tv Individual Health Insurance CSPAN July 26, 2018 8:14am-9:49am EDT
captioning performed by vitac >> -- and then apply really some sort of what they call muting factor to the reinsurance payments to make sure -- or at least minimize any sort of overlap or double payment. >> people might be interested to know where a reinsurance program is saving the federal government money. maybe you want to explain that. >> i probably didn't do a very good job. brian, you gave a great explanation of the atpc. >> basically if you were on a reinsurance program you're bringing down premiums because obviously there is this outside money coming in to help pay the
claims. well, when the premiums go down then your tax credits go down and there is a provision in section 1332 that says if you're saving the federal government money, you can basically get that money coming back to the state through what they call a pass through. so as rates go down, you're saving tax credit money, that savings then goes back to the state which they can use for really any purpose, but most are using it for reinsurance. >> all right. you guys are doing great. hanging here on this beautiful july, you guys are the last thing i do before i go on vacation for a couple weeks so i'm feel really good. i want to do level setting and build on a couple points that some of our others made on our panel this afternoon so we can get to questions because i know you all probably have that list of questions you want to ask us. i can promise or maybe not there is going to be a quiz at the end of my presentation so here is sort of what i want you all to
sort of leave this afternoon in terms of thinking about, you know, what really impacts -- what goes in -- why do you pay what you pay and where does that money go, talk a little bit about that. what are these recent policy developments and what do they mean for consumers who depend on this coverage and talk about some of the challenges? i totally agree with what brian said about affordability for that population who doesn't get a tax credit, we will talk about some of our thinking there and of course risk adjustment and i promise i won't get too technical. i think you first have to think about when you all or your employer are paying every month to a health insurance company, where does your money go? i think that's really important because i think that's a good level setting point as we're thinking about all the headlines you may read about premiums going up and sort of -- that sort of thing. we put together working with millaman in june this interesting info graphic which shows every dollar you're paying in where does that money go. i encourage you to look at it online, it has the detailed
methodology and breakdown and what all these different categories mean because that's really important. but if you look at it 22.3 cents of your dollar go to prescription drugs, that's significantly growing over time, 22 cents to pay dollars, 16 cents to hospitals and so on. so i think that's a really good thing for you all to think about when sort of talking about premiums, where does that money actually go? we're having to pay people to deliver healthcare that everyone needs and is so important. well, what drives how much those drugs cost or what those doctors require in terms of reimbursement, et cetera? there's several things that you all have to think about. i mentioned prescription drugs and obviously that drives that significant portion of your premium dollar, but who is covered? are they old? are they young? are they healthy? are they sick? sort of all that drives so does the plans as they're thinking about rates. what kind of providers are in the network? is it broad? is it narrow?
the level of the specialists that are in the network, et cetera. and finally how the care is managed and a lot of talk about this, so important not just sort of throwing more and more money at the system but really thinking about controlling the quality of care that's delivered and making sure that that money is very well spent in terms of premiums. so as sabrina mentioned all of this thinking about what is that premium going to be kicks off way long before you all even are thinking about in the news. we are in this pink period right now where plans are really done. they've developed their plans, their benefits, their rates and for those of you that work on the hill it's always interesting, we get a lot of questions about potential legislation solutions that come up in june, july, august and we're like, wait a second here, we're just about finished. so we really need to think about sort of the timing that goes into some of these proposals. we're happy to of course talk about them and provide assistance, but it's always important to note how long of a lead time that goes into the planning of benefits and how
that process sort of plays out and sabrina sort of talked a little bit about that as well. so these are sort of the key dates that i believe in the packet we've included some specific state deadlines that i think are good for specific states that you are tracking. so sort of hard to read and a number of our speakers already spoke to this, but as part of looking at how much care is going to cost there's obviously a component of what's happening in my state, what's happening in washington, d.c. and we have an issue brief that we link to in the packet around -- that goes into a little bit more detail into some of these factors if you can't see it up on the screen. these are things like the mandate and obviously that's had an impact on plan rate filings, 2019 will be the first year and we will really sort of see how that drives or doesn't drive coverage, you know, cbo has sort of that one estimate and there's other sort of views out there about what that will impact, how many people purchase coverage. state-specific programs like what bob talked about in terms of maryland's reinsurance.
