunteered to pay the penalty, but that’s not the same thing as being actively penalized, by having the federal government come knock on your door.

So, in fact, I think the individual mandate has basically run its course. What else could you do? Several of my colleagues and I talk an awful lot about automatic enrollment. This is something where the idea is to change the set point from, you have to do something to become enrolled, to you have to do something to become unenrolled. Now, there ae ways you can do this, it’s a complicated situation. I’m not saying it’s going to be easy, but to change the mindset in this country, I think, is very important. I think that’s what the ACA was trying to get at, but they just didn’t think, what was the mechanism that was going to work? Clearly the individual mandate really didn’t do it. The individual mandate was far more important in getting people into Medicaid, then it was into the individual market. Other aspects of this, yes, sure, let’s get younger, healthy people to sign up. But the reality is, that if you don’t offer them coverage that they want to pay for that is consistent with their income level, which is typically the lowest level of their lives, and consistent with their likely usage, which is typically the lowest medical usage of their lives, then you are going to lose. So, the ACA’s movement to favor older people against younger people, backfired. The ACA’s decision to basically wall off the best customers in the insurance industry, namely people under 26 whose parents were going to pay the premium, by letting them stay on their parent’s plan, that really undercut the exchange process. So that sort of thing could in theory be reversed, but in reality, of course, middle class people wouldn’t like that, so it probably wouldn’t happen.

One other aspect — there are a whole bunch of other things that we could talk about, but one other aspect that I wanted to mention is the innovation waivers. There is talk — there was talk yesterday, there was talk the day before, about speeding up the decision-making process. I used to work at what is now called CMS, and I can tell you that the clock starts whenever there is a decision that the clock has started. So, the strategy of saying that HHS has X number of days, or X number of months to make a decision, depends on when you start the clock. And furthermore, the decision about whether a proposal by a state meets the so-called guardrails, the rules that are set up for 1332, is of course, depends on who is judging whether those conditions are being met or not. And these are projections, these are not facts. The proposal is to make a change. So, you are making a guess as to how will that work. I would say that if there was something that is a black hole of bureaucratic abyss, that’s one of them.

SARAH DASH: Thanks, Joe. Tim?

TIM JOST: I would like to step back for a moment and put our discussion of market stability on a broader context. And here, imagine me holding up Senator Alexander’s blue chart that we’ve seen a lot of in the last two days. About half of Americans are covered by employer sponsored coverage, one-fifth by Medicaid, one-sixth by Medicare. Only about 16% are either uninsured or in the individual market. About 10% uninsured, 6% in the individual market. Prior to 2014, the uninsured and those in the individual market, were the only ones who did not receive generous subsidies from the federal government. The individual market was inaccessible for people with low incomes, and for many people with pre-existing conditions.

The hope of the ACA was that the policy levers that it included, could stabilize the individual market, and make coverage accessible to all who lacked other forms of coverage. Guaranteed availability and modified community rating, as well as the ban on pre-existing conditions clauses, would make coverage available to those with health problems, as well as the healthy. Those whose incomes were too low to realistically afford health insurance, would be covered by expanded Medicaid. Low and moderate-income individuals who could afford to pay something for coverage, but not full cost, would get premium tax credits and cost sharing reductions, and the healthy would, in compliance with the individual mandate, purchase coverage in a single risk pool with those with high cost claims, thus keeping healthcare affordable for all.

This strategy is not working out as planned in some markets, although I think it’s important, as Brian said, to realize that markets are very different across the country. Claims are generally higher, and enrollment lower in the individual market than was hoped for. The decision to allow transitional plans to continue for hundreds of thousands of people beyond 2014, undermine the single risk pool. Congressional appropriation writers that defunded the risk corridor program, drove a number of insurers into insolvency, and undermined the confidence of all in the market. The re-insurance program was phased out much too quickly, and the individual mandate has been phased in much too slowly. Now, there is the question as to whether it exists. The most immediate problem right now, is the concerns about the continued funding for reimbursement for insurers, for cost sharing reductions; they must offer low income people the continued enforcement of the individual mandate, and concerns about the Trump Administration’s cuts in outreach and enrollment efforts.

The biggest issue is the cost sharing reductions. By this point, some insurers have likely already written into their 2018 rates the assumption that the CSRs are not going to be paid, and unscrambling that egg is going to be difficult. If the CSR’s aren’t paid, many insurers are going to incur costs that they have not yet written into their rates. Some of them will raise their rates — all of them will raise their rates — some of them may leave the market. If they are paid, other insurers are going to have excess income that they have written into their rates. The medical loss ratio rebate may help to get some of this money back to consumers, although it should actually go back to the government, but not until late in 2019, and probably not even then, because of the way the rule works. Nevertheless, to avoid further damage, Congress should pass an appropriation, should do it next week, and should do it for at least through 2019. As the cost of the CSRs is already in the baseline, this is, at least according to budget thought, free.

