Congress must act by March to stabilize individual markets, experts say during Senate hearing

America's Health Insurance Plans CEO Marilyn Tavenner testifies during Wednesday's Senate hearing on the state of the individual marketplaces.

Expert witnesses warned lawmakers during a Senate hearing Wednesday that if they fail to ensure a stable transition while repealing and replacing the Affordable Care Act, they risk worsening the already unstable individual marketplaces.

“Insurance markets do not respond well to uncertainty,” Julie McPeak, Tennessee’s commissioner of commerce and insurance and president-elect of the National Association of Insurance Commissioners, testified at hearing held by the Senate Health, Education, Labor and Pensions Committee. "As you consider ACA reforms, it’s critical to remain transparent and to minimize surprises in our insurance system.”

For his part, Committee Chairman Sen. Lamar Alexander, R-Tenn., asked McPeak how quickly Congress needs to act in order to shore up the marketplaces enough for insurers to feel comfortable participating in 2018.

“I think you need to provide some indication to plans as quickly as possible, but March would be extremely helpful,” McPeak said, noting that insurance carriers have to file their rates by early spring. Janet Trautwein, CEO of the National Association of Health Underwriters, agreed, saying action is needed by late March at the latest.

“Right now, plans are trying to price for ‘18, and the uncertainty around cost-sharing subsidies and the tax credits would cause them to hesitate to price because we need to understand what the funding support is going to be, because that affects premiums,” America’s Health Insurance Plans President and CEO Marilyn Tavenner added.

Thus, she pointed to suggestions AHIP has previously made public, such as making full reinsurance payments for 2016, and continuing to provide premium subsidies and cost-sharing reductions through at least 2018. “Absence of this funding would further deteriorate an already unstable market and hurt the millions of consumers who depend on these programs for their coverage,” Tavenner said.

But that isn’t enough to ensure a stable and workable transition away from the ACA, Tavenner noted. Other necessary steps include recalibrating premium subsidies to encourage more young people to participate, federal risk pool funding and continuous coverage incentives.

Both McPeak and Tavenner also called for tightening special enrollment period rules, a suggestion also recently made by the leaders of major insurers Aetna and Anthem.

“The problem is that we’ve created a system that operates under a set of rules that can be broken,” Trautwein, said. “We see people that come in during open enrollment and drop out a few months later after they get the services they need.”

To solve that problem, she recommended making open enrollment for marketplace plans less frequent than the annual basis on which they are currently held, and penalizing those who enroll with more than a 60-day break in coverage. Congress could also move to allow consumers to use tax credits to buy coverage outside of the exchanges, she said, noting that “keeping people covered is the best tool we have to fight adverse selection.”

Fellow witness Steve Beshear, the former Democratic governor of Kentucky, agreed that the ACA “isn’t perfect,” but stressed that his state’s embrace of Medicaid expansion and successful implementation of its own online exchange made a tangible difference in improving the health of Kentuckians.

Any efforts that regulators and policymakers do take to improve the ACA, he said, must be done in a “deliberate and thoughtful” way. “Because one thing you cannot do is go backward.”

Later, Sen Elizabeth Warren, D-Mass., asked Tavenner about whether President Donald Trump’s executive order seeking to dismantle the ACA through regulatory means would further destabilize the individual marketplaces.

“I think this is part of what I tried to stress at this hearing,” Tavenner said. “We need predictability, and we need predictability for long periods of time in order to price and price effectively.”