The revised House Republican health care bill — the American Health Care Act, or AHCA — would allow insurance companies to charge substantially more sicker enrollees, potentially pricing those with serious pre-existing conditions out of the market, experts say.
A Center for Health Policy-Brookings Institute’s Economic Studies Program analysis of a revised version of the bill, which is now stalled in Congress, shows states would be allowed to waive certain insurance market regulations that exist under the Affordable Care Act.
At first glance, it might appear that the community rating waivers allowed under this revision would only allow insurers to charge premiums based on health status to people with a recent gap in coverage, the analysis said. Even that approach would significantly weaken community rating since coverage gaps are common. In fact, the waivers would allow states to effectively eliminate community rating protections for all people seeking individual market coverage, including people who had maintained continuous coverage.
Under the ACA’s community ratings provisions, insurers can’t vary premiums based on enrollees’ health status. But under the state waivers, insurers would be permitted to vary premiums based on health status for people who “cannot demonstrate” that they had coverage for all but 63 days of the prior twelve months. Health status rating would replace the 30% premium surcharge that would otherwise be imposed on people without continuous coverage under the AHCA.
Implementing a waiver like the one permitted by the AHCA’s MacArthur amendment would have the effect of completely unraveling community rating. Under the waiver, insurers would set two premium schedules: (1) a community-rated premium schedule for people who demonstrate continuous coverage; and (2) a medically underwritten premium schedule for people who do not demonstrate continuous coverage.
Healthy people would flee the community rated premiums for the lower cost of an underwritten policy.
The ultimate outcome would be that premiums in the community-rated pool would have to be set at a prohibitively high level, leaving people with serious illnesses (such as heart disease, diabetes, or mental illness) with no affordable options.
As a result, the community-rated pool would attract only people with significant health needs, requiring premiums to be set at a very high level. This would drive still more people into the underwritten pool, driving the community-rated premium still higher. The ultimate outcome would be that premiums in the community-rated pool would have to be set at a prohibitively high level, leaving people with serious illnesses with no affordable options, whether or not they had maintained continuous coverage. Many of these people would likely be driven from the individual market entirely.
The new amendments don’t address the fact the bill would cause 24 million people to lose coverage by 2026, by Congressional Budget Office estimates. The original bill would slash subsidies that help people afford coverage and care in the individual market. And, it would cut more than $1.1 trillion from Medicaid and marketplace subsidies and dedicate most of the savings to tax cuts for high-income people and corporations.
Info: https://www.brookings.edu (report).