Media outlets are reporting that two members of Congress – the leaders of the far-right Freedom Caucus and the moderate Tuesday Group, both composed of Republican members—have agreed to an amendment for the stalled U.S. House’s Affordable Care Act (ACA, or Obamacare) repeal bill. The amendment would make a bad bill worse by gutting protections for people with pre-existing conditions.
The original ACA repeal bill lost support from members of both groups. Some Freedom Caucus members thought the bill didn’t go far enough to strip consumer protections for people with pre-existing conditions. Some more moderate members of Congress objected because the bill would cause 24 million people to lose coverage, raise costs especially for older and poorer consumers, and make draconian cuts to Medicaid.
The reported amendment is not a compromise that bridges these two positions–it does nothing to address the dramatic loss of coverage, increased cost burdens on older and poorer consumers, and over $800 billion in cuts to Medicaid. Rather, it gives the Freedom Caucus what it has demanded: a means for states to undermine current protections that ensure people can get decent and affordable health coverage even if they have a pre-existing condition. To placate moderate Republicans, states wishing to retain the ACA’s gains in health coverage could choose to retain consumer protections, assuming local politics supported that choice.
What is in the amendment?
Under the amendment, states would be able to opt out of “essential health benefit” standards at will and waive the requirement that health plans not charge people more because they have a pre-existing condition if the state makes a high-risk pool available.
The amendment has the same effect as letting insurers deny coverage to people with pre-existing conditions – something many members of Congress have pledged not to do. Health insurance companies will jack up premiums and shrink benefits to weed out costly patients. How high will premiums go for people who are less healthy? Related, pre-ACA experience in Texas shows insurers generally charged the highest-risk enrollees in small employer plans as much as $20,000-$30,000 per person per year (and that was under a system that limited maximum premiums, which would not exist for the individual market). Individuals with severe cancers could be charged over $70,000 per year.
Notably – and hypocritically – Republican legislators want to exempt themselves and their staff members from the arcane changes above. Apparently Republican leaders think that covering essential health benefits – including pre-existing conditions – is important for themselves but not for all Americans.
High-risk pools are inadequate
Consumers priced out by these massive premium increases may technically have an offer of coverage from a high-risk pool, but the outline of the amendment contains no assurances of adequacy or affordability for the risk pool. Segregated high-risk pools, like the one Texas used to have, are pre-ACA relics generally considered failed experiments due to their exorbitant premiums, lack of meaningful sliding-scale premium subsidies, low enrollment, high deductibles, lifetime limits, and pre-existing condition waiting periods. Texas’ old pool suffered from all of these problems. In 2013, the Texas high-risk pool covered just 23,000 people and most pool participants paid premiums twice as high as standard market rates.
Insurance spreads the cost of the few really sick people over the pool of mostly healthy people. High risk pools do not; they cover only sick people. To ensure affordable coverage, high-risk pools would have to have substantial funding, something Congress may be unwilling to provide. The original ACA repeal bill contains $10 billion a year for states to use on high risk pools, but experts believe far more would be need. The Commonwealth Fund estimates that a nationwide high risk pool could cost $91 billion to $178 billion per year.
Bottom line: a bad bill that keeps getting worse
The initial ACA repeal bill had only a 17 percent approval rating, and 64 percent of Americans say it is a good thing that the bill failed. That’s no surprise given that the bill would have caused 24 million to lose coverage and hiked premiums for older and poorer individuals. What is surprising is that some members of Congress now want to abandon previous assurances that any ACA repeal-and-replace bill would protect individuals with pre-existing conditions, which one in four non-elderly Texans have. The recently reported amendment takes direct aim at people with pre-existing conditions, placing their future coverage at risk.
More on removing essential health benefits and community rating protections in Texas here.
More analysis of the impacts of the latest reported amendment here from Center on Budget and Policy Priorities.
More analysis of the underlying ACA repeal bill possibly being amended here and here.