Then henry waxman talking about the price of prescription drugs and what lawmakers can do. First of all, im an associate pastor at the Public AffairsAmerican University and i am delighted to moderate this panel. Today were talking about private insurance subsidy first ever selection. Im sure everyone in this room knows prior to 2014 the private Insurance Market in the individual market was the wild west. People would buy Health Insurance that was fully inadequate and extremely expensive but on the other hand you had people with employerbased insurance who were very happy with it as the model if you like what you have, you can keep it. The aca was very much focused on changing and improving the private individual market but also preserving the employer supported Insurance Market. Today we will hear from for experts with unique and intricate knowledge about the development, implementation of the future of private insurance and individual market and elsewhere. You have their files and i wont read their list of expertise. First, we had joel michael, partner at mcdermitt, will and emory an adjunct professor at the Sandra Day Oconnor law university. Good morning everybody. What i thought i would hit are some of the issues that affect insurers and how they view the market. Let me make sure this is. So, here are some of the major themes of white insurers who are used to having picked ability in the way they write coverages and plan benefit plans and rates it has been a marketplace that has been anything but double and a lot of that is driven by legal and policy changes. The whole discussion that has evolved on capitol hill, will the affordable air care act be repealed or replaced . For how long . Thats a shortterm gap measure so is it a full repeal in all of those questions determines where the legislation is going and it creates an atmosphere of uncertainty. Then the other question is what is the process to implement changes to the Affordable Care act is it through executive order, is it through an Agency Policy change, is a through formal rulemaking or statutory amendment . I will say that the ease in which former policies were made through various channels you may see some of that revisiting in reverse with the weight changes are made to the lost now. Process, notice, rulemaking and those protocols may be put to the side as changes to the policies are limited. As we have seen with such things as dramatic cut back in Agency Marketing and the like. Then of course what impact will the Court Decisions have on certainty and what we have is conflicting Court Decisions and many of the issues affecting insurers and a good example of that is the risk quarter litigation with 22 cases and the federal court claims has come to different outcomes as to whether the monies are owed to insurers or not and we will see once the issue is up for the federal circuit and how that is results. Then consumer understanding and its a tough enough loss to understand and interpret and figure out what your obligations are but how do consumers understand all of this legal uncertainty. Do they understand that when they hear the idea that there is an Association Health plan is tentative coming and that is by executive order but ultimately it is an invitation for rulemaking which has a potentially long tail to it and will consumers sit back and say i heard about the stuff and the president has set x, y and z but i will hold back and not purchase insurance through the traditional markets for the time being. Then what does this mean to the Health Insurance themselves. At what point do you finally say i knew i wanted to be in this market and all of this uncertainty is much too much and i need to be able to be more predictable and publicly traded in a for my stockholders and i am just going to move out of the market until it becomes legally more consistent and more clear the Kaiser Family foundation has interesting data. In 2017 there were 4. 3 issuers. State on average and in 2018 that number is down to 3. 5. Then the critical question for a lot of insurers particularly in the beginning of the program was the issue of premium stabilization. Can i be sure of who i will get and what protection does the law provide to me as an insurer and making sure that i will not take a massive loss when these individuals hit the market for the first time. As i mentioned before the risk quarter figures one part of that program but when you look at it a lot of insurers right now are standing in line and havent received those risk quarter payments and these are significant amounts of money in terms of what it means i saw one piece of data that suggests the shortfalls amounted to 4 and 7. 