The individual market also needs a permanent re-insurance program or at least a program more generous and durable than which was included in the ACA. When a Republican Congress adopted the Medicare Part D Prescription Drug program in 2003, the legislation included a generous and permanent re-insurance program that has protected the program from high cost cases, and made Part D the success that most people consider it to be today. The ACA’s re-insurance program lasted only three years and was phased out very quickly from 10 billion to six billion, to four billion dollars, and then disappeared. Re-insurance had a considerable positive effect, reducing premiums by 10 to 14% in the first year. Alaska’s re-insurance program has had a dramatic effect on premiums, reducing premium increases by 35% the first year, 20% for next year. Premium increases, I should say. Re-insurance would of course cost money — I am in favor of pouring more money into this market, but this would only even up the score by providing support for the individual market, as is enjoyed by every other market segment. Our three biggest programs — Medicare, Medicaid and tax subsidies for employer sponsored coverage. It would also, I believe, be the most effective short term means of addressing the bare counties problem, such as, as of yesterday, we have again in Virginia.

Enforcement of the individual mandate is also important. There is, in fact, every reason to believe that the IRS is in fact now enforcing the individual mandate, but there is also reason to believe that some people believe that it is not being enforced, and most importantly, there is reason to believe that insurers believe that people believe that it is not being enforced. Republican legislation considered over the spring and summer of 2017, included various continuous coverage requirements as alternatives to the individual mandate, including enrollment penalties, waiting periods, and health status underwriting, for those that lack continuous coverage. Each of these was panned for various reasons by the CBO and generally as segmenting the risk pool, without in fact increasing coverage. Until someone can come up with a superior alternative to the individual mandate, and I think that auto enrollment is worth being explored, although I think it has lots of problems, but until somebody comes up with a better solution, it should be enforced.

We also need outreach and enrollment efforts. Enrollment in the exchanges for 2017 was running ahead of 2016 until the last week of the enrollment period, when the Trump administration pulled advertising. The open enrollment period for 2018 is only half the length of the 2017 period, and enhanced efforts will be needed to make it a success. The Trump administration announced last week that it’s cutting advertising by 90% and navigator funding by 40%. This is bound to reduce enrollment, particularly among young and healthy enrollees, although I think a bigger problem, which isn’t getting much attention, is the fact that insurers have stopped paying commissions in many places to agents and brokers. And agents and brokers have driven most of the enrollment in the marketplace over the last three years, and it’s hard to understand how they are going to be trying really hard to get more people enrolled if they don’t get paid for it.

Senator Alexander said in Senate Committee Hearings on Wednesday, that if the Republicans agree to CSR appropriations, Democrats must offer more flexibility for 1332 Innovation Waivers. I think there is certainly room here for compromise and simplifying and expediting approval procedures, and perhaps as to how budget neutrality is, is calculated between Medicaid and 1332 — 1125 and 1332. And frankly, that’s all that Senator Alexander has been talking about, at least in it’s opening and closing statements. But allowing states to eliminate required coverage of essential health benefits such as maternity or mental health benefits, or to re-allocate subsidies from low income people to finance care for high income people, would undermine key ACA principles, and should not be the price that low income consumers and consumers with pre-existing conditions have to pay for market stability. And in any event, would probably de-stabilize, rather than stabilize markets. So, it’s important that we look at procedural changes, but not undermining the guardrails.

Other bipartisan efforts are also conceivable. Another moratorium on the health insurance tax, which increases the cost of coverage by about 2%, is certainly worth talking about, although then the question is, how do you pay for that? I continue to think that we need to talk about the employer mandate. I think it accomplishes very little except for generating huge amounts of paperwork. And that might be a compromise also.

Finally, I think that Congress should make health insurance premiums fully deductible from income and payroll taxes for all who purchase in the individual market. This is the benefit that costs hundreds of billions of dollars that we give to people in the employer sponsored market. Self-employed people get it, but I don’t understand why everybody in the individual market shouldn’t get the same benefit. And I think that that would at least help in making health insurance more affordable for the above 400% group that Sara talked about, as losing coverage.

So, those are some of my thoughts.

SARAH DASH: Fantastic. Thank you all for your really thoughtful remarks. I’m going to ask a few questions to kick off the discussion, and then we will open it up to Q&A from the audience. As you are listening, you should have some green cards at the tables in front of you. If you think of a question and you would like to write one down, somebody will come and pick it up, and if you prefer to ask a question in person, once we kind of get through these first initial questions, you can stand up at one of those mics on either side of the room.

Obviously, the cost sharing reductions have been a huge part of this conversation, and I just want to kind of start off with those, because I don’t know that anyone anticipated that these would become sort of the thread that you pull out of the sweater, and that’s kind of what unravels the whole thing. I’m wondering, first of all, can the panel comment on what was the point of these in the first place, number one, and number two, what policy were they trying to accomplish? Number two, why are they so important to the stability of the market? If you could walk us through. Three, how do we get to this place where we are questioning on a month by month basis, you know, whether or not they are going to get paid. Why is this the provision that is so much under question?

