Governor Charlie Baker, appearing before US senators Thursday, said his administration is working to establish a fund to help stabilize Massachusetts health insurance rates in case President Trump ends the federal subsidies that many insurers and consumers rely on.
The payments, known as cost-sharing reductions, help defray the cost of coverage for lower-income Americans who buy their plans on the individual insurance market. In Massachusetts, they will amount to an estimated $146 million next year and assist about 155,000 residents.
The Baker administration’s plan to create the fund needs approval from federal officials. The administration was planning to file its request this week.
The issue came up in Washington as Baker and four other governors testified before the US Senate health committee. Baker urged senators to take quick bipartisan action to protect health insurance markets by continuing the subsidies, which are paid monthly, for at least two more years.
The payments were promised under the Affordable Care Act but Trump, whose administration has authority over the payments, repeatedly has threatened to pull them. Many Republicans and Democrats say that would drive up premiums and prompt some insurers to stop selling coverage.
“Bipartisan cooperation is essential to achieving quality affordable health care coverage and stabilizing any market,” Baker said at the hearing. “Carriers, providers, and people all need certainty about what rates are going to be.”
Addressing a group that included senators across the political spectrum — from conservatives who want to repeal the health care act to liberals promoting a more aggressive role for government in health care — Baker focused mostly on policy details and steered clear of politics.
He called on Congress to waive certain federal rules that would allow states more flexibility in providing coverage to residents. And he said government health programs should have more authority to negotiate the prices of prescription drugs.
The three-hour hearing was convened by Lamar Alexander, a Tennessee Republican who chairs the US Senate Committee on Health, Education, Labor and Pensions and Patty Murray, the panel’s top Democrat.
They are working on a bipartisan bill to help stabilize the individual insurance market, through which 18 million Americans receive coverage.
The senators are attempting to tackle an issue that has been dominated by partisan rancor for more than seven years, and it’s unclear whether they will be able to craft a bipartisan solution in a matter of just days. “That’s a tall order,” Alexander acknowledged.
Even if senators reach agreement, the legislation still would need approval from the House.
At the same time, Trump and some conservative senators are still seeking ways to roll back the Affordable Care Act.
The political uncertainty has trickled down to Massachusetts, where regulators are behind schedule in approving insurance rates for 2018 as they wait for more clarity from Washington. The state’s insurance exchange, the Health Connector, has delayed announcing what coverage plans will be available to consumers next year, and at what price.
Without federal subsidies, insurers have said they will have to raise premiums by about 19 percent.
“The plans need certainty,” said Lora M. Pellegrini, president of the Massachusetts Association of Health Plans. “We can’t be living month to month.”
Insurers praised Baker — a former insurance executive — for stressing the importance of federal insurance subsidies. If the president yanks the subsidies and Congress fails to fill the gap, they said they supported Baker’s backup plan to create a state fund.
Baker wants authority to keep using federal money to pay subsidies to insurers, but through a different funding mechanism. His administration says the plan could save the federal government money.
The federal subsidies amount to $35 million annually for BMC HealthNet Plan, an insurer owned by Boston Medical Center.
“We are a midsized health plan. This is really a critical issue for us,” said Susan Coakley, president of BMC HealthNet. “To depoliticize this would be a wonderful thing.”
Baker, a Republican in a largely Democratic state, has broken with members of his party in Washington who have sought to repeal the health care act.
On Thursday, he criticized the latest repeal effort from two Republican senators, Lindsey Graham of South Carolina and Bill Cassidy of Louisiana, which would give states block grants of funding for health care.
Baker said that approach would sharply cut the funding Massachusetts gets from the federal government.
“The proposal would dramatically negatively affect the Commonwealth,” he said. “We’re talking billions and billions of dollars over the course of the next four or five years.”
Baker spoke alongside Republican governors Gary Herbert of Utah and Bill Haslam of Tennessee, and Democratic governors John Hickenlooper of Colorado and Steve Bullock of Montana.
A spokesman for Alexander said Baker was asked to testify because he is “a recognized leader in health care.” Baker is a former state health secretary and former chief executive of the insurance company Harvard Pilgrim Health Care.
Massachusetts Senator Elizabeth Warren, a Democrat and committee member, also noted Baker’s “considerable expertise.”
“Massachusetts has a long history of bipartisan cooperation on health reform, which is one of the reasons that our state’s health care system has become a model for the rest of the country,” she said. “The governor and I have continued that bipartisan cooperation.”