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Schrader, House Moderates Craft Bipartisan Obamacare Fixes

A draft of the deal released this week would scrap the medical device tax and the employer mandate for businesses with fewer than 500 workers. At the same time, it supports re-establishing up to $15 billion a year for reinsurance to help carriers with the costliest patients, and would guarantee cost-sharing assistance for working-class adults.
August 3, 2017

U.S. Rep. Kurt Schrader, D-Ore., has been at the center of discussions in Congress to pass bipartisan legislation this fall that aims to prevent the collapse of the individual healthcare market, as well as the online marketplace created by the Affordable Care Act.

Schrader and three other representatives spoke to reporters Tuesday to share a rough outline of the centrist Problem Solvers Caucus proposal, which would guarantee the permanent funding of copayment and deductible assistance for working-class Americans buying on the exchange and create a federal reinsurance program that could total $15 billion, ideas that Schrader promoted in July amid the debate in the Senate over Trumpcare, which failed by one vote.

Sen. Lamar Alexander, R-Tenn., has announced hearings on similar ideas when Congress returns from its summer recess, and House hearings could also be forthcoming. It’s unclear how the mercurial President Trump might react to the legislation, but a coalition from the center might get him an overdue piece of legislation to sign, if far short of dramatically dismantling Obamacare.

“I think it’s remarkable that we’ve got this traction,” Schrader told reporters. “We’re dragging the leadership of both our parties along.”

The reinsurance program is the backbone of the fix -- it would put back in place a federal program to help health plans pay for care to their sickest patients, possibly through a new assessment on the overall market.

The $7 billion for cost-sharing assistance has already been appropriated in the budget, but explicit funding would put to rest a political turf battle over whether the Obama administration had been offering this assistance without legal authority. President Trump has also been rocking the health insurance market by threatening to axe funding for these payments, which could cause health insurance premiums to rise 20 percent.

Repealing this assistance would actually cost the federal government billions while increasing the uninsured by millions since the feds would be on the hook to increase subsidies for premiums to keep them at an affordable level for middle-class consumers. Lower-income consumers who lost this assistance would likely drop out of the market, since it could make it unaffordable for them to actually use their coverage.

“It’s a vicious cycle -- if we don’t do this, the whole insurance system falls apart,” Schrader told The Lund Report.

To sweeten the pot for Republicans, the proposal repeals the $24 billion medical equipment tax and also raises the threshold for the employer mandate from 50 to 500 employees.

“This is a viable path forward, and it gives each side something they want,” said Rep. Charlie Dent of Pennsylvania, a veteran moderate Republican.

Freshman Rep. Josh Gottheimer, D-N.J., said they plan to make up for the lost revenue from the tax repeal without raising the federal deficit, offering vague ideas about finding savings in Medicare payments. Schrader said he believed that they could find $24 billion in savings by making the bidding for Medicare Advantage contracts more competitive and changing the payment structure for drugs under Medicare to more heavily favor generic medications.

He said that simply cutting Medicare rates for hospitals and other providers was off the table. They could, however, pursue more value-based reforms championed by Sen. Ron Wyden, D-Ore., which have attempted to move the healthcare system for seniors to pay for quality outcomes rather than raw volume of tests and procedures.

Schrader represents the Oregon fifth district, a politically divided region that includes Clackamas County, Salem and the central Coast. He’s won election to that district for five terms by hewing to a middle-of-the-road path, first with the Blue Dog Coalition, and now with the Problem Solvers Caucus.

The legislation may be a “solvable problem” because it’s notably small ball in scope. It keeps the basic system intact while doing little to resolve the high and rising costs of care and pharmaceuticals. “What’s missing is any effort to get at the underlying drivers of the problem,” said Jesse O’Brien, a healthcare advocate at the Oregon State Public Interest Research Group. But as a first step, O’Brien said “it’s mostly good or totally acceptable.”

Schrader told The Lund Report that fixing the individual insurance market could help produce more productive debates in the future. “If we can stop this fire from burning, it will build a little trust, it will make it easier to go forward,” he said. “Cost containment is the next step.”

In Oregon, actuaries at the Department of Financial Regulation reduced individual health insurance rates by 6 percent after the Legislature passed House Bill 2391 in June, which put up $136 million for a reinsurance program over the next two years by taxing all state-regulated health plans 1.5 percent.

The state agency lowered the rates because health insurers will be able to dip into that money to offset claims for their most expensive members, but the plan requires a federal waiver for approval and is also being challenged by a group of Oregon House Republicans with a referendum. The state is waiting to seek federal approval upon completion of a public comment period and two public hearings in Salem and Portland on Aug. 24 and 25.

Reach Chris Gray at [email protected].