Tim, I wonder if maybe you can comment about the lawsuit? I mean, I think questions have been raised about the legality of the payments and so on. So, let’s kind of start with the policy goals, and then kind of walk us through why it’s so important and then why are we at this point, and then since we’ve talked a lot about where you all think we should go from here.

TIM JOST: Well, the policy goal was to make healthcare, as well as health insurance, affordable to low income people. And the basic idea was, if I am someone who has an income at 100% or 150% of poverty and I get health insurance for $50 a month, but I’ve got a $6,000 deductible, that’s worthless. I’m not going to buy it. Bankruptcy gives me a better deal than that. So, the idea was, let’s reduce cost sharing for people, basically below 200% of poverty. And it reduces it very significantly for people under 150% of poverty. There are a lot of zero deductible policies out there with reasonable co-pays. So, that was the idea; let’s make healthcare as well as health insurance affordable for low income people. What happened though, was that although the law says very clearly that insurers shall reduce cost sharing and the federal government shall reimburse them for doing that. It is simply paying them for a service. It’s not a bailout. Although the law said that, there wasn’t any specific appropriation for the money, and under our constitution, you have to have an appropriation for money before it gets paid. So, in 2014, the House was looking for some reason to sue the Obama Administration and some smart lawyer discovered this problem. So, a lawsuit got filed by the House of Representatives against the Obama Administration by saying, you can’t pay these because it’s illegal. The Obama Administration argued that in fact there is an appropriation, because the money is part and parcel of the appropriation for the premium tax credits, which is clearly there. But a lower court, a federal district court judge in Washington refused to accept that argument, and enjoying the payment of the cost sharing reductions, but stayed her decision in spring of 2016 pending an appeal. The Obama Administration appealed to the D.C. Circuit, filed briefs last fall, and then when the House was supposed to file its brief, their lawyer said he was too busy, and then the election came along. And ever since the election came along, there has been continuances in the case because the House and the Trump Administration say, we are negotiating, leave us alone, we will figure this out. Nevertheless, at any time, the Trump Administration could announce, we’ve changed our position, and now we are no longer going to defend this lawsuit. Well, a month ago, the attorneys general from 19 states were successful in intervening in the lawsuit, and so now if the Trump Administration tries to dismiss the appeal, we’ll find out what happens next. It’s unclear. But at least somebody would be there to say, no, let’s keep this going. In the meantime, the insurers are sitting there with seven, nine, ten billion dollars sitting on the table that they have not written into their rates. They are saying: How are we supposed to be doing business when we don’t know whether we are going to get paid or not? Which is a fair question. So, that’s where we are, and the CSR appropriation would simply clarify that question, and at least in the short term, loot the lawsuit and get everybody back on their feet again.

And one last fact on it, and that is that the CBO has assumed all along that the cost-sharing reductions were funded, so it’s in the baseline. There would not have to be a pay for if the Senate adopted it, although of course, as Joe will say, they still have to borrow the money to pay for it.

SARAH DASH: Anyone else want to comment? Sara?

SARA COLLINS: Just one thing: Just to show how important these cost-sharing reductions have been, if you look in our new issue brief on Exhibit 12, and we ask people about how much they pay in deductibles. So, people with incomes under 250% of poverty, who are in marketplace plans, are paying deductibles that are around the same amount as people are paying employer based plans. But if you look at people above that income threshold, about 250% of poverty in the marketplaces, people are paying much higher deductibles than they are playing in employer based plans. So, it’s been effective for lower income people to reduce their out-of-pocket costs.

I also wondered if Brian — we had an earlier conversation about what states are doing in response to this uncertainty.

BRIAN WEBB: That’s where it gets complicated. It’s not complicated already. Is if the federal government isn’t going to reimburse the companies for that difference in premium between the lower cost sharing and the higher cost sharing. Companies have to do something to compensate for that. So, it was suggested in a couple of states that they go ahead and take all of those projected losses and load it all onto the silver plans in the exchange. Why? Well, silver plans are what people buy to get the cost sharing reduction. They are silver plans, just with lower cost sharing. A couple states did that. Now, if you saw the congressional budget office report, if everybody did that, if all the carriers loaded all that loss onto the silver plans, that means your tax credits go up. Tax credits are based on the second lowest silver plan. So, not only would you basically be paying with those tax credits, that loss, that seven billion dollars in lost revenue, but actually you would be paying more than that, because you would be paying — also the people above 250% of poverty, you would be paying their additional tax credits as well for all of the silver plans, or bronze plans or anything else they want to buy. So, actually it was 194 billion dollars over ten years in additional federal spending, if the federal government doesn’t just pay its obligations here. Now, right now, some states have said, yeah, load on silver. Some have said, load it on all plans, on and off exchange. Some say, we are not going to tell you what to do, do whatever you want. We’ve got some carriers assuming payments will be made. Some not. Some loading on silver, some on all plans. And this is going to be a disaster. We need to know what the rules are. We need to know what people are supposed to do, so we are all on the same page come September 27th when all rates are supposed to be finalized.

