Health plans that are cheaper -- but potentially useless to people who are seriously ill -- could proliferate if the tweaks to the GOP health bill being discussed by Republican lawmakers move forward, several health policy experts said.
The bill is still in a "conceptual" stage, according to House Speaker Paul Ryan, so specific policy changes aren't yet known. But one of the core ideas that Vice President Pence discussed with members of the House Freedom Caucus would allow states to apply for waivers from requirements that determine the minimum level of health coverage. Today, insurers must cover 10 "essential health benefits," such as prescription drugs and maternity care.
Republicans also discussed changes to "community rating" requirements that currently allow insurers to vary their prices for a limited number of reasons, such as smoking status and age.
The specific policy changes haven't yet been released or agreed upon, even in draft form, and much depends on how sweeping the provisions are when finalized. But the ideas described by lawmakers could effectively undermine one of the most popular parts of the Affordable Care Act — the requirement that insurers not refuse to sell plans or charge more to people with preexisting conditions. That policy has widespread bipartisan support, including from President Trump.
"Taking Mark Meadows and the Freedom Caucus members at their word, I assume they believe it would lower insurance premiums in the individual market. But the price of that would be some people would not be able to get health insurance," said Thomas Barker, a co-chair of Foley Hoag's health care practice who worked in George W. Bush's administration. "Maybe it would be cheaper for everyone, but some people might be uninsurable."
Without requirements about which benefits must be included in coverage, "the preexisting condition protection is totally meaningless," said Linda Blumberg, a senior fellow at the Urban Institute. A person with cancer or diabetes could be guaranteed that an insurer won't deny them coverage. But plans in certain states might get waivers, potentially giving them the flexibility to not cover radiation treatments or insulin.
"If you don’t have to cover their chemotherapy, you don’t have to cover their radiation and whatever else they need -- what is that preexisting protection doing for you? It's worth nothing," Blumberg said.
Another aspect of the proposal Pence has been discussing this week with members of the House Freedom Caucus — allowing insurers to abandon the “community rating” system and charge sick consumers considerably higher premium rates than healthy ones — could also dramatically alter how Americans with preexisting conditions get coverage.
Dan Mendelson, president of Avalere Health, said in an interview that if congressional Republicans go ahead with that change, “You’re basically in a world where there is no guarantee for people with preexisting conditions in the commercial market.”
Under that scenario, which Mendelson described as “a pre-ACA world,” some consumers would likely enter into the high-risk pools that existed before passage of the 2010 health law. Those pools are composed of sicker customers, and Republicans have discussed the idea of providing $100 billion in federal funds over a decade for the states to help them, in part, subsidize participants in high-risk pools.
Questions remain about whether Republicans will be able to achieve the ideas they've been talking about within the bounds of the reconciliation process and how such a bill would fare in the Senate. But if lawmakers grant insurers freedom to vary their prices more flexibly than they can today, it could be tantamount to not having access to coverage at all for some people, one health care industry official argued.
"This is going to stabilize the insurance market by jettisoning sick people and low income people," said the official, who spoke on condition of anonymity so that he could be candid.
Combined with another of Trump's health care promises -- that insurers will soon be granted the ability to sell insurance across state lines -- policy specialists said changes to the minimum package of health benefits required to be covered by insurance could create a race to the bottom.
That's because healthy people would likely be attracted to the cheapest, most minimal plans. Insurers that offered plans that had more generous benefits could become a magnet for sick people who needed that care -- and, as a result, would have to raise their premiums even higher.
Under the guise of offering insurers and consumers more choice and freedom in how their insurance is structured, peeling back the current definition of what insurance is could ultimately result in less choice, said Craig Garthwaite, an associate professor of strategy at the Kellogg School of Management at Northwestern University. Insurers would have no incentive to offer plans with benefits more generous than the minimum, and it could even put them at a competitive disadvantage.
Insurers that cover expensive hepatitis C drugs favorably, for example, could find themselves attracting those patients.
"If you do that and your competitor doesn’t, you’ll have to raise your premiums," Garthwaite said.
Juliet Eilperin contributed to this story.