[Congressional Record Volume 163, Number 151 (Tuesday, September 19, 2017)]
[Senate]
[Pages S5862-S5864]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS (for herself and Mr. Nelson):
  S. 1835. A bill to provide support to States to establish invisible 
high risk pool or reinsurance programs; to the Committee on Finance.
  Ms. COLLINS. Mr. President, the cost of health insurance has been a 
major problem with the Affordable Care Act and with many of the bills 
which have been advanced to repeal and replace this law.
  I rise to introduce the Lower Premiums Through Reinsurance Act of 
2017. This bill would provide States with the flexibility and support 
they need to create State-based reinsurance programs for their 
individual health insurance markets in order to lower premiums while 
ensuring continued coverage for people with preexisting conditions.
  I am very pleased to be joined by my colleague and friend Senator 
Bill Nelson in introducing this bill. Senator Nelson is a former 
insurance commissioner who comes to this issue with a wealth of 
knowledge dating to his experience with Florida's innovative 
homeowners' reinsurance program, developed in the 1990s in the wake of 
Hurricane Andrew. For my own part, I spent 5 years in State government 
overseeing a department which included the Bureau of Insurance.
  Over the past 2 weeks, the Senate HELP Committee, on which I am 
privileged to serve, completed a round of hearings under the able 
leadership of Chairman Lamar Alexander and Ranking Member Patty Murray. 
They

[[Page S5863]]