MATT EYLES: Right, and just the final thing that I will add is, really back to the point around, you know, what’s so special about the CSRs that has created this level of uncertainty? And I think to Tim’s earlier point, there has been sort of a cumulative effect, and then looking ahead to saying like, what is the future of a market when there is such uncertainty and stability, recognizing this is such a larger amount of funding that we are talking about. I think that’s really — plans in particular that might have incurred substantial losses over the first couple of years, are looking at this and saying, this is really just too much and we need to wait and see what happens in this marketplace, before we can sort of commit to going further; because they don’t want to jeopardize their entire enterprise, thinking they still have responsibilities to their employer group customers who rely on them for coverage, and making sure that they are solvent and responsible insurers, to provide coverage to a broader group to their employees and to their communities. So, it’s unfortunate that it’s gotten to this place, but that’s really the calculous that’s being faced, I think, by a lot of plans right now, and why the need for action is so urgent.

SARAH DASH: Great, so I’m going to ask for the green cards to be brought up, but I want to — 1332 waivers came up a lot too, and I want to just kind of first set a baseline, someone can quickly explain the 1332 waivers and kind of what those guardrails were in a nutshell. I know it’s longer than that. And kind of talk about what would we expect states to do under those 1332 waivers? Brian, you mentioned Alaska and Maine that used that process to get some re-insurance, but what would states be expected to do under 1332 that’s different than what’s happening now?

BRIAN WEBB: What states are looking at — and a couple of states, Iowa and Oklahoma, I encourage everybody to look at those two states. They are offering broader 1332 waiver ideas than Minnesota and Alaska, which were just the re-insurance. Someone to get rid of the exchange. So, basically you would sell through your agents and brokers to the companies, or through private exchanges, if they wanted to form, and you could still get the tax credits and all of the benefits for buying through those alternative groups. Some want to adjust the essential benefits. Some want to change other aspects to try to provide coverage that is more affordable to people, that’s less coverage for certain populations, while trying to protect everybody else. That’s where the guardrails come in, because the guardrails is basically, you have to make sure that the coverage is the same, the cost is the same and no more cost to the federal government. So, to do that is difficult. It’s hard to change essential benefits to make sure everybody still has the same access to coverage. Again, it’s hard to change the subsidies, and like, Iowa wants to look at readjusting all the subsidies. It’s hard to do that and say, well, it’s still affordable to everybody. That’s where it gets difficult and that’s what states are trying to do. So, I encourage you again, look at Iowa and Oklahoma to see what some states are thinking about.

JOE ANTOS: One of the limitations of 1332 is that it only refers to the individual market, and maybe people have pointed out quite correctly that the individual market is just as step away from Medicaid. So, the idea of being able to coordinate waiver activities with Medicaid and with the individual market will be very important. It would also help to some extent resolve the scoring issue. If it’s supposed to be budget neutral, it’s really hard to do that if you are only dealing with the individual market, and you might be able to find some savings in Medicaid. In any event, it makes sense, given that you do have people moving back and forth between the two markets to try to harmonize the rules. And they are not harmonized at all.

BRIAN WEBB: Right, that’s where you would combine your 1115, which is your Medicaid waiver, with your 1332, which is your private market waiver, and try to get budget neutrality. And also, budget neutrality over the life of the waiver, not just a year, every year, every year.

JOE ANTOS: Right, but you can’t do that under the current rule.

BRIAN WEBB: Yeah, can’t do that under the current rules, so these are the kinds of things states would like to be a little more creative.

SARAH DASH: Actually, you guys read this questioner’s mind, because somebody asked about how HHS and CMS and Treasury, and I guess any other agency that’s involved, would operationalize combining the 1332, and 1115 waivers, so I think you’ve answered a couple of those questions, talking about kind of the need to harmonize the rules, but is there anything more specific that you would offer?

MATT EYLES: Well, I mean, I would look to maybe some other parts of the law where there have been so-called tri-agency rule making. Right? So, you have Department of Treasury, Labor and HHS that had issued rules that, you know, try and look at how do you get this kind of coordination. I’m not sure whether there would need to be specific authority to sort of authorize say, section 1115 and 1332 to be able to do that, but to the extent that you are looking across sectors, it happens today in some examples.

