Republicans are targeting two key consumer protections in their latest attempt to gain enough votes to pass the American Health Care Act, phase 1 of their Affordable Care Act repeal and replace plan.
On the chopping block are the essential health care benefits package and so-called community rating provisions – which prevent insurers from charging significantly more for older patients and those with preexisting conditions.
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“Obamacare is already in a race to the bottom in terms of quality coverage for the sick and that’s because of the law’s community rating provisions, which penalize high-quality coverage for the sick,” Michael F. Cannon, director of health policy studies at the Cato Institute, said in an interview. “The [AHCA] would arguably accelerate that race to the bottom. The waiver provision in this amendment definitely would and it would because the bill would allow states to waive the community rating provisions, but only for people who were not previously insured.”
The waiver provisions would “increase premiums for the previously uninsured and discourage them from enrolling,” Mr. Cannon predicted.
David Anderson, research associate at the Margolis Center for Health Policy at Duke University, Durham, N.C., said that, if a state elects to take a waiver, so-called high-cost patients “such as individuals with cancer, individuals with cystic fibrosis, individuals with coagulation disorders, [would be] shrugged to the side into a high-cost risk pool or some kind of risk sharing ... with their own premium pool.” This could lower premium costs for healthy patients, he added.
This could be enhanced by narrowing the essential health benefits. For example, Mr. Anderson said that a state could keep the drug benefit, but apply for a waiver to narrow its coverage for all generics plus a limited list of brand names.
“Someone with cystic fibrosis with a $300,000-a-year medication will not have that covered and will be put in the high-cost risk pool,” Mr. Anderson said. “What it does is that it makes insurance cheaper for individuals who are highly unlikely to be high cost, and it makes it much more expensive for any individuals with known high-cost conditions.”
The draft amendment also would make it easier a whole lot easier to get such waivers approved: If enacted, the legislation would give default approval of such waivers and allow just 60 days for the Department of Health & Human Services to deny waiver request.
States would be able to apply for a waiver from the essential health benefits requirements for the 2020 plan year and a waiver to charge higher premiums to certain individuals for the 2019 plan year.
Waivers to change the essential health benefits package would need to meet one or more of the following conditions:
- Reduce average premiums.
- Increase enrollment.
- Stabilize the health insurance market.
- Stabilize premiums for individuals with preexisting conditions.
- Increase consumer choice.
For a state to change community rating provisions, its waiver also would need to create a mechanism, such as high-risk pools, to help those patients. Funding for these pools is provided for in the AHCA, but has been criticized as being inadequate on a national level.
Mr. Cannon of the Cato Institute predicted that such waivers ultimately would lead to more adverse selections for people needing comprehensive coverage and could force more people to lose coverage than to gain access to affordable, high-quality plans.
“If you waive essential health benefits in a community-rated market, you get even more adverse selection against comprehensive plans that sick people want, so those plans disappear,” Mr. Cannon said. “They either disappear because the insurers stop offering them or they disappear because insurers try to make the coverage worse, because Obamacare penalizes them if they don’t make coverage worse.”
He said these waivers provide little incentive for health insurers to stay in the individual markets and they could, as they are already, flee the individual markets.
The AHCA is phase 1 of the GOP repeal and replace plan. Congressional Republicans want to use the budget reconciliation process for the AHCA, so that they need only a simple majority to change revenue-generating provisions of the ACA. Phase 2 is a comprehensive review of all federal health care regulations and phase 3 is slated to be new legislation to replace the ACA with a new health care reform plan, which will require a two-thirds majority in the Senate to pass.