5 of premiums for 2014 and 2015. This is far from chump change and a significant amount of money that are do these insurers and there is also some question and at least in 201,516 whether the reinsurance payments would be in jeopardy and there was legislative activity up on the hill and questions about the issue of appropriation and making sure that so much of the collections for the reinsurance premiums were reallocated to the treasury and so far those payments have not been disrupted to insurers but it did create some unease. Then there is this whole issue of the risk adjustment process and you better get used to risk adjustment because there will be a lot of legal questions Going Forward as there already has been with this process and not only in the commercial Insurance Market but also in medicare advantage. Its a formula a concept that is subject to a lot of adjustments and data changes and has an amazing Financial Impact as well as impact on market enrollment. Then i would say the other thing is when you look at all of these issues of premium stabilization in the uncertainty and couples with the recent decisions to cut back on csr payment is is it unreasonable for Health Insurers to look at the program and say do i have a reliable partner that i can count on when it comes to any kind of cost sharing responsibility under this program. I mention the risk adjustment impact and the idea at one point was there will be these new startup coops and they would be great and actually it is the smaller new start plans that have the most difficulty with risk adjustment and many of them found themselves with huge bills to pay back to cms on risk adjustment formula. They were on the brink of insolvency if they went ahead and made those payments so they went into Federal District court and tried to get an action to enjoy cms from collecting these money and the outcome was the courts were not going to hold back the enforcement of the risk adjustment approach and at least in three cases the evergreen plant in maryland and the minuteman plan in massachusetts and i think the new mexico plan and these were plans that were litigation challenging the risk adjustment formula and two of those plans have gone down. The third is trying to negotiate a buyer to prevent the insolvency from occurring. The other is not just new start plans but also providers, sponsor plants. A number of Health Systems and saw this is a great opportunity when the law was passed to get into the insurance business. It is more complicated than one thing and the idea of how you master risk adjustment was new to a lot of these plans and particularly plans who were undergoing rapid growth and had no experience with the enrollments. They really did not know the Health Status of the individuals and if you dont have good mechanisms in place to capture the Health Status of those individuals which triggers these payment applications on risk adjustment you can find yourself on the short end of the stick and that is exactly what happened to [inaudible] they announced in august they were withdrawing from the market and that was after losses 157. 8 million in 2016 and another 59. 9 million in the first half of 2017. These are systems that have resources and the withdrawal from the market will be painful as opposed to letting the plan go through receivership. So, what has the government done . It is not like this has been a total absence of attempts to stabilize the market. There was a market stabilization roll that was developed and released on april 18 with the Effective Date of june 19. It did some things that the Insurance Agency would favor. For example, when you look at the question of adverse selection and when we talk about that today there is a way to look at it from the consumer approach. What i mean is are there and i will call them gaming of the system that consumers can engage in two time when they buy health care coverage. That is a form of adverse reaction. With the very liberal, i will say, grace. Premiums due under the program a lot of games were played about not paying premiums, enrolling in another planning getting another grace period and so on and so forth. These rules tried to avoid that. Also, special enrollment. They became potential for abuse to individuals to wait till they needed coverage and then through special enrollment cycles enrolled in the coverage for that cycle. These rules tightened up those particular provisions so that it would be harder to have this gaming of the system. But, there were other provisions in the rule to but these were the ones that had the most direct correlation to adverse selection. Some people would say what about the shortening of the opening enrollment. And also with recent cutbacks with marketing and advertising funds from the federal agency the speculation is that too might have an impact on adverse reaction. In other words, who will be the most focused on Getting Health Care coverage in a period of uncertainty. The people who have Health Status problems and need the coverage they will be right on it but the healthy, the younger folks will probably remain passive and not actively enrolled. We will see if that plays out do this open moment. Then there is the question of the individual mandate. Is it to be enforced or not . There was this executive order i think last january where the president put out which in essence gave the signal that they could waive deferred grant exemptions from or delay the provision of any requirement Affordable Care act and the question the speculation at the time was this is a signal that the individual mandate would no longer be enforced. There were some things going on at the irs at the time where they were not collecting a certain information about other coverages that people started to interpret with some form of a policy to suggest that this idea of the mandate did not exist and was now being carried out by the irs and at the end of the day that was more confusion than it was reality and the irs believed appropriately that it had an obligation to collect the information and enforce the laws and that is t