TIM JOST: The 1332 in fact says that states can combine applications for — or coordinate applications for Medicaid and individual market waivers. But the Obama Administration specifically said that when it comes to determining the deficit neutrality, that you have to apply them separately, you can’t combine them. And I think that was really more of a policy decision than a legal decision. 1332 certainly doesn’t prohibit combining the applications and looking for a budget neutrality for both of them. All 1332 waivers are determined jointly by Treasury and HHS, so there is already interagency cooperation there. One person explained it to me that the problem was combining real money and “squishy” money. That 1115 is a little bit “squishier” than 1332, and I think that there was — there have been some concerns from OMB and from the people on the budget side as to what happens once you start moving money from Medicaid into the individual market. I think there are also concerns on the part of people who advocate for the Medicaid population, that money that is intended for the very poor, not be used to subsidize higher income people. But I think it’s basically a policy decision and certainly a decision that could probably be implemented within the existing law, and Congress of course can change the law to make that clear.

SARAH DASH: Great, thank you. I want to ask about kind of the high cost individuals, low cost individuals and some of the conversation that has happened in the last year over the cost of coverage. Brian, you mentioned some states might want to shift the essential health benefits around, and you know, maybe drop some of them, or that kind of thing. And obviously the essential health benefits were a big part of the conversation around what to do with the individual market in the last year. What are the dynamics? Does dropping essential health benefits, requirements, lower the cost of care? For whom? What effect does that have on the stability of the market? On enrollment and that kind of thing? If you guys could comment on that.

MATT EYLES: I will start there. There has been some really interesting analysis that has been done by various actuaries to really look at sort of what’s been driving the costs of the individual market. They’ve tried to compare, what would a base plan have looked like, say in 2013, before the Affordable Care Act took effect, and 2015? What explains the difference in premiums? So, in 2013, and this is data from Oliver Wyman; they looked at sort of a standard individual market plan, and the monthly premium was about $280 a month. When they looked at a 2015 plan, it was almost $440 a month. You’re like, okay, what explains the difference? And things like the essential health benefits are not a substantial driver. Out of that total increase, only about 15% of it could be attributed to both an increase in the actuarial values, so the plans became more generous. And then, providing coverage for the essential health benefits. About 5% of the increase was due to taxes and fees like the health insurer tax, PCORI and others. The bulk of it actually was driven by the population that enrolled, and the level of utilization among that population. So, really, two-thirds of the amount was driven by the population that was enrolled, where it was unfortunately a sicker and older population than we were hoping to attract through the exchange marketplace. So, things like the essential health benefits are not really driving the cost of coverage. Could there be more flexibility perhaps within the categories? We argue, yes, there is. And that’s probably something that HHS could address currently under its existing authority. But scaling back those benefits isn’t going to lead to a substantial reduction in what the premium is.

TIM JOST: Just quickly; what it would do however, would be to significantly increase costs for specific individuals and if you look at those 2013 plans, the benefits they were least likely to cover were maternity care, mental health, substance abuse and pharmaceuticals. So, if you transfer those costs to individuals, there would be a very high individual cost, and there would probably be a very high social cost as well.

SARAH DASH: Brian, did you have a comment? Then Sara?

BRIAN WEBB: As you look down the road, we do have those grandmothered plans, those transition plans, and there is going to be a lot of talk about the fact that when they actually become ACA compliant, they are going to be far more costly. As Matt was mentioning, a lot of that cost is not the fact that they are going to be more generous packages. It is the fact that they are going to be put into the single risk pool. They will be in the pool with everybody else. So, that’s what we’ve got to think about, when we think about this population. Even if you said, yeah, you can go and sell those, but you’ve got to be in the same risk pool, rates are still going to go up significantly.

SARA COLLINS: Just a data point on dropping maternity coverage in particular. Chrissy Eibner from Rand did an analysis that’s on our site, looking at what it would do to premiums just to drop the maternity coverage benefit, and it would only reduce premiums by 4%. But it would increase women’s and family’s out-of-pocket costs by anywhere from 1000 to 3000%. So, that’s what it means. The trade-off is just not equal.

SARAH DASH: I have a follow up question, but I’m going to open up the mic’s, so if someone want to ask a question in person, feel free to stand up. Let me follow up on something you said, Matt, which was the population that enrolled. You know, there has been a lot of talk about, was that kind of a lot of pent up demand? And would that have been expected to stabilize? Or are we just dealing with a population in America that just realistically has a lot of chronic illness? Brian mentioned certain people just have very high medical expenses, very high cost of treatment, et cetera. Talk about that a little bit, and then I want us to just broaden it a little bit, and talk about actually getting people into the marketplace since there has been conversation around sort of the outreach and enrollment, and the marketing and what does that mean not only in terms of, you know, whether or not people sign up for coverage, but what does that actually do to the stability of the marketplace or not? Another big question.

