Introducing the SSIP: Provisions for market stabilization in the Better Care Reconciliation Act

The American Health Care Act of 2017 (H.R. 1628), also known as the AHCA, was introduced as the first phase of a plan to repeal key provisions of the Patient Protection and Affordable Care Act (ACA). The bill was passed in the U.S. House of Representatives on May 4, 2017. On June 22, 2017, the Senate released its draft of a bill to amend portions of the ACA, called the Better Care Reconciliation Act (BCRA).

One key feature of the AHCA is the Patient and State Stability Fund (PSSF), a grant program to states intended to stabilize individual and small group state insurance markets and to lower patient costs. A similar concept is included in the BCRA in the form of the State Stability and Innovation Program (SSIP). The SSIP is a grant program which provides funds directly to insurers as well as to states with the primary goal to stabilize and support the individual market.

This paper discusses elements of the SSIP and outlines the details from the draft bill released¹ on June 22. Additional insight on the implications of the PSSF can be found in the Milliman white paper “The Patient and State Stability Fund: What Happens Now.”² Many of the same considerations and implications of the PSSF still apply to the funds made available under the BCRA, specifically with the long-term portion of the SSIP. However, there are substantial structural differences between the SSIP and PSSF that warrant a fresh look at the proposed program and a reconsideration of potential implications. For example, the PSSF allowed states greater flexibility with how funds would be used, while the SSIP gives more control of the use of funds to Centers for Medicare and Medicaid Services (CMS). As proposed legislation evolves, policymakers, insurers, and other stakeholders should strive to understand the changes in federal and state expenditures that will occur should the proposed legislation be enacted.

State Stability and Innovation Program overview

The SSIP appropriates a total of $112 billion to insurers and states over the period 2018 through 2026. The SSIP is composed of two distinct parts. The first provides funds for short-term market stabilization programs (“Short-term Assistance Activities”) that will go directly to insurance carriers in the first four years of the program. The second provides funds for the “Long-term SSIP,” which will be allocated to states starting in 2019 to fund various programs.

Funds for Short-term Assistance Activities

The funds available for the Short-term Assistance Activities are $15 billion annually in 2018 and 2019, and $10 billion annually in 2020 and 2021 designated to “address coverage and access disruption and respond to urgent health care needs within States.” The bill further clarifies that these funds are intended to support programs with health insurers for the specific purpose of stabilizing markets, encouraging carrier participation, and improving choice of plans offered in the individual market. The bill states that the Administrator of CMS will determine the exact procedure for distributing these funds. These allocated funds would have no issuer matching requirements and would be available until expended.

Within 30 days of enactment of the bill, the Administrator of CMS will issue further guidance to insurers on how to participate in this program. In order to be eligible for funds in 2018, issuers must send a letter of intent no later than 35 days after enactment, and before March 31 of the previous year for funds allocated in 2019 through 2021. The letter of intent must contain a certification that the funds will be used as required and in a manner to be determined by the Administrator of CMS. These funds will reduce premiums for products issued by carriers that participate in the program. Situations where some but not all carriers in a given market participate in the SSIP could result in further market disruption, where non-participating carriers have a significant competitive disadvantage. Funds should be available to issuers in a given state regardless of that state’s participation in the Long-term SSIP.

Funds for the Long-term SSIP

The Long-term SSIP provides a fixed amount of funds annually, starting in 2019 and continuing through 2026. Beginning in 2022, states are required to match a certain percentage of allocated funds annually with non-federal dollars. Table 1 below summarizes the annual allotment of federal funds as well as the required level of state matching funds.

The funds under this program could be used in a number of ways, including:

• Providing financial assistance to high-risk individuals who have, or are projected to have, a high rate of utilization of health services (as measured by cost) to help enroll in a plan in the individual market
• Establishing a program to enter into arrangements with health insurers to help stabilize premiums and to promote participation and plan choice in the individual market
• Providing payments to health care providers for health care services as specified by CMS
• Providing assistance to reduce the out-of-pocket costs (such as copayments, coinsurance, and deductibles) of individuals enrolled in health insurance coverage in the individual market

The exact methodology for the allocation of funds by state is not described in the bill. However, the bill specifies that the eventual allocation method in years 2019 through 2021 needs to ensure that at least $5 billion of the total Long-term SSIP funds in each year are used for the purposes of entering into arrangements with health insurers to stabilize premiums and promote participation and plan choice in the individual market. The bill gives the Administrator of CMS the authority to specify the parameters for the use of these funds, and these parameters will be released within 30 days of enactment of the law.

To be eligible to receive funding in a certain year, each state must submit an application to the Administrator of CMS no later than March 31 of the previous year. This application includes a description of how funds will be used and a certification that the state will meet the minimum match requirement with non-federal funds and will only use the money for the allowable purposes. Each of the 50 states and the District of Columbia are eligible to submit applications. If a state application is approved in a given year, the same application is automatically approved for each subsequent year through 2026.

The enactment of new health reform legislation is likely to be an iterative process, and changes to BRCA and the specifics of the SSIP are probable. Issuers and state administrators should stay attuned to emerging developments in order to be ready to take advantage of the funds being made available.

The comments and summaries contained in this paper are based on the interpretation of the BCRA by the author. This information is current as of the time of this writing, and future events may affect the material presented here. The author is not an attorney, and, therefore cannot issue legal interpretations or opinions.