(Updated)Paul Ryan resurrects GOP healthcare bill, adds federal risk pool amendment

Alabama Representative Gary Palmer introduces a risk-sharing amendment for the ACHA on April 6, 2017. He co-wrote the amendment with Arizona Representative David Schweikert.

House Speaker Paul Ryan on Thursday unveiled an amendment to the American Health Care Act that would create a federal risk sharing program for insurers. The idea has support from both moderate and conservative Republicans.

On Thursday afternoon, a House Rules Committee approved a mark-up of the amendment that moves the proposal on to the House for a vote.

Ryan said the program would lower premiums and raise the number of insurers offering plans, which would increase competition and give consumers more choice.

Insurers are leaving the Affordable Care Act's insurance exchanges left and right, to the point that in some markets, consumers have only one choice for an insurer, Ryan said.

The amendment lowers premiums, keeps the ACA mandate to insure those with preexisting conditions, and gives states more flexibility, he said.

[Also: Polls show even higher support for Obamacare after GOP whiffs on reform]

"This amendment would create a new federal risk-sharing program," Ryan said. "It is a high-risk pool that will lower costs for people with preexisting conditions and lower costs for everyone else."

Ryan gave no cost to the amendment sponsored by conservative Reps Gary Palmer of Alabama and David Schweikert of Arizona.

The $15 billion proposal would reduce premiums by reimbursing health insurers for consumers with high-cost conditions, House Majority Leader Kevin McCarthy said in a memo, according to USA Today.

The Affordable Care Act also included a reinsurance provision for insurers that enrolled higher-cost individuals. Another ACA risk corridors program was aimed at limiting insurers losses and gains, but was challenged by Republicans who said Congress never appropriated the funds. Some insurers sued the federal government for the funds.

[Also: GOP house members face scrutiny for health bill fail, had little choice but to keep trying, analysts say]

Amendment co-sponsor Rep. Gary Palmer said the Palmer-Schweikert proposal is modeled after what is being done in Maine.

"They have this risk-sharing agreement that has brought down premiums and increased the number of insured," Palmer said.

The risk-sharing program would be a federal program for three years and then turned over to the states, Palmer said.

Ryan said that since the AHCA was pulled two weeks ago, much work has been done to come up with a new plan to repeal and replace the ACA.

Ryan pulled the bill because the GOP did not have the votes within the party to pass the AHCA due to lack of support from conservatives within the Freedom Caucus.

Asked about these divisions and how Republicans would bridge the divide, Ryan said, "I actually think that divide is narrowing quite quickly."

Ryan said he's asked the House Rules Committee to mark-up the amendment.

[Also: GOP pulls healthcare bill after signs pointed to embarrassing defeat]

"What we're trying to do is find the kind of provision so people have more choices," Ryan said. "We're going to keep talking and working on it until we get it right."

House Ways and Means Chairman Kevin Brady said the amendment restores decision-making authority back to the states.

"It's based on proven results at the state level," Brady said. "With this proposal believe we're making a small but important step forward in lowering healthcare costs."

In the 1990s, Maine was among eight states that enacted health insurance market changes that were later reflected in the ACA, according to March study of the plan by Health Affairs.

Maine guaranteed coverage of individuals regardless of the person's health status. The state plan also prohibited insurers from charging premiums based on actuarial tables and limited differences in premiums based on age.

The result were high premiums and an insurance death spiral faced by the ACA today.

In 2011 Maine overhauled the system, creating what is called an invisible high-risk pool for individuals with pre-existing conditions, according to Health Affairs. The invisible high-risk pool was made of up individuals who had certain conditions that would have normally placed them in a regular high-risk pool.

However, these individuals did not know they were in the invisible high-risk pool and were not charged higher premiums.

The invisible high-risk pool operated behind the scenes as the Maine Guaranteed Access Reinsurance Association. It was subsidized by two funding sources.

One was by insurers which were required to transfer 90 percent of pool premiums to the invisible high-risk pool. This covered approximately 42 percent of all claim expenses, Health Affairs said.  The remainder of costs were financed by a $4 per member per month assessment on all policies -- raising nearly $28 million on approximately 575,000 covered lives, Health Affairs said.

Maine also expanded the rating bands to 3 to 1, the maximum allowed under the ACA, Health Affairs said. This lowered premiums and attracted younger consumers to buy insurance.

The Maine invisible high-risk pool reimbursed insurers for 90 percent of individuals' claims between $7,500 and $32,500 per year and 100 percent of claims more than $32,500.

Insurers were not incentivized to place people in the invisible high-risk pool because it meant losing almost all premium revenue and remaining responsible for up to $10,000 in expenses.

It's estimated that the invisible high-risk pool reduced premiums by 20 percent. By contrast, the ACA's reinsurance program only offset premiums by 8.5 percent, Health Affairs said.

Twitter: @SusanJMorse