Here’s the opening quote from a press release Thursday from Sen. Lamar Alexander (R-Tenn.), chairman of the Senate Health, Education, Labor and Pensions Committee, about the Senate GOP leadership’s healthcare bill:
“To begin with, the draft Senate healthcare bill makes no change in the law protecting people with preexisting conditions, no change in Medicare benefits, and increases Medicaid funding — that’s TennCare — at the rate of inflation.”
The second and third of those points are blatant head fakes, given that Medicare has not been an issue in this debate and that the changes Republicans are proposing for Medicaid would slash the program by hundreds of billions of dollars. But the first point is just as misleading, albeit in a more subtle and pernicious way.
Under the ACA, a.k.a. Obamacare, insurers are required to sell a comprehensive insurance policy to anyone who wants it, and their premiums have to be based on the expected needs of an entire community, not each individual applicant. Those three elements — “guaranteed issue,” mandatory coverage of “essential health benefits” and “community rating,” in the parlance of the insurance industry — are collectively the shield that protects people with preexisting conditions who aren’t covered by a large employer’s insurance plan.
The Senate’s “Better Care Reconciliation Act” wouldn’t repeal that part of the ACA — Senate rules don’t allow that sort of legislating on a budget reconciliation bill. But it does include a provision giving states carte blanche to waive the essential health benefits, as long as they don’t increase the federal deficit.
Under current law, states can apply to waive the essential health benefits requirements as well as the federal rules for premium and out-of-pocket subsidies, insurance exchanges, the “individual mandate” that requires adult Americans to obtain insurance, and the “employer mandate” that requires businesses with 50 or more full-time employees to offer health benefits. To earn a waiver, however, they have to show that their approach will provide insurance coverage that’s just as comprehensive to at least as many people and be at least as affordable as it would be without a waiver.
In other words, the ACA invited states to be creative in achieving the law’s goals.
So, under the Senate bill, it would be perfectly fine for a state to let insurers offer cheap policies that exclude coverage for potentially costly risks and preexisting conditions (for example, by omitting maternity care and cancer drugs) as well as extremely expensive comprehensive policies that any resident can access — but not necessarily afford. Or a state could offer the comprehensive policies itself through a high-risk pool, an approach that’s been tried and failed repeatedly because of its high costs. Either way, average premiums would drop, which the state could argue would be expected to boost enrollment.
At least two governors have already indicated an interest in waiving the essential benefits. They could do so under the Senate bill with only the assent of their state insurance commissioner, with no need for state lawmakers to approve.
Even if just one state opts for a more limited set of “essential” benefits, the effects could spill over onto Americans covered by large employer plans across the country. That’s because the law bars employers from setting annual or lifetime benefit caps only on benefits that are essential — and lets them use any state’s list of those benefits. So a single state that excludes maternity care or prescription drugs would open the door to any U.S. employer’s health plan to slap a cap on those benefits.
So, while it’s technically true that the Better Care Reconciliation Act wouldn’t amend the ACA’s protections for people with preexisting conditions directly, it would leave them open to indirect attack by state officials eager to cut insurance premiums the easy way: by allowing insurers to cater to the customers they really want to serve, which are the ones who don’t need healthcare.