obviously the health insurance tax on a moratorium is about 3% of the premium that you pay. i would say that there is really a lot of uncertainty around some of the regulatory developments related to association plans that have been spoken at at length and the short-term plans as, you know, we've soon the rule or in some case proposed rule and you really don't know how the market is going to respond to that and what that's really going to mean from people that remain in the market, how healthy they are or not or what sort of changes you're going to see. so very interesting and i would hate to be a health plan actuary right now for a lot of reasons, but specifically because a lot of this is untested. right? we don't really know how this is going to drive markets in specific states. so i think we've seen from the administration with the executive order from october a real policy shift to focus on regulatory actions and these regulatory actions are focused on, you know, one primary goal
which is giving people alternatives to the aca coverage. i mean, that's sort of very clear goal in terms of the association health plans and the short-term plans. so i think it's just important to know that all of these types of plans are very different, they have different rules, different sort of structures and benefits, et cetera. so we did lay out a little bit more detail in the different types of plans. so you know what -- and i think our biggest issue and importance is making sure that when consumers are purchasing these products they really understand what they're buying, how many of you would like to read your insurance contract every year? nobody. really important in terms of disclosures. so i think we've mentioned this a little bit in terms of the 2019 outlook. i would say that at least going into a couple of the fourth of july week plans sort of knew what they knew, we understood the regulatory environment, we understood the trends that were happening at various companies
and across the country in terms of different state programs and there was -- i always say this, whenever there is a press release saying that there's something stabilizing then something happens. so we have a number of new entrants coming into new states, a new local metropolitan areas which i think is really exciting, it's showing that health plans are committed to serving this market, they want to be able to support people who don't get coverage through work or don't qualify for a federal program and they want to support this market. so we have seen sort of that positive -- positive development there. but the one thing that i would highlight and we 100% agree with what brian said, is that this is not working for those people that either they own -- they're caring for a family member, they're a sole proprietor, they don't have insurance through work, and i think where we really agree and want to support those policy solutions that support that aspect of the market because i think that's -- that is the part of the market, about 8 million people at least
in the current individual market plus the uninsured, which is 28 million or so, that are really going to be driven towards some of these aca alternatives. so that's going to drive up cost for the people that remain, right? depending on how healthy they are, assuming a healthier person would leave that market. so that is a really significant long-term concern for the individual market. so risk adjustment. so i don't have enough time, i'm happy to take questions. a lot of complicated legal developments in the case yesterday or the day before. the administration sent an interim final rule to omb to respond to the issue at a court case related to the methodology behind how much people pay in and receive from the risk adjustment program. so that is a very positive development. ahip along with blue cross blue shield association submitted a motion in the case to the new mexico judge yesterday also urging -- addressing this
uncertainty and prompt resolution. we can get into that a little bit more if you all have questions about that. so really appreciate your time. thanks for hanging with me this afternoon and we welcome your questions. >> thank you, jeanette. and thank you to the other panelists. i'm going to open this up to questions now. there are two microphones in the floor and there is -- there are also green forms that you can fill out and bring up to the -- and people will pick them up. so before we -- before we get -- before we get started, i do want to just ask one question to the panelists, it's a two-part question and it gets at this issue that brian raised and highlighted and jeanette just also underscored is the affordability of insurance plans for people who are above the subsidy threshold, so above 400% of poverty which is only about $90,000 to $100,000 a year for a family of four. as jeanette mentioned, they are
going to be the most likely to be attracted to the -- these non--aca compliant health plans like short-term policies, but there are also a lot of plans in the market that don't comply with the affordable care act, limited benefit policies, policies that are sold by health sharing ministries, farm bureau policies, and my question is -- and jeanette has a really nice list of things that consumers should think about when they are marketing a plan -- how are people going to know that they're being marketed a plan that may not cover everything that they need that might underwrite certain members of their family? do these plans have warning labels on them and is that going to vary a lot by state? >> states are going to have requirements for disclosure, that's the strongest protection, number one, and if they fail
