CMS’s Slavitt defends ACA markets, hints at risk corridor settlement

CMS Acting Administrator Andy Slavitt faced tough questioning from Republican lawmakers about whether increased premiums for 2017 and the failure of ACA co-ops are signs the Affordable Care Act (ACA) exchanges are failing.

Slavitt told members of two subcommittees of the House Energy and Commerce Committee at a Sept. 14 hearing that the rise in premiums are likely a one-time effect caused by two of the ACA’s risk adjustment mechanisms ending. He also said premiums are still lower than they would have been without the ACA, citing data from the Congressional Budget Office (CBO).

“Overall, independent experts calculate that marketplace premiums are currently 12 percent to 20 percent lower than CBO predicted when the Affordable Care Act was enacted,” Slavitt said. “If rates had come in as CBO predicted and grown with medical trend, consumers likely would pay more next year than they actually will, even with this year’s rate changes.”

But Republicans on the panel questioned the accuracy of that data, and whether customers being shielded from premium increases by qualifying for subsidies could be considered a success.  

“When you talk about premiums being down and they’re subsidized—it’s phony,” said Rep. Tim Murphy, R-Pennsylvania. “It’s absolutely phony.”

Slavitt offer one new bit of information on a risk adjustment mechanism affecting exchange insurers: risk corridor payments. Designed to shield insurers from steep losses in the first few years of the new marketplaces, CMS only paid 12.6 percent of requested payments for 2014. Several insurers, including struggling co-ops, have sued, and Slavitt was asked if there’s been any talk of settling with insurers.

“So there have been discussions, by somebody, with (the Department of Justice) about how you’re going to settle, and you don’t know where the money’s going to come from, but you assume somewhere it’ll come from?” asked Rep. Morgan Griffith, R-Virginia.

“Yeah they’re representing us, so we have in fact talked to them, yes,” Slavitt said of discussions with the DOJ. 

CMS recently announced any funding available for risk corridor payments would go to cover the 2014 shortfall rather than fulfill 2015 requests.

The hearing was dominated with heated accusations about the effects of the ACA, such as Rep. John Shimkus, R-Illinois, saying his state’s insurance market is worse off thanks to “intervention from a government bureaucrat.”

Democrats on the committee focused on how the uninsured rate is now at its lowest level ever, though one Democratic member said the law still needs to be refined.

“The Affordable Care Act is working like any law. It’s not perfect,” said Rep. Gene Green, D-Texas. “It would take an earnest effort on the part of Congress and states and regulators to bring forth further solutions which stabilize the market. This can only be done if we’re honest and separate overblown portrayals that don’t reflect the facts of meaningful critiques.”