MATT EYLES: Sure. Just to start, you know, I think it’s a mixture of everything that you just mentioned. So, yes, there was some pent-up demand. Certainly, early in the program. And we’ve seen some of that persist. There is also — you have to think about the nature of the population where given that 85% of it is receiving at least premium subsidies, and 60% of that group are receiving cost-sharing reductions, perhaps this population looks a little bit more like a Medicaid population from a health perspective. When you look at sort of the average risk score, which is a really wonky actuarial term for like, what’s the health of the population? It has tended to skew a little bit higher. People have also seen some challenges with things like special enrollment periods that were being used to essentially enable sort of “just in time” health insurance. So, rather than staying continuously covered for 12 months, special enrollment periods, and there have been some changes recently, were leading to situations where people were coming into the program, utilizing a lot of services, and then once they got treatment, they decided to just drop coverage. Some of those changes have been put into place recently, and so hopefully we can get to a point where we will get some longer-term stability, but there is a number of factors that have contributed to what we’ve seen at least in terms of higher utilization overall in this program, versus maybe what was expected.

JOE ANTOS: You didn’t mention the three-month grace period which I think is maybe even more significant, because basically some people have been able to get three months’ worth of services without paying anything. Insurance doesn’t work that way. That is not insurance, that is just a government subsidy.

SARA COLLINS: I just wanted to make a comment on the outreach and enrollment issue and based on our survey findings, this is exactly the wrong time to be pulling back on advertising and outreach in enrollment. We find that 40% of people who are uninsured are unaware of the marketplaces. So, that’s an indication that the advertising is very important still, remains to be very important. We also find that people who get personal assistance, and maybe it’s a navigator, maybe it’s a broker, maybe it’s a help line, we don’t know, but they are much more likely to enroll in a plan than people who didn’t get that kind of assistance. So, this continues to be a need and a very important part of increasing enrollment. Some work that ASPY had done earlier in the Obama Administration show that states that had the highest enrollment growth had declines in per member, per month. So, enrollment is a huge part of spreading the risk across people who are very sick, and people who are much more healthy. So, just continuing to improve the affordability of plans, continuing to making people aware of their options, and helping them through this choice that’s very difficult in the individual insurance market. How many of us have had to buy a plan on our own, in our careers? I’ve never had to do it. It is a very complicated process, even though it’s been simplified over time, the work that HHS had done on the website, has helped people significantly over the last few years. But it still is important that people are able to get help when they need it.

JOE ANTOS: I would raise a question about navigators versus brokers though. I think there is a gigantic difference. Brokers are generally professionals. They are obviously intending to sell products, except in the cases where, as Tim mentioned, where fees are not being paid. But if they are being paid, then they are going to be able to tailor the product and sell the product. Because that’s what they are doing, they are selling the product to somebody who is largely unaware. And we are talking about a population that is not used to this. In fact, neither are we. If you have a problem with your employer sponsored plan, it’s because your HR director didn’t understand what he was buying either. So, in fact, you need people who are professionals at this. And as Tim said, those are the people who really brought the bulk of the new people into the exchanges. I think the recent announcement by the Trump Administration, while it was pretty sharp, pretty severe, none the less, they were pointing at something — at least, I think they were pointing at something that is a real issue, which is, you want to put your money in promotion and in sales, where it’s going to do the most good. And I think the navigator program really needs to be looked at, but probably not cut quite so severely before you look at it.

TIM JOST: I would absolutely agree that brokers and agents have been much more effective at signing up people than the navigators have been, but on the other hand, that really wasn’t the navigator’s job. In fact, they are prohibited from selling insurance. Now, if you look at the statute, if you look at the regulations, if you look at the funding opportunity announcement, if you look at the grant awards, which I have done for the navigator programs, they were not primarily tasked with enrollment. They are tasked with education, with outreach, with dealing with hard to serve populations. With helping people find access to Medicaid, as well as ACA coverage, as individual market coverage. All of which are things that agents and brokers aren’t paid to do. Although, some of them do some of that. And so, and the navigators were completely blindsided by this, as frankly were everybody but a few very top people in the government. And frankly, I think there is some serious legal questions as to whether you can retroactively defund a program based on criteria under which the program was not funded. So, I think navigators still serve a useful role, and I think it’s a terrible shame that the program was defunded.

I would like to just very briefly respond to a couple of other things that were said. One of which was about special enrollment periods. Last year, the Obama Administration started requiring documentation for special enrollment periods. What they found was that enrollment did drop significantly, but that it fell much more significantly with young people than with older people. So, the idea that people were gaining special enrollment periods and that that was what was driving the high cost of care — I mean, they said, for next year, let’s do a pilot project, let’s see how it works out. The Trump Administration rather imposed 100% verification and I’m curious to see how that is in fact working out. I doubt we will ever get any data on that after the Trump Administration. I will stop there.

SARAH DASH: Thanks, Tim. I know we could probably talk all day, but I do want to get to the gentleman who are standing at the mic. So, I’m going to start with Chris to my left.