they have to submit that material to the state for approval or at least to review so that they know that they're giving the proper kind of information to consumers before they make the purchase. so it's clearly one where the buyer is going to be forewarned before they make the acquisition of a short-term medical product that has some real distinct limitations to it, particularly if it turns out that they have very limited coverage for preexisting conditions, those people really need to know that before they make the purchase and think they have insurance and then try to use it and find out the hard way that they don't. so states are going to -- i can tell you the state of washington is going to be vigorous on this. in my discussion with my colleagues from other states, they are equally going to be aggressive. >> yes, certainly the disclosures are required for short-term medical and some of the other plans as well, but
it's important as commissioner kreidler mentioned, that people, you know, look at things and read the disclosures, but also listen to what your producer is telling you, make sure your producer is telling you something that matches with the paperwork that they put in front of you. people need to be diligent and they need to make sure they understand exactly what it is they're getting. >> i want to be -- push back a little bit. in our analysis of state rules relating to short-term plans, very few require them to submit forms and rates on an annual basis, and so there's actually not a lot of upfront review of what hits the street and what consumers see, and time and time again we hear about consumers that get very slick marketing materials that make a plan look a lot like a major medical policy when it's not. i will just give you one example
of the kind of sophistication you might have to have as a consumer. i got a call the other day from somebody who bought a short-term policy, it was a stacked policy so it was basically four three-month policies that she bought all at once and it said it covered mammography. so she goes to get her mammogram and she gets a really big deal. and she said this is covered mammography i'm not supposed to get a bill. oh, it doesn't cover the reading of the mammography. so what's the consumer supposed to do? it said it covered mammography, but the plan said, sorry, we didn't cover the reading. so you have to pay this gigantic bill. so i am not sure disclosures, you know, in ten-point font at the bottom of a ten hj page marketing brochure is going to do the trick. >> i certainly would add the caveat that we are not going to allow them to renew that policy, it's a one-time deal and it's
limited to three months. >> but really the point, too, is that there's just a lot of variation across states in their approaches to all of these kinds of plans, so that's something to watch this year. i also think it's important just on the affordability side that states have a lot of tools other than using these plans to get people cheaper policies who are above this threshold. i do want to point out, too, that congress has the ability to make -- to extend the subsidies. so we have an analysis that ran did on our commonwealth website that shows if you lift that 400% of poverty cap threshold and allow the tax credits to extend to people above that level, it has a natural phase-out, no one pays more than 9% of their income towards their premiums, so it's actually not very costly to the federal government to do this, but it would really provide a lot of relief for people who are just over that threshold. in the absence of that states
are obviously really scrambling now to address this affordability issue in their markets, one of them obviously is the promotion of these alternative benefit policies, but the reinsurance efforts at the state at least up to eight states at this point is a way of making plans more affordable and maybe the panel would also like to chime in on how other states are doing this -- or what other tools states are using to make these plans -- make policies affordable for people over that threshold. >> well, the key tool states are looking at right now is reinsurance, but there are some other ideas out there, i don't know if you're very familiar with that i had hoe is doing, but they're trying to create what would be a state plan with a different risk pool, it's tied to the other risk pool but it's another option out there. it's got a lot of the same benefits and things like that, but because it's a different pool it provides more affordable
