Kasich and Hickenlooper detail plan to shore up Obamacare, break health care stalemate

WASHINGTON — A bipartisan pair of swing-state governors hope to break the stalemate over health care, sending Congress a proposal on Thursday that aims to bolster the individual market, increase state flexibility and restrain rising premiums.

The plan — spearheaded by Ohio Republican Gov. John Kasich and Colorado Democratic Gov. John Hickenlooper — would initially preserve and strengthen key elements of the Affordable Care Act and then give states flexibility to unravel some of Obamacare's coverage requirements. 

In an interview, Kasich said the plan should hit a political sweet spot, because it includes Republican and Democratic priorities. 

"Up front, you get (the market) stabilized," Kasich said. "Then set us free to ... do what’s best for states." 

The Kasich-Hickenlooper plan would:

• Keep the individual mandate, which requires most Americans to purchase insurance, until and unless policymakers can find a better incentive to get healthy individuals to get coverage.

• Explicitly guarantee the federal government continues to pay insurance companies subsidies that help them offer plans with lower deductibles and copays to low-income individuals. The Trump administration has threatened to halt those payments, which Kasich said would be a "disaster."

• Continue the federal government’s efforts to promote enrollment in Obamacare by funding outreach efforts that encourage people to sign up for insurance on the exchanges. The Trump administration announced Thursday that for the 2018 open enrollment period, it would slash the ad budget to encourage enrollment by 90 percent and also trim spending on a program to help consumers navigate the sign-up process.

• Create a temporary $15 billion stability fund for states to use to reduce premiums and minimize insurers' losses. The Kasich-Hickenlooper plan calls for funding that for at least two years but doesn't spell out how to pay for it. 

• Spur competition in underserved areas by exempting companies from a federal health insurance tax if they enter markets where there is currently only one carrier. 

Those steps would fix flaws in Obamacare and would likely appeal to Democrats who want to bolster the law and thwart GOP efforts to repeal it.

On the conservative side, the Kasich-Hickenlooper plan calls for giving states additional leeway in meeting basic coverage requirements and making it easier for states to seek waivers from the ACA’s regulations. The Trump administration is already taking steps to speed up and streamline the federal approval process.

The push to let states opt out of the ACA's coverage requirements is more controversial. Currently, insurers offering plans on the ACA's exchanges must cover 10 "essential" benefits, including substance abuse, maternity care and hospitalization. Conservatives say those mandates have made insurance unaffordable and over-regulated.

Kasich said giving states the flexibility to offer slimmed-down plans is a vital part of long-term reform. He said, for example, Ohio could nix the individual mandate and instead offer bonuses to young people to encourage them to sign up for coverage. And the state could offer younger residents catastrophic coverage that includes primary care and a medical savings account. 

"To me, that’s a legitimate definition of comprehensive" for a young, healthy adult, Kasich said. He said the governors' proposal "leaves in place some guardrails so we don’t end up in the Wild West."

Most Americans get their insurance through their employers or through government programs, such as Medicare. But those who purchase insurance in the individual marketplace face higher premiums and fewer choices in part because the fate of the ACA remains in flux.

Kasich said he has not talked to GOP leaders in Congress yet, but he and Hickenlooper outlined the plan in a letter Thursday to top lawmakers.

“Continuing uncertainty about the direction of federal policy is driving up premiums, eliminating competition, and leaving consumers with fewer choices,” the governors wrote to House Speaker Paul Ryan, R-Wis., and others. “We ask you to take immediate steps to make coverage more stable and affordable.”

Six other governors also signed on to the plan, including one Republican, one Independent, and four Democrats.

Whether Congress can move forward on the Kasich-Hickenlooper plan, or any bipartisan health care bill, is far from clear.

Many Republican lawmakers remain committed to killing Obamacare, a promise they campaigned on for seven years, and will staunchly oppose any legislative fix to the 2010 law. And President Trump has threatened to “let Obamacare implode.”

But there are a handful of GOP lawmakers, in the House and Senate, who want to craft a bipartisan fix to protect those Americans most at risk of losing coverage.

“If your house is on fire, you want to put out the fire, and the fire in this case is the individual health insurance market,” Sen. Lamar Alexander, R-Tenn., chairman of the Senate health care committee, said in an Aug. 1 statement after the Senate failed to advance a pared-down ACA repeal bill. “Both Republicans and Democrats agree on this.”

Alexander's spokesman did not immediately respond to a request for comment on the Kasich-Hickenlooper plan. Senate Minority Leader Charles Schumer, D-N.Y., called it a "good first step."

Kasich said he hoped the plan would appeal to Alexander and other lawmakers who seem committed to a less partisan, more pragmatic approach to health care. He said allowing the individual market to implode is "not moral" and the GOP has to do something.

"Some politicians want to run away from this," he said. But "it's going to collapse ... It’s a disaster for people and they just can't ignore it and look the other way." 

Alexander plans to hold a series of hearings, beginning next week, to discuss ways to stabilize the individual markets. Hickenlooper is among those scheduled to testify. 

Senate Democrats say they hope to craft a bipartisan fix by mid-September. But it's not clear how quickly GOP leaders will move forward on health care, which will be competing with tax reform and spending bills for lawmakers' attention. 

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Contributing: Maureen Groppe