Revised Senate Healthcare Bill Would Allow Lower-Priced Plans

Senate Majority Leader Mitch McConnell (R-Kentucky) on Thursday circulated a Senate bill to replace the Affordable Care Act (ACA) that would allow health insurers to sell lower-priced, deregulated plans as long as they still sold coverage on the exchanges that complies with the original law.

The amendment, which had been advanced by US Senator Ted Cruz (R-Texas), would give consumers access to less costly coverage. The idea is opposed by America’s Health Insurance Plans (AHIP), as well as the Blue Cross Blue Shield Association, which issued a memo saying the change could create a two-tiered system—sick people would stay on the exchanges and healthy people would buy coverage outside them, defeating the very nature of shared risk.

The new Senate bill keeps the idea of converting Medicaid to a block grant system with per-capita caps, but would offer some flexibility for states to deal with public health emergencies. According to The New York Times, it also keeps a pair of taxes on the wealthy that had been targeted for elimination, and in turn adds $70 billion to a fund for states to hold down premiums and out-of-pocket costs.

Two ACA fundamentals barred insurers from declining coverage for those with preexisting conditions and codified a set of “essential health benefits” that include coverage for pregnancy and mental health care. Along with the individual mandate, which required everyone to buy coverage, the idea was to get everybody into the same risk pool—the young and healthy, those approaching retirement, and those with expensive, chronic conditions.

However, critics of the ACA say penalties for staying uninsured were not enough to woo young adults to the exchanges; this group was turned off by rich coverage they felt cost too much. Some insurers had underpriced coverage to gain market share and suffered big losses. In sparsely populated states that did not expand Medicaid to families earning up to 138% of the federal poverty line, a few costly cases could wreak havoc on the risk pool. The combination caused insurers to raise prices or flee costly markets. This has brought calls to address the problem through a system of reinsurance for high-cost, complex cases. Alaska this week received a waiver to set up such a system.

This week, HHS announced a 38% drop in the number of health plans that have signaled their intent to sell coverage on the exchanges in 2018. If past trends hold, more could drop out before final decisions are due in September. While HHS officials say this shows “Obamacare” is failing, ACA advocates say uncertainty over the law’s future, and especially the fate of cost subsidies for low-income buyers on the exchanges, has made insurers wary.

The Senate bill reportedly seeks to resolve the risk pool problem by offering more money to subsidize coverage in the regulated market, because Republicans have said they are determined to bring down average premium costs. The Senate bill would end the individual mandate as well. This change is in the House bill that passed May 4, 2017.

The new Senate bill would also:

• Let people who enroll in catastrophic coverage receive federal tax credits to pay premiums
• Allow consumers use health savings accounts to pay premium costs
• Set aside $45 billion to combat the opioid crisis