options. you have iowa following tennessee in creating a state farm bureau plan which they call not insurance which means it doesn't have to comply with the aca, but can be a way to provide more affordable coverage but it tends to be good coverage to people in those states. we will see how that plays out. so there's just -- this is going to be the challenge. this is what all the states are looking at is what can we do going forward? i think we've been basically spending the last eight years just trying to get to stability, just trying to figure out what the options are. we keep -- you know, keep hearing changes at the federal level, regulatory changes, all kinds of things, so can we get to the point where things are stable enough where we can really sit down and try to figure out for each state how best to get affordable options to people. that's the challenge in front of everybody right now. >> stabilizing the market is number one. i mean, we don't want to see individuals going off to health insurance products that are weak
and inadequate but they're cheap, but as soon as they get sick then come running to the aca-compliant plans. if you do that you have a very expensive risk pool for anybody that really needs insurance and that person out there that's with the cheap policy today will pay through the nose tomorrow when they try to get full coverage because, wow, all of a sudden i have metastatic cancer. >> i would also note that that becomes very expensive to taxpayers as well because they're paying for a lot of that coverage on the exchange and if rates keep going up because it basically becomes a high risk pool taxpayers will be paying that dime. >> i would say, i mean, there are some creative policy solutions that we've been sort of thinking about. minnesota did something pretty interesting a couple years ago where they created a specific state discount program for those people that were unsubsidized. unfortunately that didn't work that well just because it was announced really late in open enrollment so there were some other complicating factors related to that, but that was
something that states could certainly consider, you know, i think the budget questions are a big one. there's also -- you know, the individual market doesn't get the same tax parity that, say, you get when you purchase employer-sponsored coverage or small group coverage and sort of, you know, thinking about that, only individuals up to the 400% qualify for that premium tax credit. does there need to be a debate around sort of that? and then there's sort of other things that we think are really important, especially in rural areas, you know, addressing -- expanding access to telemedicine, some other things to really help get at sort of that cost of care lever that i will call to really think about how do you get that underlying cost down that we really think are important to consider. it's not just sort of -- reinsurance is great and we love reinsurance, but i think they are sort of looking at that in concert with some other things that really sort of address more of the underlying root causes and some of the things that i showed in my slights of sort of
why the cost of the smaller pool of people is ssh continues to go up. >> right. and also i just want to mention, too, in addition to the minnesota subsidy program a couple states -- and you can see it on georgetown's new map that is on our website -- other states have also increased their subsidies. so they have taken a different path from reinsurance and increased the subsidies for people to make them more affordable. so i am going to switch to the first question. >> thanks. mike miller and just for background, i'm a physician who has been doing health policy time for about 30 years. i want to give you the context because i work both here in the senate, over in the house and for the last 18 years i've been buying -- for most of the last 18 years -- been buying my own health insurance in four different states where i've lived. i am the face of the constituent in that unsubsidized individual market. i want to bring up a couple things because one thing that is very clear sabrina mentioned
divergence, there was a great divergence in the state before the aca, the aca brought up divergence. the state where i now live the rates are going up very much and i ran into a friend who is republican yesterday in the metro, he is paying $36,000 a year for his family of four, i'm paying about 9. i'm probably going to be leaving that state of maryland before the end of the year because potentially facing a 95% increase in premiums next year. my question is to brian and the two state insurance commissioners, do you guys think within your state operations how this affects economic development and prosperity and job growth, particularly around entrepreneurs and the gig economy. i was living in a state that was very progressive years ago and what they did in their individual small group market was drawing people in who were starting businesses bus because they knew they didn't have to
worry about how to get insurance for their new employees or themselves while they were going on this entrepreneurial risk-taking adventure of investing their time and money -- their lives and their money in this new venture. the question is are states thinking about their individual insurance markets as part of their economic development policy and practices? thank you. >> i think it's safe to assume that we all think about it, but we're very much limited a z to what we can do about it. because we're caught in a dilemma. what we can do that was by far the most effective certainly for most states and for the state of washington was to expand the medicaid program, don't allow those legacy policies to dilute the risk pool and a number of other steps that we could take as a state, whereas the most effective way we could help to stabilize the market and hold those rates down, but i think that has always been one of my primary movers as to why we really need to make sure that we