AUDIENCE MEMBERS: Thanks. Chris Jacobs, Juniper Research Group. My question — I think there was consensus from the panel in the comments about the CSR payments that they are all in fact at least currently being unconstitutional. At least in theory, under the system of law, that the executive should have no discretion whether or not to make payments. If there is a valid appropriation, you must make the payments under prior Supreme Court precedent. If there is not a valid appropriation, you cannot make the payments, and that is a violation of the anti-deficiency act, which is a criminal violation to do so. So, everybody, by saying it’s uncertainty, is basically admitting there is no valid appropriation currently. So, that gets to my question, particularly to Brian and Matt, about the idea that this isn’t a bailout. Why would insurers base their business model, or why would insurance commissioners base their regulatory model for the current plan year upon a new administration continuing unconstitutional acts? What everybody admits is unconstitutional.

TIM JOST: Chris, I do not admit that they are unconstitutional. The Obama Administration made a good faith argument that there was an appropriation, it never argued that they could make the payments without an appropriation. I understand that’s your position, that is not the consensus position at this table.

AUDIENCE MEMBER: Well, everyone who says it’s uncertain, you are admitting —

TIM JOST: No, it’s uncertain as to whether they will pay or not. Not as to whether they are constitutional or not.

AUDIENCE MEMBER: Right, but if there is a valid appropriation, the insurance commissioners, the governors, or the insurance companies themselves could go to federal court and file suit under train of New York, demanding that the Trump Administration continue to make the payments. No one has done that.

SARAH DASH: Let me see if anyone else on the panel wants to respond.

AUDIENCE MEMBER: My point is, like I said, this was foreseeable. I had submitted requests to the California Insurance Commissioner and the California Exchange, asking had they done any analysis after the ruling last year, to see what would happen about the payments, could a new — we all knew there was an election in November; nobody — at least neither Trump nor Clinton, to the best of my knowledge, committed to making the payments. So, why did everybody assume that those payments would be made for 2017? And what does that say about the regulatory model if everybody collectively assumed the wrong way?

BRIAN WEBB: Under the court decision, they are still being paid. Pending appeal. We will wait for the appeal, see what comes out of that decision, to see whether it is constitutional or unconstitutional. In the meantime, payments are being made. You have states like California that have said, let’s assume they are not going to be paid for next year, and let’s load it all on silver and let’s jack up the cost to the American tax payer.

AUDIENCE MEMBER: Did insurance commissioners do that analysis last year after the court ruling? If they didn’t do it last year, but are slapping on surcharges this year, how would that not be arbitrary and capricious?

BRIAN WEBB: For this year? For 2017, you have to remember the payments before 2017, we were still under appeal, right? And the court said those payment continue, right?

AUDIENCE MEMBER: Right, but I also — first of all —

TIM JOST: So, 19 states have intervened in that lawsuit, taking the position that the payments are —

BRIAN WEBB: I’m just trying to figure out, when were the state regulators supposed to tell the carriers, go ahead and load it on for 2017? And assume they are not going to be paid, when they were being paid. And the court was still out, and the appeals was not until sometime this year?

AUDIENCE MEMBER: I’m just saying, there was uncertainty there always. And ignoring it doesn’t mean it didn’t exist. I wrote a piece last May, saying the new administration could cut off the payments —

SARAH DASH: I think clearly there is differences of opinion on this, and I think clearly there is still a case in the court, and we’ve been able to have a good discussion about kind of the policy issues, certainly the legality and the constitutionality is not something we will be able to resolve today or at least not in the next few minutes, but certainly welcome to continue the conversation after the panel. But thank you for your question. Mike?

AUDIENCE MEMBER: Thanks, Sarah. I want to get back to some data that Tim brought up, and it’s something that Joe was talking about, in terms of the size of the individual market and sort of the stability or the churn of it, because Tim brought up that it’s about six percent of the population, but the census bureau — because I think that’s a snapshot in time. Six percent people are in the individual market. But that census has data that it’s about 16 percent over the course of a year, are buying their own insurance. That may be a little bit of an inflated number, but it’s clearly a lot higher than the six percent. So, my question is, how significant is that? The reason it’s higher, the full year, is because people go in and out of the individual market, they go to unemployed, they go to an employer plan, they go to Medicaid, you know, all around. I wondered if Brian could talk about how that varies state to state, because I know different industries, whether it’s seasonal or part time work or union — go to union states or non-union states, so that size varies probably state to state. And then if Matt could talk about how important that churn is for the companies as they are trying to enroll people and how it affects their overall cost as part of it. And if anybody else has any insights about what the actual size, or how to think about the individual insurance as part of the under 65 total population insurance coverage. Thank you.

