A revived Republican health care plan pushes much of the difficult decision-making about the future of health insurance in the U.S. down to the state level.
On Thursday morning, Politico published a week-old summary of an amendment to the proposed American Health Care Act, negotiated between senior members of the hard right Freedom Caucus and the more moderate Tuesday Group, two important constituencies within the House GOP conference. Those groups had been the source of most of the Republican defections on the first version of the plan, with Freedom Caucus members peeling off when the bill appeared insufficiently conservative and Tuesday Group members jumping ship when the bill was changed to win the Freedom Caucus back.
The amendment — reportedly negotiated by Tuesday Group member Tom MacArthur (R-NJ), co-chair of the Tuesday Group, and Mark Meadows (R-SC), chair of the Freedom Caucus — tries to split the differences between the two groups by preserving many elements of the Affordable Care Act in federal law while opening the door to state-level waivers that would allow them to be ignored in practice.
A late version of the AHCA had sought to eliminate the requirement that insurance plans purchased with a federal subsidy cover a set of “essential health benefits” including hospital care, mental health and addiction services, maternity care and more. Freedom Caucus members had also wanted to gut the rules requiring insurers to offer insurance to all applicants regardless of health status, and to eliminate community rating requirements, which mandate that premiums can vary only with age, not health status.
The proposed amendment retains the ACA’s essential health benefits as the “federal standard” and keeps many of the popular elements of the ACA in place, including the bans on denying coverage to people with pre-existing conditions and gender discrimination. It also maintains the requirement that insurers issue and renew policies to all applicants, and that they allow dependent children to remain on their parents’ plan up to age 26. It also keeps the community rating requirement in place.
However — and it’s a big “however” — the amendment also establishes the availability of what it describes as a “limited waiver option.” Under it, individual states can apply for waivers to the essential health benefits requirements, and some elements of the community ratings rules.
Premiums could not be raised on the basis of gender or age, except insofar as the proposal already allows for an age-based step-up in premium costs that expands to a 5-to-1 ratio in costs between the oldest and youngest policyholders.
The amendment would, however, allow insurers to deny coverage to people on the basis of their health status if the state “has established a high risk pool or is participating in a federal high risk pool.”
High risk pools are seen by many as a way to lower premiums for healthy people by moving sicker patients out of the coverage pool, thereby reducing the per-person costs of care for health insurers. However, past efforts at creating such pools have been a mixed bag at best.
Nearly three dozen states tried to implement high risk pools in the years before the Affordable Care Act took force. The pools frequently capped membership, imposed waiting periods before coverage was available, and imposed annual and lifetime coverage caps on patients. Further, because they are designed with the understanding that they would lose money, they often faced funding shortfalls.
And even with 35 states implementing risk pools by 2011, only 200,000 people were covered by them — far fewer than needed coverage — and they still lost $1.2 billion that year.
According to the text of the amendment, states seeking a waiver, “must attest that the purpose of their requested waiver is to reduce premium costs, increase the number of persons with health care coverage, or advance another benefit to the public interest in the state, including the guarantee of coverage for persons with pre-existing medical conditions.”
As the country saw with its first experiment with high risk pools, though, just because something’s “stated purpose” is to do all those things doesn’t mean it will actually succeed.