get closer to 100% coverage for health insurance because when people don't have coverage they impact the rest of us and the system adversely by causing rates to be higher than they would have been. we've got enough problems with pharmaceuticals and just general medical trend without adding to it some of the dumb stuff we could turn around and do. >> so the answer to your question is yes. but i would also say there is, you know, somewhat limited ability to respond. our focus on the reinsurance program is because it does offer us the ability to get some premium relief almost immediately in 2019, you know, it's very -- it's very hard to look past that right now because that's the thing that can get us the most relief right now, but certainly we're always concerned
with the folks who are in that spot. we have public rate hearings every year and you as the face and people who are in the same position as you are are there every year telling us about this. and so we're trying to do what it is we can, understanding that our statutory mandate is to provide, you know -- or to approve rates that are, you know, not inadequate, not excessive and not unfairly discriminatory -- or not discriminatory. so we're doing what we can. >> next question. >> my name is adidia i'm just an intern and i've been looking at a lot of the rate requests and a few of the states such as minnesota and pennsylvania have requested really low or even decreases and given like their reinsurance programs. so i wanted to know why do you think that the federal reinsurance program ended and
why there isn't more bipartisan support for reinsurance program at the federal level given like most states are talking about it and like we spent our entire time today talking about it. >> the one ended because the aca only allowed it for three years. it was a transitional reinsurance, the idea was that we would reach stability in three years. you know, we try. but there has been bipartisan support for a federal reinsurance program, last year there was a bipartisan group that got a bill very much along the process in the senate, it would have been $10 billion a year which translated to about $18 billion after pass through and everything going out to the states. that would have been a tremendous help, nationwide, especially for states that may not have the funds available or the ability to do an assessment and things like that. it would make sure it got something out there. unfortunately it got tripped up right at the end and the bipartisanship fell apart. so right now we're not doing it.
we would -- the naic is still very supportive of that and that would be a quick and easy way to, again, get to that stability so we can move on to the more in-depth changes necessary. >> yeah, i would just add that there are, i think, a lot of states, unfortunately, that a reinsurance program at the state level is just very challenging, either because it's difficult to get the legislature to raise the revenue or there's just not that infrastructure. a lot of states that have done it have leveraged a pre aca high risk pool infrastructure. so it's not -- it can be a really heavy lift at the state level. so perhaps we will soon be in more rational political times here in congress and the federal reinsurance could be revisited. >> it's really interesting what wisconsin ended up doing and had governor scott walker really
support state-based reinsurance program in their state of wisconsin and how he funded that was because of the savings from the health insurer tax moratorium and how that's passed through medicaid managed care plans and he used those savings. so very creative approach because that moratorium had been passed after they had already gone through that assessment process and used those savings to sort of fund the wisconsin waiver. so it's sort of a creative way to find sort of rainy day funds, if you will, and use that to sort of jump start the program in the state. >> thank you. >> so i have a few questions that have come in. would you like to -- do you have a question? i think we might need a microphon microphone. >> i'm sara with bloomberg law. anybody can respond to this, but a point that alex azar has made
is that healthy people who are in the exchanges are not likely to leave because they're getting subsidies. so i'd like to get some response to you about that because you're saying, you know, all the healthy people will go to the cheaper market for short-term plans, but if they are in the aca now they get subsidies so why would they leave? could you respond to that? >> yeah, sure. i mean, jeanette had a great slide showing -- i think it was jeanette, right, showing that there's, i don't know, roughly 10 million in the exchanges and 8 million buying off exchange. i think it's somewhere between 80% and 90% of people on exchange are subsidized. so i think the concern that you're hearing about these alternative or non-aca compliant policies and siphoning away of the healthy risk is that it will be largely the unsubsidized healthy folks that will gravitate to these cheaper options, but also remember the