BRIAN WEBB: I think you bring up a good point, and this is why you need to analyze each market individually. It is a significant difference from one state to the other about the type of population, even what’s available to them. I mean, we think of Tennessee where they have a large Farm Bureau plan that is available to a lot of people, that has a deal with a lot of issues of — whose eligible for what, how do you break up the market? That’s what this comes down to. How do you break up your market, and who is flowing in and out of it during the year? And it does vary by state as to what’s available to them and what that market, and what the size of it is. And that’s something we are constantly looking at. The size of the individual market is different from state to state, and when you look at the individual market, where they fit, what is available to them, are they coming in and out of Medicaid a lot in one state? Are they coming in and out of the small group market? Are they coming in and out of the large group market? Are there other things available? Are they going to alternative plans that are outside the market? Are they in transitional plans? Are they in grandfathered plans? That varies by state, and that is something that adds to the uncertainty of the risk that we are trying to, over time, hopefully get to some stability. Does that answer your question?

MATT EYLES: I would just add that the churn is real, and we know because of all of the reasons that Brian just mentioned, and whether it be from other say, commercial type insurance, or from Medicaid and the duration of coverage. So, it is — the sort of snapshot versus, if you looked at it over the course of a year, how many people are actually say, touching the individual market? It is significantly different, and I think it makes it challenging say, from an operational perspective, certainly for plans as they think about everything you need to do for a new enrollee, or someone who dis-enrolls and how do you really think about impacting the cost of care over the long term, if people are moving out, the types of investments that health plans make, say in the large group market, where you have a very stable population that might stay with you for a number of years and what you are able to do. With someone who is only there for a couple of months, you know, how do you really engage them and get them to think about their health and get all the right care and coverage, you know, delivered to them? It definitely makes it more challenging and it’s another just, back to that instability in the individual market.

SARAH DASH: So, we have just one more minute and I’m going to ask kind of for a lightening round. We don’t have time to get into the substance of what the longer-term goals might be, as Joe kind of pointed out in the beginning. But I want to kind of just ask the panel, I mean, do you think that is still needed? And what do you think it’s going to take in the next year to get to kind of conversations around what those longer-term goals might be, beyond the immediate short-term issues? And for folks who have to leave, if you just fill out a blue evaluation on your way out, that will be fantastic. Then we will wrap up.

MATT EYLES: I will start. So, I think listening to Senator Alexander and Senator Murray, this is supposed to be a first step and there could conceivably be a phase two, where maybe if we are talking about a very, very small package right now, that we could talk about re-insurance, and how do we put some of these programs in place that would provide some longer-term stability, whether we are able to get there given the full agenda that everyone in this room is very well aware of. I’m not really sure whether we will be able to do that, also knowing that next year is mid-term election year.

BRIAN WEBB: As we look to longer term, as I have said, there are a lot of long term issues here that need to be looked at, and it really is going to have to take lots of hearings, lots of conversations, lots of regular order, to try to get to a point where we can come up with a plan that people can work with, and obviously being the NEIC, we would say, the more you can give that flexibility back to the states, the better off we are going to be.

JOE ANTOS: Certainly, it is true that healthcare is local and so is health insurance, and it’s more local than the state level in most states. So, I think the presumption that the federal government can really call the shots is mistaken. Guidance is great, but really being able to characterize the problems that are really on the ground is a difficult issue. The longer-term issue though of course is what we haven’t been talking about, which is two-fold. One is how do we want to distribute subsidies across the population to enable them to buy appropriate health insurance? That means, looking more carefully at all of the other programs. Tim seemed to suggest that we ought to level up. I’m not sure leveling up makes sense, and I know we can’t afford it. But the other part of that is, healthcare costs. So, we talk a lot about financing, but it’s healthier delivery where the big challenge is, and the big opportunities lie.

TIM JOST: As usual, I agree with Joe, except for, I do think we probably do have to level up. I think this is one of our most expensive populations, and if we want the market to work, we are probably going to have to put some money into it.

SARA COLLINS: I just wanted to mention, just based on the comments about the size of the individual market, you know, that we are looking at about 18 million people in that market, but many more people who haven’t gained insurance, but have just switched over to the individual market. And about 30 million people who are currently uninsured, who might benefit from covers to the Medicaid and the individual insurance markets. So, we are around 60 million people who are now dependent on Affordable Care Acts provisions, and I think what’s been missing in the policy discussion, certainly through the course of the repeal and replace today, and even perhaps on this panel where so much of the conversation is about risk and money, that the health of people really depends on this coverage, and that insurance coverage, the Institute of Medicine, said in 2002, that concluded in the Seminole report, insurance coverage is the most important factor in someone’s access to healthcare. So, I think we really do have to keep that in mind when we are talking about money and risk, and whether or not the risk pool is balanced, that people’s health really does depend on this coverage.

SARAH DASH: Well, thank you. And thank you all for sticking with us. It’s a nice Friday afternoon, we really appreciate it. Please join us next week at the same time, but in Senate Russell 325 for a conversation on speaking of health and access to care, integrating care for chronic pain. That will be next Friday the 15th at noon in Senate Russell 325. And join me in thanking our panel.