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IMA Wellness Blog

Cancellation of January ACA Outreach Cost at Least $1.1 Million

Baker Tilly is an IMA member public accounting and consulting firm…

At the Agencies

In early 2017, the Trump administration ordered the Department of Health and Human Services (HHS) to curtail open enrollment outreach for the Affordable Care Act (ACA). According to a recent report issued by the HHS Inspector General, the sudden cancellation of these ACA open enrollment outreach efforts cost the federal government at least $1.1 million. In addition to the cost, when the administration abruptly curtailed the outreach, it caused enormous confusion within the agency. Staffers quickly stopped open enrollment advertisements and outreach, notified HHS, the Centers for Medicare and Medicaid Services (CMS) and several contractors that the outreach operations would end. Later that same day, administration officials clarified that only some activities should be ceased, prompting staffers to reinstate some aspects of the outreach plan. The mix-up led to $1.1 million in unrecoverable costs and $5.6 million in recoverable costs. A preliminary assessment by HHS had estimated that pulling outreach would cost at least $5 million.

According to the CMS, there is enough funding in federal reserves to support the Children’s Health Insurance Program (CHIP) for one or two months in the 12 states that need additional federal funding to support the program. However, CMS clarified that there is not enough money to fund the program nationwide through the end of the year. Now four weeks past CHIP’s expiration, state officials are unsure of future CHIP funding. There is little guidance on how the $3 billion in unspent CHIP funding is being distributed across states in need, and additional funding occurs on a month-by-month basis. Congress is aware of the funding need, but funds have not yet been authorized or distributed.

The Congressional Budget Office (CBO) analysis of the Alexander-Murray healthcare stabilization bill shows that it would save the government $3.8 billion over 10 years but would not lower premiums until 2019. The savings come primarily from rebates insurers would pay back to the government, and from the expansion of cheaper catastrophic “copper plans” that would reduce the subsidies paid out by the government. The CBO could not project changes in enrollment resulting from the bill’s increased open enrollment outreach and marketing. Without continuing cost-sharing reduction (CSR) payments, according to CBO, premiums will increase by an average of 20 percent, increased subsidies to pay higher premiums will increase the federal debt by $194 billion over 10 years and millions of consumers may live in counties where they cannot buy insurance on the individual market.

On the Hill

The U.S. Senate Health, Education, Labor and Pension (HELP) Committee Chair, Lamar Alexander (R-TN), and Ranking Member, Patty Murray (D-WA), developed a bipartisan bill to stabilize the individual insurance market. The bill includes funding for CSR payments through 2019; addresses so-called “double dipping” to prevent insurance companies from maintaining higher rates even once the CSR reimbursements are resumed; increases state flexibility and reduces administrative hurdles to the ACA’s Section 1332 waivers; allows states to make reforms that result in “comparable” coverage to current law while protecting essential benefits; permits states to determine budget neutrality over the lifetime of the waiver rather than on a year-to-year basis; and reduces the approval timeframe for state waivers, allowing emergency fast-track approval and “me too” waivers that resemble already-approved waivers. The bill does not include reinsurance funding or a delay of the health insurance tax. There is widespread industry support, including the National Association of Insurance Commissioners (NAIC) and the National Retail Federation (NRF). Groups especially support the funding of cost-sharing reduction payments for the remainder of 2017 and through 2019, as well as the bipartisan nature of the negotiations. Conservative House Republicans remain strongly opposed to the bill, and it could be included in an end-of-year spending bill rather than as a stand-alone bill.

House Ways and Means Committee Chairman Kevin Brady (R-TX) and Senate Finance Committee Chairman Orrin Hatch (R-UT) drafted an alternative to the bipartisan Alexander-Murray healthcare deal. This more conservative version of a healthcare stabilization package would fund CSR payments for two years. In exchange, the individual mandate would be paused through 2021, and those who went uninsured from 2015-2017 would not be penalized. The plan would also increase the maximum contribution to health savings accounts. Sen. Patty Murray (D-WA) signaled that this partisan proposal would not pass the Senate.

From the Administration

A U.S. District Court judge in California ruled against attorney generals from 19 states seeking to force the Trump administration to continue CSR payments that subsidize low-income consumers in the individual market. Because CSRs are now effectively being funded through premium subsidies, ending the payments is not expected to have an immediate impact. However, because of increased premium payments and higher number of Americans receiving subsidies, ending the payments would cost almost $200 billion over 10 years.


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