aca subsidies are on a sliding scale based on your income. so if you are fairly low income, like between 100% and 200% of the federal poverty line you're getting a pretty good deal on the marketplaces, but as you get closer to 400% of the federal poverty line you're being asked to contribute as much as 10% or close to 10% of your income to premium alone, which is -- can be a pretty big bite out of a family income. so for thoeks like that, between 300 and 400 i think many could find that the short term or association plans are a cheaper option. >> state of washington now we're a little bit of an exception -- more an a little bit an exception from the average among the health insurance exchanges around the country is that 40% of the individuals inside the exchange do not receive a subsidy in our -- in our state exchange. that is much higher than almost
any other state and maybe every other state. so it's a little bit different in that respect. so their concern is if we don't do something that helps such as maybe a premium wrap as we've often referred to it which would be a subsidy for individuals on their premium -- for those individuals who do not receive assistance for their premiums, that more and more of them are going to wind up leaving the market. >> i think we have a question here. >> hi. i'm rhonda, i'm also just an intern. >> nobody is just an intern. >> jeanette had mentioned something that's a big topic of discussion right now which is prescription drug prices as an increasing percentage of premiums. so i was just wondering if there were any state or federal policies that you were a fan of that have been proposed that you
think will insight meaningful change in terms of producing overall premiums. >> sure, i can start that. earlier this week we've filed significant comments on the administration's prescription drug blueprint, which i really think has a lot of great ideas, sort of getting at this issue. one challenge is that with an rfi or request for information and so those really have to be turned into, you know, actionable sort of policies in order to sort of drive some of those results. one of the interesting ones that was in there was looking at direct to consumer advertising and talking about what something really costs in that advertising. i definitely thought that was interesting. so i think there is a lot of good ideas out there. it's the underlying unit cost of prescription drugs that's really -- and these continual price increases that's just the root cause and i think sometimes we get wrapped around the axel in thinking about other issues and rebates and all that sort of
thing, but it's really about how do you get more competition, how do you reduce the underlying drug costs, unit costs is the only way we're going to get at this. as you can see i think it's like, what, 22.3 cents on the dollar that you're paying every month goes towards prescription drugs and i don't see that number going down, frankly. >> there's actually, you know, an interesting finger pointing episode going on, it's been going on for a while. you will see the pbms point the finger of the manufacturers and say they keep raising their prices, they are the reason drug prices are so high and the manufacturers point their fingers at the pbms and say they're creating artificial spreads when they go ahead and sell and dispense or have their reimbursements go to the pharmacists. so there is a lot of finger pointing as to why prescription drug costs are so high and i think people need to take a look at that and at a policy level try to get to the bottom of that argument if you're going to get
any traction on any solution. >> hi. kate gill lard, american physical therapy association. what do you think the impact will be in states that have expanded medicaid, maybe transition some of that population into the private market and now are rolling it back? i'm thinking arkansas and new hampshire in particular have private options for their medicaid expansion population are now kind of backtracking, if that will affect the overall risk pool for good or for bad, just what your thoughts are. thanks. >> i'm not an actuary and so take this for what it's worth, but i think there's some evidence that the population in many states between 100 and 138% of the federal poverty line which i think is what you're talking about where they are currently in medicaid and there's talk about shifting them to the private marketplace, i
think there's some evidence that just generally a sicker population and so it could have a negative impact on the marketplace risk pool, but, you know, i think each of those states is going to need to do their own actuarial analyses and figure that out and then, you know, determine whether the tradeoffs are worth it. >> my name is lance kill patrick, i'm just a consultant. you know, a lot of the theme that i'm hearing from the panel today which is not necessarily surprising is the lack of control over so many different forces that are causing a lot of the price pressures and everything that are going on. i wonder if this isn't an inflection point where this could actually cause some rethinking about creating state public options or state-based medicare for all.
