10 ways to improve the ACA

After a Sunday church service, fellow parishioners approached me with empathy toward the prospect of dealing with health care after Tuesday's election. I know this is simply the beginning of what state insurance regulators will be facing as consumers will be bringing us an array of questions regarding the future of the Affordable Care Act (ACA).

' Will it be repealed?

' Will it be replaced?

' Will it be amended?

The answer to each question is the same: no one knows today what will occur with the ACA. However, it's important for people to understand that it will not be possible to make any changes quickly and any changes that do occur will likely take course over time. This means that, since the law still is in effect today, people should take steps to obtain or maintain health coverage that meets the needs of their families.

There are mounting challenges in America's health care system. It's clear to me that we need a modern day Manhattan Project to address health care - a focused initiative where the brightest minds come together to address the many deficiencies of the ACA and recommend changes to health care financing and delivery systems. This type of project would lead to a more affordable and ultimately sustainable health care system - something that has yet to occur with the ACA.

The ACA did not address what is driving health care spending. To 'fix” health care we must transform the entire health care economy with a focus on what is driving spending. Rising health care costs impact all Americans, not just the small percentage that purchase their own coverage through the ACA. Without structural changes to our health care system and a focus on costs, health care may squeeze out all other government programs. Additionally, employers will continue to shift costs to employees holding down wages and ultimately impacting GDP growth. President-elect Trump needs to take a holistic look at health care. Focusing on the ACA is the logical place to start as it needs immediate corrections.

If the new Congress passes a bill to repeal all of the ACA, I hope that a replacement for the ACA is stapled to that bill. An immediate repeal would lead to devastating consequences in the disruption of people's care, and create even more uncertainty for millions of Americans. To ease the uncertainty, a transition time is required for any whole or partial suggested change.

To offer immediate predictability, President-elect Trump could consider keeping transitional (grand-mothered) plans in place for another 24 months. At least one state has requested CMS to allow for an extension of the transitional plans due to severe lack of choice in the market in that state. The request was rejected. Millions of Americans are in grand-mothered and grandfathered plans that they like and that are working for them. President Barack Obama allowed for the transitional plans to continue and the new administration should consider keeping the individual and small group transitional plans. In Iowa we have nearly 117,000 people in these plans today.

To be clear, there are no easy fixes. The existence and reach of the ACA are contentious issues. Issues related to the ACA have been litigated in court and evaluated by public opinion for years now. Some parts of the ACA have merit and should be kept, in my opinion, but on a whole, with skyrocketing premiums and insurers leaving markets, it is clear the ACA needs a lot of work. To make the individual insurance market work, it is imperative to build sustainable risk pools for individuals.

Rates for 2017 are rising 25 percent on average. Affordability is a major issue for Iowans purchasing their own coverage. Premium tax credits may offset and assist with affordability for those that qualify. However, for the nearly 125,000 Iowans that are above 400 percent of Federal Poverty Level that did not have access to employer coverage before the ACA, affordability is a major issue. The ACA exempts certain people from the requirements of the individual mandate. One of the exemptions is an affordability hardship exemption. If one cannot secure health insurance for under 8.16 percent of their modified adjusted gross income for 2017 they may qualify for the hardship exemption. This would be net of any premium tax credits. Therefore, a significant number of people will be able to 'opt out” of the ACA's insurance mandate today and as the rates continue to rise, however, those individuals will not have health insurance coverage.

Many have stated the ACA took a sledgehammer to health care when it was more appropriate to use a scalpel. Healthcare issues differ by state, but no matter what tool is needed to improve access to health care, it is clear a number of changes should be considered immediately to help ensure that consumers have choices as they seek out coverage.

10 Points to improve the ACA:

1. Create a mechanism for covering catastrophic claims separate from individual insurance pools. As a parent of a child with Type 1 diabetes, I am grateful that the ACA eliminates pre-existing conditions. I know that if I need to ever buy my own insurance, I can find coverage that will still be meaningful for our family. However, it is clear that the most chronic and catastrophic conditions are the drivers for an extraordinary amount of the rate increases. In testimony I provided before Congress I stated that looking at high risk pools for catastrophic claims (defined as claims that cost over certain amount) has merit. These high-risk pools could be state-funded pools like many states had before the ACA, or could be a large federal pool. If we have the ability to keep the most expensive claims out of the individual risk pool, while still providing coverage to those families, it will lead to predictability in pricing. In Iowa, one claimant is driving nearly 10 percent of the 2017 rate increase for one of the companies offering coverage to Iowans. That family needs coverage but, if the coverage was provided through a mechanism where the costs are spread to society in general and not to the small pool of individuals utilizing a single insurance company, costs for individual health insurance could be kept more manageable and predictable.

2. Eliminate the mandate. Instead, allow people to enroll in health insurance only once every two or three years, unless they have a proven special enrollment event. Let companies validate the special enrollment with an appeal available to a third party or state department of insurance.

3. Shorten the grace periods to 30 days. There are stories all over the country with people gaming the lengthy grace periods.

4. Abandon metal tiers. There are no platinum plans in Iowa and few Gold plans. Look at better ways to judge and compare plans.

5. Review the need for prescriptive essential health benefits. Require that carriers have two or three standard plans, similar to how Medicare Supplement plans are standardized. Then carriers also could design and offer non-standard plans.

6. Move the age band back to 5:1. At 3:1 the younger healthy people feel penalized and are priced out of the market. Getting younger people into the pool will stabilize the rates for everyone.

7. Encourage innovation in the market. Encouraging innovation with limited underwriting and thereby reward healthy people similarly to how lower income folks are incentivized through tax credits. Allow consumers to be rewarded with healthy behaviors, and allow companies to innovate on product design.

8. Look at health savings accounts as a means to increase consumers' pricing awareness. If this is adopted widely, look at ways to fund health savings accounts for certain lower-income Americans.

9. Publish health care prices and create objective quality benchmarks and metrics for consumers to review. This will help inform consumers on price and quality. In the current market, individuals have no clue what health care related procedures and items will cost us. We are more price-aware buying a refrigerator than we are having a heart procedure. That needs to change.

10. Fix the 3R's. Abandon risk adjustment and risk corridor and continue a public reinsurance option.

Much is written about selling insurance across state lines. I do not see that as a major factor that would help drive down costs. Those insurers that would sell across state lines would have to comply with applicable state mandates, and would still have to build a network of doctors for competitive pricing. New companies can enter states today with ease and many companies sell in multiple states. The issue is the cost to contract with doctors in those states. More competition in insurance sounds good, but if those carriers cannot get enough scale to get competitive pricing arrangements with providers they will be priced out of the market.

This is hardly an exhaustive list, but we need to start somewhere. Many more things must be reviewed in the health care economy, such as costs of prescription drugs, cost shifting from public programs to private insurance, emerging technologies and end-of-life care. However, looking at the financing of health care and insurance is the logical place to start as money always is front and center. My hope is that reasonable people come together to address this challenge.

' Nick Gerhart is outgoing Insurance Commissioner of the State of Iowa. Nick serves on the National Association of Insurance Commissioners (NAIC) Executive Committee, Chair of Life and Annuity (A) Committee, member of Financial Condition (E) Committee and International (G) Committee. In addition, Nick is a board member of the National Insurance Producer Registry (NIPR). More information: http://www.iid.state.ia.us/