New AHCA amendment gives states the option to weaken the ACA’s consumer protections
By David Blumenthal, M.D. and Sara R. CollinsDavid Blumenthal, M.D., M.P.P., is president of The Commonwealth Fund, a national philanthropy engaged in independent research on health and social policy issues.
Sara R. Collins, Ph.D., is vice president for Health Care Coverage and Access program at The Commonwealth Fund. Commentary and opinion from The Commonwealth fund. Reprinted with permission. Visit here.
News outlets report that House Republicans are close to agreeing on an amended version of the American Health Care Act (AHCA), their proposed repeal and replacement of the Affordable Care Act (ACA). The all-important legislative language for the revised bill is not yet available, nor are Congressional Budget Office (CBO) projections of its effects on coverage and the budget, so any analyses are necessarily tentative.
Nevertheless, the summaries leaked to the media offer insight on the amended bill. If accurate, those summaries suggest that the revised AHCA will significantly increase the numbers of uninsured Americans, raise the cost of insurance for many of the nation’s most vulnerable citizens, and, as originally proposed in the AHCA, cut and reconfigure the Medicaid program. The new amendment specifically allows states to weaken consumer protections by, for example, permitting insurers to charge people with preexisting conditions higher premiums.
What the Amendment Leaves in Place
The amended proposed bill does little to change many provisions of the original AHCA including:
- a phase out of the ACA’s Medicaid expansion;
- capped federal payments to states for their Medicaid programs;
- flat premium tax credits for individual market coverage that adjust for age but not income or premiums;
- the option for insurers to charge older people as much as five times what they charge young people;
- replacement of the ACA’s individual mandate penalties with a premium surcharge for those who fail to maintain continuous coverage;
- repeal of taxes that helped fund the ACA’s coverage provisions;
- state funding for reinsurance or other programs to stabilize the individual market.
The CBO estimated in March that the combined effects of these provisions would increase the number of people without health insurance by 24 million by 2026. Older Americans would be particularly hard hit by the bill, experiencing much higher premiums relative to the ACA and the greatest coverage losses.
What the Amendment Changes
The amendment offers states the option to apply for waivers to reduce ACA consumer protections that have enabled people with health problems to buy private health insurance. States could waive the ban on charging people with preexisting conditions higher premiums, as long as states set up high-risk pools for people with conditions like cancer or heart disease who could no longer afford coverage. States could also change the ACA’s required minimum package of health benefits for health plans sold in the individual and small-group markets.
Despite the fact the federal ban on preexisting condition exclusions would remain under the AHCA, as Tim Jost points out, insurers could reach the same end by not covering services like chemotherapy that sick people need, or by charging very high premiums for individuals with expensive, preexisting problems. In addition, waiving the ACA’s essential benefit requirement could weaken other consumer protections like bans on lifetime and annual benefit limits and caps on out-of-pocket costs.
While states that allowed higher premiums for people with health problems would be required to use a high-risk pool under the amendment, prior research has found that such pools operated by states before the ACA were expensive both for states and for people enrolled in them, and covered only a small fraction of the individuals who would have benefited. An amendment proposed earlier in the month would provide federal funds for a so-called “invisible risk-sharing” program, a hybrid between a high-risk pool and reinsurance for high claims costs, but the allocated funding would likely need to be much higher to have an impact on costs.
The number of states that would apply for these waivers is unknown, but it seems reasonable to expect that many states with governors and legislatures that have opposed the ACA would do so. For a substantial part of the country, therefore, the amendment could seriously undermine the ACA’s protections for people with preexisting health conditions.
Setting aside the amended AHCA’s potential effects on the health and health care of Americans, many questions and uncertainties remain about the bill’s timing and fate. First, the rush to introduce and pass it quickly seems likely to run afoul of Congress’ need to pass a spending bill next week that will keep the federal government funded beyond April 28. So it could be weeks before an amended AHCA gets serious consideration in the House. An important benefit of delay would be to give the CBO time to analyze the impact of the amendments.
Second, the fate of the amended AHCA in the Senate remains uncertain. Some possible provisions – affecting essential health benefits, premium increases based on health, and other features – may not withstand scrutiny by the Senate parliamentarian as she evaluates whether they are appropriate parts of a budget reconciliation bill, and thus exempt from filibuster. Furthermore, many moderate Senate Republicans reportedly have concerns about the Medicaid provisions of the AHCA.
Third, the complex legislative maneuvering around the AHCA should not detract attention from the fundamental facts. Health insurance saves lives and protects Americans from crippling medical debt and even bankruptcy. Changes to existing legislation that result in fewer insured Americans will undermine the health and quality of life of millions of people, as well as increase economic inequality in this country.