i know mr. rose is going to be talking about this issue -- not in favor -- this fall and i was wondering what the panelists' thoughts on that were. thank you. >> well, as the only elected person on this panel let me say that as i observe what's taking place right now in the system i clearly see some degradation taking place to the point where the only way that you can recover is to move to a single-payer system. just the consolidation that you've seen among providers, much less even among insurers, all of which make the kind of competition that we are anticipating as a part of the aca that much more difficult to effectively accomplish. i think, you know, the system itself -- and to some degree the
resistance to the aca, which is a market-driven approach -- moves us that much closer, then, to a single-payer approach overall. >> yeah, i -- you know, it's interesting, right? there's so much attention on the individual market which is this fairly small proportion of the overall population. and if you look at the actual cost of coverage in the individual market, the premiums, it's not that much different from the group market premium, it's just, of course, that people in the group market are insulated from that cost thanks to the employer tax exclusion and all that. but the point being that we don't talk in these panels about the underlying issue, which is, of course, the prices that providers charge and the cost of care. so one intriguing thing about a public option, of course, is
could that get at that issue? not so much the universal coverage issue which people rightfully care about, but more something to push back on the providers, which is really sort of i think where a lot of our cost issues lie. and you look at, for example, medicare advantage which is a pretty well functioning market, one of the reasons that's able to function so well and they're able to get essentially medicare rates from providers is because medicare exists as a public option and so basically the payers in that market just piggyback off of the medicare rates. >> so i can't sit here and not jump in on this question. i would lose my job this afternoon. so definitely from our perspective we really want to think about how you can support private market solutions and the role that health insurance providers sort of play. you know, 178 million americans get their coverage through their employer and that market is, you know -- there's certainly these
underlying medical cost trends, affordability, but it's working for a lot of people. so when we have these broad brush discussions around single payer and medicare for all you really have to think about the disruption to those programs that are working when the real -- seems to me the real problem is looking at the smaller population, this individual market that sort of gets all of the hot air for people like you and others that are buying your coverage on your own, and looking at solutions to fix that. let's talk about fixing that and improving that and a we've got some good ideas and i know others do as well on both sides of the aisle and let's do that before sort of -- sort of throwing the baby out with the bath water and going back to some of these other approaches. >> i also want to just point out that there is some definitional issues with this idea of a public option. so we've seen in congress the proposals for a continuum of public options and even at the state level you might even want
to talk about what they're doing in washington to ensure that every -- that every market has a carrier and one is requiring public plans that serve schools and whatnot -- private plans that serve public institutions to also play in the marketplaces. there are bills in congress that would do -- that would insert a medicare-like public plan option in states that have bear markets, for example, and they are kind of -- the proposals run along -- run along a continuum where more and more people have access to such a public plan. so i think one has to distinguish between these kinds of kind of more marginal solutions to bear markets before one goes off into the -- to the
single-payer realm. that there are potential ways to address some of the market issues that we're seeing, particularly bear markets, by coming up with a public plan-type option or requirements for insurers to stay in the market if, for example, they're participating in the medicaid program, maybe they should also be required to participate in the marketplaces. so i think there is a lot of fluidity in terms of what we mean by a public option. and i will go to the next question. >> hi. my name is isaiah, i'm an intern, like the others. i had a question about reinsurance and the mechanism that reinsurance employs to reduce the rate of increase in premiums. so if a state applies for a 1332 waiver and cms approves it and they have a state-based reinsurance program and the amount of money they're getting
