Kaiser, Policy

Back where we started? Senate health bill adds uncertainty for people with chronic conditions

Insurers were struggling last week to grasp the implications of the legislation, studded with ambiguous language. One big takeaway: The Senate’s version of health care would undermine historical assumptions and drastically shift risk in the individual market.

The latest Senate health proposal reins in costs by effectively splitting the individual insurance market, with healthy people diverted into stripped-down plans and chronically ill individuals left with pricey and potentially out-of-reach options, insurance analysts said.

This draft — a fresh attempt by the Republican Party to undo the Affordable Care Act — injects more uncertainty into plans for people with pre-existing conditions such as cancer, asthma, diabetes or other long-term ailments. Those people, insured through ACA marketplaces now, could be more isolated than in an earlier version of the Senate bill.

For such patients, “I would be pretty nervous,” said Sabrina Corlette, a research professor at Georgetown University’s Health Policy Institute. “You will have separate pools — one that only healthy people can get into and one for you. That pool is liable to get increasingly expensive — in fact, very expensive over time.”

The two biggest insurer trade groups went further on Friday, saying in an unusually strong-worded letter that “millions of more individuals will become uninsured” if the proposal becomes law.

Plans sold to individuals and families through the Obamacare exchanges cover some 10 million people, many with chronic disease.

A draft bill released Thursday added a proposal from Texas Sen. Ted Cruz that would let insurers sell health coverage outside the ACA exchanges with no provisions for prescription drugs, mental illness, hospitalization or almost any other benefit.

Such plans would be far cheaper than comprehensive coverage and almost certainly draw younger, healthier people away from high-benefit insurance, analysts said.

Without healthy customers subsidizing the sick, premiums and other costs would soar for plans that accept chronically ill patients, experts said. The Senate draft includes $70 billion over a decade to help pay those costs, but it’s far from clear that would be enough.

Insurers were struggling last week to grasp the implications of the legislation, studded with ambiguous language. One big takeaway: The Senate’s version of health care would undermine historical assumptions and drastically shift risk in the individual market.

Letting carriers sell low-cost, low-benefit plans to healthy consumers “is simply unworkable in any form and would undermine protections for those with pre-existing medical conditions, increase premiums and lead to widespread terminations of coverage for people currently enrolled in the individual market,” America’s Health Insurance Plans and the Blue Cross Blue Shield Association, two lobbying groups, said in a Friday letter to the Senate.

The Republicans are nowhere near success with this plan. Already two of the 52 Republican senators — Kentucky conservative Rand Paul and Maine moderate Susan Collins — have said they won’t support the bill. One more defection would sink it, and a delay caused by the surgery of Arizona Republican John McCain gives opponents more time to build resistance.

Senate leaders had scheduled a vote for this week but postponed it to give McCain time to recover from treatment of a blood clot near his eye.

Meanwhile, the nonpartisan Congressional Budget Office is likely to issue its assessment of the bill this week. The CBO had said an earlier Senate bill would increase the number of people without health insurance by 22 million by 2026.

The Republican plan offers a freer insurance market — something the party has long favored — while purporting to protect those with existing illness. Insurers selling stripped-down plans would be required to also offer traditional Obamacare plans covering pre-existing conditions.

But such coverage risks becoming a high-cost ghetto for the chronically ill, experts said. It would likely become unattractive to carriers and unaffordable to members who could face paying thousands of dollars for premiums and thousands more out-of-pocket before coverage kicks in.

Even though insurers selling unregulated plans would be required to offer full-coverage plans to all comers, they could limit their risk with time-tested maneuvers to repel the sick, said Ana Gupte, who follows health care stocks for Leerink Partners.

“They usually find ways to minimize enrollment” such as jacking up premiums or cutting broker commissions for certain coverage, she said.

Nor would there likely be much choice in high-benefit Obamacare plans, she said. Under the Senate bill, carriers seeking to sell skimpy coverage would have to offer only one high-benefit “gold” plan and a medium-benefit “silver” plan as traditionally sold under the Affordable Care Act.

Even then, the legislation would allow state officials to alter Obamacare standards for out-of-pocket maximums and essential health benefits.

That even could allow richer plans intended for the chronically ill to drop coverage of prescription drugs, mental illness, maternity care or other items.

The bill includes two measures intended to keep costs in high-benefit Obamacare plans from spiking out of control. One is the $70 billion in federal subsidies to help cover the expense of the pool of sick people.

“It seems to me it’s not nearly enough” to keep plans affordable for those with chronic illness, said Timothy Jost, emeritus law professor at Washington and Lee University and an expert on health reform.

The other is a six-month waiting period for applicants wanting to buy full coverage who don’t already have it.

That’s supposed to induce healthy people to buy high-coverage plans and help subsidize the sick. Otherwise they risk a coverage gap if they become gravely ill or hurt, raising the chance they would have to pay thousands out-of-pocket for any unexpected medical expense.

But that incentive to buy comprehensive coverage is far weaker than Obamacare’s mandate, which fined people for not having insurance, Jost said. The Republicans’ bills would scrap the mandate.

“I just don’t think it’s going to be terribly effective,” he said.