As Senate Republicans move toward a vote on their own repeal-and-replace bill, they face an urgent political task. They must prove the bill is much less cruel than the version that passed the House last month, to keep on board more moderate GOP senators who don’t want to be seen voting for a bill that kicks millions of poor people off Medicaid and guts protections for people with preexisting ailments.
Senate Republicans appear to be preparing to do this in several ways. One is to say they’ll phase out the Medicaid expansion more slowly over time. Another is reportedly to jettison a key feature of the House bill, one that would result in soaring premiums for people with preexisting conditions, pricing untold numbers of them out of the market entirely and leaving them without coverage.
A new report from the liberal Center for American Progress (CAP), however, seeks to challenge that second effort, by directly debunking the notion that the Senate bill will be a lot less onerous for people with preexisting conditions. The report points out that a key provision of the Senate bill would still have the effect of gutting protections for people with preexisting conditions, even if it avoids explicitly doing this.
Here’s how. The House version of the bill would allow states to waive both the ACA’s requirement that insurers cover “essential health benefits” (such as doctor visits and prescription drugs) and the ACA’s ban on insurers from jacking up premiums for people with preexisting conditions. The Congressional Budget Office projected that the result of the latter provision would be one-sixth of the population living in states that waived the protection for sicker people, leading to soaring premiums for them, many of whom “might not be able to purchase coverage at all.”
The Senate bill may seek to avoid this. Axios reported recently that Senate Republicans are mulling a compromise in which states could only seek the waiver on essential health benefits and not on jacked-up premiums for people with preexisting conditions. Thus, the Affordable Care Act’s protections would theoretically remain for sicker people.
But the CAP report argues that those protections would nonetheless be substantially weakened. That’s because, in states that waive the requirement of coverage for essential health benefits (EHBs), insurers could reduce the cost of covering people with preexisting conditions by nixing the EHBs upon which those people rely:
By allowing states to the ACA’s essential health benefits (EHB) requirements, it would enable insurers to effectively screen out sick people by excluding certain services. As a result, people with pre-existing conditions in waiver states would face significantly higher costs and find it much harder to find insurance plans that actually covered treatment for even relatively common conditions such as mental health problems or diabetes.
Topher Spiro, a health policy analyst at CAP, pointed out that under the Senate bill, insurers that are prohibited from jacking up premiums for people with preexisting conditions — but are allowed in certain states to waive EHBs — might cut their costs on sicker people by going out of their way to waive the essential services that those people disproportionately need.
“The Senate bill will create a downward spiral in benefits offered as insurers race to slash benefits to avoid the sickest people,” Spiro argued. “Before the ACA, some plans didn’t cover prescription drugs and many plans didn’t cover mental health or opioid addiction treatment. Under the Senate bill, insurers in some states could drop such benefits again. If you have diabetes, or cancer — or any preexisting condition that requires drugs — or an opioid addiction, you could be forced to pay thousands of dollars for prescription drugs or care out of pocket.”
How many people might this impact? The CAP report argues that 5.3 million people with preexisting conditions could end up living in states that seek waivers from EHBs, and thus under eroded protections. This calculation is based on two things. First, a recent government estimate found 55 percent of people getting insurance on the individual markets have preexisting conditions. Second, the CBO projects that nearly 10 million people enrolled on the individual markets would live in EHB waiver states. Applying that 55 percent future to the 10 million who would be in waiver states, it reaches the 5.3 million number. To be sure, this is a very rough and imperfect calculation.
Larry Levitt, a senior vice president at the nonpartisan Kaiser Family Foundation, told me today that he thinks the estimate of the number of people who might be impacted is somewhat high. But he stressed that CAP’s underlying argument is sound. “The estimates of people with preexisting conditions may be somewhat high, but the overall point is right and certainly many people would be affected,” Levitt emailed.
Levitt added another crucial wrinkle, however, pointing out that under the Senate bill, insurance companies could proactively try to get states to waive the EHB requirement:
States would come under enormous pressure from the insurance industry to waive required benefits. No insurer would want to offer the benefits needed by people with preexisting conditions, so it would be a competitive race to skinnier insurance policies. Even if certain benefits were offered on an optional basis, they would be really expensive because insurers know that only people who know they’ll need them will buy them.
We won’t know what the Senate bill would do until we see it. But if Senate Republicans do allow states to waive the requirement of coverage of essential health benefits — while claiming they are maintaining protections for the sick — this argument should come under a great deal of scrutiny, theoretically making it harder for moderates to go along.