from the federal government is equal to the amount that they're saving the federal government through reduced premium tax credits, how does that lower the rate of increase because the amount of money in the system isn't changed. >> well, so at least on the reinsurance side you're taking the worst claims out of the system and you're pulling them out. so you're obviously dropping the biggest drivers of, you know, claims cost out so you can drop your premiums. if you've got lower premiums, then the second lowest cost silver plan cost drops and therefore the atpc, the subsidy is not as high, and, therefore, you've got a lower subsidy coming, but you can do an actuarial study and show through use of that reinsurance what would have happened had you not pulled those claims out of the experience and then you can show what would have happened versus
what you anticipate happening and there's that gulf there and that's the savings and they pass the savings back. did i answer your question? >> kind of. i mean, specifically what i'm trying to get at is if the amount of money you're putting into the healthcare system, into the -- so the amount of money that they're getting, that the state is getting from the f federal government is the same as the amount of reduction in the tax credit, right? >> you have to have some money up front. there has to be some up front money that goes in that actually lowers the premiums and then that savings. i think that's where we're getting caught up, it's not the premiums reduced and then -- something has to reduce the premium so there is that money coming from the outside, it just augments it because you get some savings coming back which further lowers. >> now i'm better understanding your question. i think the answer is it's not necessarily, okay, you saved
$200 million, state, you get $200 million. cms looks at it and they use some calculation and i don't know what it is to determine what the actual savings are, but it may not be a dollar for dollar match. >> i see. thank you. >> i think we have time for one more question. >> hi. i'm ben lambert, i'm with the alliance for retired americans. i just wanted to ask there has been a lot of discussion of parts of the aca that aren't working as well as intended or as intended at least, but one people right now that does seem to be working more or less as intended is the 80/20 medical loss ratio. so particularly for the commissioners on the stage i was wondering if any of you are anticipating changes, policy changes, like less vigorous enforcement or anything along those lines, and if so how you're preparing for it?
>> well, it's somewhat interesting, you know, in the state of washington when it came to the medical loss ratio, the 80/20 stipulation, 80% being paid in premiums -- or for medical services and 20% for administrative costs, we had almost no pay-back to insurers because we were already meeting the standard. part of that is having a very competitive market and being very vigorous in how we regulated the market to make sure that all insurers played by the same set of rules. so they couldn't come in and low ball it and make money, but at the expense of the overall market. so it depends a great deal from one market to another, but i can't -- i'd be very surprised to see a willingness to go back and try to modify that in some fashion because it obviously means moving money away from patient care and moving more to
arguably profits for insurance companies and that is not a selling political remedy. >> i have not heard anything about modifying the mlrs. >> the only area that has been discussed and probably not that seriously, is possibly a break for rural areas. just try to get carriers in those areas, let them spend a little more money on marketing because it is more expensive to market in those areas, a little more on outreach and those kinds of things so give them some break on that, but that's the only thing we have really heard and of course that wouldn't necessarily destroy the marketplace. but the fact is individual market most carriers are well above 80%, some are at over 100% which is always very exciting. so it's there, but though just to make sure it doesn't get out of control. and we will see how it goes forward. >> thank you. >> thank you. i wanted -- i think this is -- we are out of time, unfortunately, and i think mary ella is going to close us out.
>> yes. i think we can all agree a round of applause for these incredible moderators and panelists. [ applause ] >> and for all those interns out there who started as a hill intern, i think we have probably a lot of people who started out as hill interns, it's a great beginning. and then you become consultants, of course. anyway, i want to thank the commonwealth fund for making today's briefing possible. i think it was an incredible discussion. really shed a lot of light on what's going on today, but finally i want to ask everyone to complete your blue evaluation form, please. it really helps us with programming and we also love to get your ideas for further topics for other briefings. so thanks again for coming and you can watch it again, i think, probably on c-span in another couple of days if you didn't get enough. thanks. and now live to capitol hill
as this morning u.s. trade representative robert lighthizer will testify on the trump administration's trade policy and the agency's 2019 budget. this hearing today following the administration's announcement tuesday of a $12 billion aid plan for farmers affected by retaliatory tariffs from china, canada and the european union and mexico. subcommittee members may also ask about the status of nafta, the north american free trade agreement. live coverage here on c-span 3.