Senate Republicans' claim of saving individual health insurance markets could prove hollow

Washington Post

Republicans have vowed for months to undo the Affordable Care Act and stave off the collapse of the nation's most fragile health insurance markets, which serve people who buy coverage on their own. In the Senate, that turns out to be a short-term goal.

Legislation that the Senate's GOP leaders finally disclosed on Thursday would keep billions of dollars flowing - but only for two years - to health plans that have been begging for continued help with the expense of millions of lower-income customers in ACA insurance marketplaces. After 2019, the payments would stop.

And the cutoff of those payments would coincide with the end of subsidies that help the vast majority of people with ACA health plans afford their premiums. The subsidies would be replaced with smaller tax credits with clear winners and losers. The new credits would not reach as many middle-income Americans, and although they would be available for the first time to people below the poverty line, the amounts could be too small to be useful.

Taken together, these and other features of the Better Care Reconciliation Act could drive prices up after a few years for people who buy individual insurance - a core group the ACA is designed to help. After the next three years, it also would begin a sharp downward path in federal support for Medicaid, the cornerstone of the nation's health-care safety net for the past half-century.

According to health policy experts across the ideological spectrum, the bill's design amounts to a strategic calculation: Try to allay the immediate fears of insurance companies and states, at the risk of letting problems with affordability and access to coverage accumulate.

"It stabilizes things nicely for 2018 and 2019, and after that is a crap shoot," said Dan Mendelson, president of Avalere, a Washington-based health-care consulting firm.

Other elements - touted by the GOP as freeing Americans from burdens of the ACA - could accelerate insurance-rate increases over time and leave health plans with a greater share of unhealthy customers. The bill would defang the ACA's requirement that most Americans carry health coverage by erasing penalties for being uninsured. Unlike a similar bill that House Republicans narrowly adopted last month, the Senate version would compel insurance companies to take all customers, healthy or sick, and charge them the same prices.

As the bill emerged from weeks of secrecy Thursday, Senate Republicans were not the only ones to have reached an accommodation. Within the insurance industry, officials have decided to protest the eventual cuts to Medicaid but accept for now the relief - short-term though it is - that the measure would offer them in the individual market.

"The health plans now need to think about, 'Does this provide stability for the long term, and when do you have those discussions?' " said one industry insider who spoke on the condition of anonymity about political discussions that remain fluid.

The long-term uncertainty never was broached Thursday as Senate GOP leaders revealed their health-care plan to fellow senators.

"We agree on the need to stabilize the insurance markets that are collapsing under Obamacare," Majority Leader Mitch McConnell, R-Ky., declared on the chamber's floor. He promised that the bill would bring "hope to Americans who face the possibility of limited or zero options next year under Obamacare."

Few Republican lawmakers questioned that outlook as they were absorbing the details of the legislation. Sen. Bill Cassidy (La.) told reporters that, with two funds designated to help states keep insurance rates stable, in part by cushioning the costs associated with people with the highest-medical expenses, "there's a lot of money."

The $112 billion the legislation would provide through those two pots of money is $28 billion less than parallel funding in a similar bill that House Republicans narrowly adopted last month.

The cross pressures on Republican leaders also were on display in the Capitol. Sen. Rand Paul, R-Ky., said the fact that the measure would devote billions to shoring up the private market was a reason that he is unwilling to support it. He will hold out for "a bill that looks more like a repeal of Obamacare and less like we're keeping Obamacare," he declared.

Like the House version, the Senate plan would immediately abolish the ACA's penalties for most Americans who fail to carry health coverage, although it does not eliminate the mandate itself - a step impossible under the rules of a special budget process that Senate leaders plan to use to avoid a potential filibuster.

Even ending the penalty "is a very big deal," said Larry Levitt, senior vice president of the Kaiser Family Foundation. "The individual mandate was the stick that encouraged healthy people to sign up for insurance. Without it, premiums will increase significantly."

Unlike the House bill, which allows health plans to temporarily charge higher rates to customers who let their insurance lapse, the Senate's version does not include any such deterrent.

Without any legal prod for people to buy insurance, "you would have a disaster of a marketplace," said Robert Laszewski, a health-care industry consultant. The Senate plan would require insurers to charge the same prices to sick customers as healthy ones, while allowing consumers to wait to buy coverage until they become ill. "You can let people buy insurance on the barn after it burns down," Laszewski said.

Federal financial help in affording insurance premiums also would differ in the Senate plan. It would take into account how much insurance costs in different communities, but the tax credits that would replace the ACA's subsidies in 2020 would be tied to the skimpiest category of coverage under the current law. Such health plans usually come with high deductibles before the coverage begins.

The subsidies in the Senate GOP plan would make insurance more affordable to young adults and more expensive for people from middle age through their mid-60s. While the ACA allows financial help for those with incomes up to four times the federal poverty level, the Senate version would stop at 350 percent of the poverty level.

On the other hand, it would for the first time allow insurance tax credits to be given to people living below the poverty line. That would primarily help a group now estimated at 2.6 million in the 19 states that decided not to expand their Medicaid programs under the ACA. This pool of people, policy experts predict, would expand because cuts to Medicaid under the bill could lead more low-income Americans to become uninsured.

"It's essentially replacing the Medicaid expansion with tax credits for low-income people," Kaiser's Levitt said. "Whether those people at the low end really [would] get enough help to buy insurance is a different question."

The Washington Post's Juliet Eilperin contributed to this report.

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