GOP Seeks Way to Pay Insurers So More Don't Drop ACA Plans

(Bloomberg) -- Republican lawmakers are seeking a way to guarantee that health insurers get $7 billion promised to them to help low-income people afford the out-of-pocket costs of Obamacare
plans, in an effort to keep more companies from leaving markets created by the law.

The payments are threatened by a lawsuit that GOP House members filed during the Obama administration that argues the Department of Health and Human Services inappropriately funded the payments on its own, rather than going through the congressional appropriations process. Insurers have said they would consider nonpayment a breach of contract and may drop the plans mid-year, Representative Greg Walden, an Oregon Republican who chairs a key health committee, told reporters in the Capitol on Thursday.

“I will do everything I can to make sure the cost-sharing reduction payments get made, especially this year where they were promised by the federal government under the contracts,” said Walden, chairman of the House Energy and Commerce Committee. “That's an obligation not only to insurers but also to the people who took on those plans. We cannot leave them high and dry.”

Several big insurers have already retreated from the ACA, often called Obamacare, because of financial losses, and more may follow suit. UnitedHealth Group Inc. and Aetna Inc. have left ACA markets in most states, while Humana Inc. is planning to stop offering individual ACA plans entirely for 2018. Analysts at Jefferies wrote in a research note that Anthem Inc. is considering pulling back from the Obamacare market next year. 

Separation of Powers

While the payments are being made as the issue works its way through the courts, the lawsuit heightens insurers' uncertainty about whether the funds will continue to be available. House Speaker Paul Ryan said the suit concerns a vital issue and will continue.

“We don't want to drop the lawsuit because we believe in the separation of powers,” Ryan said Thursday. “We believe in Congress retaining its lawmaking power.”

Walden said the funds needed for the payments should be appropriated by Congress when lawmakers are expected to pass legislation to continue funding the government by April 28 or face a shutdown. The money would be available next year, and Republicans hope to have worked out a deal to repeal and replace the Affordable Care Act by then. 

Republican leaders' proposal to repeal and replace Obamacare, the American Health Care Act, failed to garner the votes needed to pass last week. The bill didn't address the issue of how to fund the cost-sharing payments.

“It is a big issue we need to address in the future, and probably sooner rather than later, because the insurers are trying to figure out” what the marketplace will look like in 2018 and whether they'll have the cost-sharing reductions, Walden said.

--With assistance from Zachary Tracer and Anna Edgerton

To contact the reporter on this story: Anna Edney in Washington at aedney@bloomberg.net.

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, John Lauerman, Stephen West