Under the Republican health bill, it’s up to states whether to dismantle key parts of the Affordable Care Act.
Red, or GOP-leaning, states are sure to be interested in rolling back the law’s coverage requirements and freeing insurers to charge people more when they have preexisting conditions.
As strange as it sounds, deep-blue, heavily Democratic states supportive of Obamacare, including California and New York, may be forced to do the same, according to experts, regulators and consumer advocates.
The American Health Care Act, which narrowly passed the House on Thursday and now heads to the Senate, would significantly cut the federal subsidies on which many Americans rely to buy coverage. Unless the legislation fails or changes substantially, many consumers across the country could see the amount they pay every year for premiums increase by thousands of dollars, making coverage effectively unaffordable.
Few, if any, states would be able to fund subsidies on their own. To keep insurers in the market and bring costs down, state leaders might feel compelled to seek exemptions from rules that require health plans to provide 10 “essential health benefits” and prohibit them from charging higher rates for sicker consumers. The new GOP health care bill would allow such waivers.
“With the skimpier subsidies, states are going to be under enormous pressure to apply for these waivers,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms.
These opt-out provisions could accelerate the unraveling of Obamacare, even in places that fully embraced the landmark law.
“Certainly the Californias and New Yorks of the world will do what they can to hold onto the ACA protections. But when confronted with insurer exits and big price hikes, many states with the best of intentions may feel they have little choice but to get a waiver,” Corlette said.
The idea of opting out is unfathomable to many liberals who fought so hard to win the consumer protections in the Affordable Care Act. They’re hoping the Senate will dump the bill or, in its quest for more moderate votes, at least make the premium tax credits more generous or eliminate the waivers.
Republican leaders insist the current health law isn’t worth saving because it has left consumers with double-digit rate hikes, onerous deductibles and little or no competition in some states, as insurers exit the marketplaces.
Rep. Kevin Brady (R-Texas), chairman of the House Ways and Means committee, said the GOP health bill grants states the flexibility they need to remove the “crushing mandates” that have led to “Obamacare plans you don’t want and can’t afford.”
House Speaker Paul Ryan (R-Wis.) struck a similar note in urging his colleagues to pass the bill. “Let’s make it easier for people to afford their insurance. … Let’s return power from Washington to the states,” he said on the House floor Thursday.
Consumer advocates in North Carolina, Colorado and other states are taking the threat of waivers seriously.
“No state is safe from such a waiver,” said Brendan Riley, a health policy analyst at the North Carolina Justice Center, an advocacy group focused on economic and social issues.
North Carolina would be one of the states hit hardest by the House bill, according to an analysis by the left-leaning Center on Budget and Policy Priorities. The state’s average premiums and out-of-pocket costs would rise by $7,549 annually.
Nationally, the average tax credit for enrollees in the online marketplaces would be 41 percent lower under the American Health Care Act by 2022, according to a study by the Kaiser Family Foundation. (Kaiser Health News, which produces California Healthline, is an editorially independent program of the foundation.)
The GOP bill also ends the penalty for not having coverage, which experts say might increase premiums as fewer healthy people sign up, leaving health plans with a higher proportion of sick patients.
All this could put the focus back on which benefits are deemed essential in health insurance — an all-too-familiar battle in statehouses before the ACA set a nationwide standard.
The health law now requires all plans sold on the individual and small-group markets to cover the 10 essential health benefits, including hospitalization, prescription drugs and mental health treatment. It has made coverage more comprehensive and prevented insurers from selling bare-bones plans that had cheaper premiums but often exposed consumers to huge medical bills after they sought care.
Before the ACA, coverage for maternity care, prescription drugs and substance abuse treatment often wasn’t available. State lawmakers were hesitant to approve new benefit mandates for fear of raising premiums.
Washington state Insurance Commissioner Mike Kreidler, a Democrat, said he sees a political fight over benefits on the horizon if the GOP bill advances.
“I certainly think there’s going to be political pressure applied to make adjustments [in essential health benefits],” he said. “I’d be vociferously and violently opposed to those changes.”
Adela Flores-Brennan, executive director of the Colorado Consumer Health Initiative, said she too has faith that her state’s Democratic governor and insurance commissioner would uphold essential benefits and protections for people with preexisting conditions.
But she and other patient advocates said that resolve may be tested by the lack of competition in some areas, which insurers could use as a bargaining chip for more leeway on regulations.
For instance, Flores-Brennan noted that industry giant Anthem is the sole company on the state’s insurance exchange in 14 Colorado counties. She said she worries the company could threaten to pull out if the state doesn’t opt for weaker standards.
California would be loath to cut benefits. If you’re selling a policy to a young adult without maternity care, that’s nuts.
Even in California, a liberal bastion that enthusiastically implemented Obamacare, the law’s supporters are bracing for a fight over the waivers.
“As premiums go higher, it will create pressure on us to undercut the standards we have,” said Beth Capell, a lobbyist for the consumer advocacy group Health Access California.
In California, premiums and out-of-pocket costs would rise by $2,779, on average, under the House bill, according to the analysis by the Center on Budget and Policy Priorities.
“California policymakers will once again hear what we heard year after year before the ACA: ‘Some coverage is better than no coverage. More limited benefits are better than nothing,’” Capell said.
John Baackes, the chief executive of L.A. Care Health Plan, with about 26,000 enrollees in the California exchange, said state leaders would exhaust every other option before slashing coverage.
“California would be loath to cut benefits,” Baackes said. “If you’re selling a policy to a young adult without maternity care, that’s nuts.”
No matter the state, red or blue, experts anticipate vigorous debate over these waivers because consumer protections under Obamacare have become more popular.
Wisconsin Gov. Scott Walker, a Republican, experienced that firsthand last week when he suggested his state may opt out of the ACA’s preexisting condition rules — and then immediately backtracked amid strong opposition.
Michael Miller, director of strategic policy for Community Catalyst, a Boston-based national consumer group, said waiver requests won’t necessarily proceed “quietly even in the red states. … People have heart disease and cancer and asthma in those states, too.”
This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.