In an attempt to lure enough moderate and conservative votes to keep afloat their healthcare bill, Republican Senators released a revised version of the bill last Thursday.
But it also holds onto more of the structure put in place by the Affordable Care Act (ACA), also known as Obamacare.
There is one new amendment, though, that some experts say could open the insurance market to bare-bones policies that would also drive up the cost of premiums for more comprehensive plans.
Cheaper, skimpier policies
Under the ACA, insurers had to offer policies that met certain criteria, such as which benefits were provided and which medical conditions had to be covered.
An amendment by Senator Ted Cruz (R-Texas) would allow insurers to sell less comprehensive plans that don’t meet those guidelines, as long as they also offered at least one ACA-compliant plan on the exchanges.
The noncompliant plans would be sold outside the health exchanges.
These kinds of bare-bones policies would attract younger, healthier Americans. People could even use the premium subsidies that are part of the revised Senate bill to pay for the cost of these less comprehensive policies.
But older adults and people in poorer health would likely stay on the policies that still meet the ACA guidelines because they have greater medical care needs.
These ACA-compliant plans would also attract women needing maternity care, which was not always included in insurance policies before the ACA made it an essential health benefit.
The Kaiser Family Foundation predicted that “ACA-compliant plans would effectively become a high-risk pool, attracting enrollees when they need costly health benefits.”
People with preexisting conditions — even if they don’t currently require medical care — may also end up on these plans because cheaper off-exchange plans would likely bar them from signing up.
This would end up creating a two-tier insurance market. One would offer inexpensive plans with fewer benefits, higher deductibles, more cost-sharing, or all of these.
The other would provide comprehensive yet expensive policies.
In addition, as more people with lower health costs leave the ACA-compliant plans, the cost of premiums on the comprehensive plans would continue to go up.
Attempts to stabilize the market
The Cruz amendment would provide $70 billion to insurers from 2020 to 2026.
This is intended to stabilize this part of the insurance market by covering some of the rising costs of “high-risk individuals” on the ACA plans.
However, some health experts have cried foul, saying that Cruz is counting on money that was already allocated by the Senate bill for other uses.
Stability in the insurance market is important because other aspects of the Senate bill could actually disrupt it.
The revised Senate bill drops the ACA mandate that requires all Americans to obtain insurance. This could lead to more people with low healthcare costs giving up their coverage.
The bill also doesn’t include the premium surcharge that was in the bill passed by the House. This was intended to keep healthy people in the insurance market by allowing insurers to charge people 30 percent on top of the premium if they let their coverage lapse.
The Senate bill is also likely to lead to rising costs for people with illnesses, preexisting conditions, and also older adults, which could further disrupt the insurance market.
In addition, the revised bill allows states to seek waivers from the requirement that insurers cover 10 essential health benefits outlined under the ACA. These include maternity care, mental health programs, prescription drugs, and substance abuse treatment.
In states that waive these requirements, insurers could offer cheaper, less comprehensive plans.
But an analysis of the original Senate bill by the nonpartisan Congressional Budget Office (CBO) predicted that in waiver states, “premiums in the nongroup market could be very expensive for at least a short period of time.”
Several insurers blasted the Cruz amendment, with one company telling Forbes that stable insurance markets “require broad-based enrollment and a stable regulatory environment that facilitates fair competition and a level playing field.”
Insurers say the amendment would have the opposite effect, fracturing the marketplace into two tiers — high-risk and low-risk — and adding more instability.
The CBO was expected to release the score of the revised Senate bill today, but has postponed it until a later date.
In any event, the Cruz amendment may not even be included in that scoring if some Senate Republicans have their way.
Which means that the full effect of this amendment, if the bill is passed as is, wouldn’t be known until after the marketplace had already splintered.