looked at the steps we could take in the near term to stabilize the 
individual market and help to bring down rates. Reinsurance was 
frequently mentioned as an option Congress should consider and adopt. 
Insurance commissioners from Alaska, Pennsylvania, South Carolina, 
Tennessee, and Washington State all spoke positively of its benefits, 
as did the five Governors who testified before the committee--three 
Republicans and two Democrats. Although the witnesses presented 
different views on how a reinsurance mechanism might be structured, 
they were in broad agreement that reinsurance funding would help 
stabilize the markets and lower premiums.
  The National Association of Insurance Commissioners has recommended 
that Congress provide reinsurance funding of $15 billion annually to 
help cover high-cost claims in the individual market. We realize, 
however, we are living in very tight budget times, and there is an 
understandable reluctance among many Members to provide that level of 
Federal funding. We believe the ACA's section 1332's flowthrough 
mechanism can effectively leverage that level of funding with a much 
smaller contribution of Federal dollars. Our bill, therefore, would 
appropriate $2.25 billion per year in 2018 and 2019, which should be 
sufficient to leverage $15 billion in total reinsurance funding 
annually, based on the ratios in Alaska's recently approved 1332 
waiver.
  As Alaska's insurance commissioner told the HELP Committee, next year 
her State will be able to fund its $55 million reinsurance program with 
just $6.6 million of its own money--15 percent of the total. The 
remaining $48.4 million will be provided in Federal flowthrough funding 
that matches the savings to the Federal Government resulting from the 
reinsurance program. Let me explain why there would be savings for the 
Federal Government.
  If we are able to reduce the cost of premiums, then the Federal 
Government will be paying less by way of subsidies to individuals who 
qualify for those subsidies because they make 400 percent or less of 
the Federal poverty level.
  The bill we are introducing today would allow States to quickly stand 
up their own reinsurance programs through the Affordable Care Act's 
section 1332 waiver process. Broadly speaking, the bill would create a 
menu of options States could use to design reinsurance programs, which 
in turn would be eligible for Federal seed money grants. States may 
also obviously add funds from other sources to the mix.
  States that want to set up their own reinsurance pools quickly could 
do so under our bill by using one of three options designed for 
expedited review: first, by demonstrating that their program is an 
``invisible high-risk pool'' along the lines of the Maine and Alaska 
models, which I will describe in more detail in a moment; second, by 
showing that their program fits within the parameters of ObamaCare's 
``transitional insurance program,'' which expired at the end of last 
year; and third, by submitting what I would call a ``me too'' 
application based on another State's program that has already received 
approval.
  I wish to take a moment to explain why our legislation provides 
expedited review for different reinsurance pool designs. First, many of 
the witnesses who testified before the HELP Committee made the point 
that States would have difficulty quickly coming up with their own 
design. We acknowledge that, and that is why we provided expedited 
review for a pool based on the transitional ACA reinsurance program 
previously in effect and with which States are already familiar.
  Second, we know from the experience of the States of Maine and Alaska 
how effective invisible reinsurance pools can be. Alaska's invisible 
pool reduced a projected 40-percent rate increase to just 7 percent 
this year and is expected to contribute to a 20-percent decline in 
premiums next year. Maine saw similar results in its program, the Maine 
Guaranteed Access Reinsurance Association.
  The Maine program, which was in operation from 2012 until the end of 
2013, covered approximately 3,600 insured individuals, at a cost of 
approximately $12,500 per person, per year, and reduced rates in the 
individual market by about 20 percent on average.
  It is important for us to keep in mind that the individual market is 
where people who do not have employer-sponsored insurance have to go to 
buy their insurance. If they make 400 percent or less of the Federal 
poverty level, they get premium tax credits--subsidies, in other 
words--from the Federal Government to assist them with the cost. But if 
they make a dollar over 400 percent of the Federal poverty level, they 
lose that assistance altogether.
  Another problem that is in the ACA is those cliffs, which make no 
sense whatsoever and really penalize individuals who may work in the 
trades, such as electricians and plumbers, who don't know for certain 
what their income is going to be and can face an unexpected bill where 
they have to pay back the entire subsidy. But there are others who make 
above 400 percent who knew it and didn't qualify for the subsidy, but 
they still have to purchase in the individual market. I think that 
should be revisited, but that is a speech for another day.
  My point is that they would benefit greatly from a 20-percent 
reduction in the premiums they pay. That was our experience in Maine. 
On average there was a 20-percent reduction in premiums when the 
reinsurance pool was in effect. The reinsurance pool even generated a 
surplus of $5 billion during its 18 months of operation.
  The Maine pool was successful for several reasons. First, risks were 
ceded up front so insurers could not wait until a policyholder 
developed an unexpected serious health condition to decide who was 
going to be in the high-risk pool and who was not. The rules also 
required policies for individuals who suffered from certain high-risk 
conditions to be automatically ceded to the pool on enrollment.
  I note that when an insurer made the decision to cede to the pool the 
risk for a particular policyholder, or if it was an automatic ceding, 
90 percent of the premiums from that policyholder went to the 
reinsurance pool to help finance it.
  Second--and this is important--the program was invisible to both 
individuals who were insured through it and to healthcare providers. 
Individuals were covered seamlessly and enjoyed the same benefits as 
nonpool enrollees. Likewise, healthcare providers did not know whose 
policy had been ceded to the pool.
  Third--and also very important--Maine's program operated with the 
full set of consumer protection guardrails set by the ACA, including 
guaranteed issue, guaranteed renewability, and prohibitions against 
taking preexisting conditions or health status into account in issuing 
policies or setting rates.
  Fourth, the Maine program was designed to provide true reinsurance. 
Insurers paid the first $7,500 in costs, plus 10 percent of the next 
$25,000. After that threshold, the pool picked up the rest of the 
costs.
  Finally, Maine's program was backed by a stable funding source. In 
addition to receiving 90 percent of the premiums for ceded policies, it 
also received funding that was assessed at a rate of $4 per person, per 
month, on all healthcare policies.
  While Alaska's reinsurance program differs from Maine's in some 
respects, the success of both models shows the promise and proves the 
promise of invisible reinsurance pools, and that is why our bill 
includes invisible reinsurance pools as an option for expedited review 
and approval.
  Open enrollment in the ACA exchanges begins November 1, just about 6 
weeks from now. In just days, CMS is expected to finalize the premiums 
insurers will charge in the ACA exchanges next year. While I personally 
remain ever hopeful that a bipartisan agreement on a targeted, 
consensus approach to stabilizing the markets and reducing premiums can 
still be reached, clearly, we have very little time. Beyond providing 
cost-sharing reduction funding, there is no step that would be more 
powerful in stabilizing markets and reducing premiums than providing 
reinsurance.
  This Chamber is deeply divided on what to do on healthcare policy, 
but surely we ought to be able to come together and build on the good 
work that the leaders of the HELP Committee have done--work that more 
than 60

[[Page S5864]]

Senators have witnessed and participated in by attending coffees that 
Senator Lamar Alexander and Senator Patty Murray have sponsored with 
our witnesses and by participating in the HELP Committee hearings. They 
have worked hard to produce a bill that would really make a difference.
  The bill Senator Nelson and I are introducing today helps to fill out 
the reinsurance provisions that I know from attending each of those 
hearings have been widely supported by virtually every witness who 
testified before us. It would enable States to stand up their own 
reinsurance program simply and quickly, and it would reduce the costs 
of the Federal Government if we used the section 1332 flow-through 
mechanism far below what would otherwise be required. Most important of 
all, it is something that we could do right off, along with the cost-
saving reductions, which help low-income people with their copays and 
their deductibles--their out-of-pocket costs. Those two steps are 
actions that we could take right now to help moderate premium increases 
that would otherwise occur and that would be of real benefit to anyone 
who is in the individual market.
                                 ______