Repeal, take two: House GOP’s ObamaCare deal may let states opt out of “community rating” for people with preexisting conditions
Biiiiig caveat: Under the deal, states would still have to make sure that people with preexisting conditions are eligible for some sort of coverage. Insurers wouldn’t be allowed to drop them entirely. To obtain a federal waiver from the relevant ObamaCare regs, a state would either have to join a federal high-risk pool for those consumers or set up one of their own. In that sense, the GOP compromise (between the conservative Freedom Caucus and the moderate Tuesday Group) is a mirror image of O-Care itself. That law gave states the power to set up their own insurance exchanges, provided that if they declined to do, their residents would be able to participate in the federal exchange instead. In this case the GOP would be giving states the power to set up their own system for covering preexisting conditions — or, by doing nothing, they can continue to have their residents governed by federal regulations.
But there’s a biiiiig caveat to the biiiiig caveat. Although people with preexisting conditions would be eligible for some sort of coverage no matter what a state does, obtaining a waiver from the ObamaCare regs would mean the federal “community rating” requirement would no longer apply. That means that insurers could charge someone with preexisting conditions according to their individual health circumstances — which potentially means monster hikes in their premiums. They’d still be technically eligible for coverage, they’d just … have no way to pay. How’s that going to play politically?
According to a draft of the tentative deal obtained by POLITICO, the latest proposal would allow states to apply for “limited waivers” that would undermine Obamacare’s protections for pre-existing conditions. Under these waivers, states could opt out of Obamacare standards setting minimum benefits that health plans must offer and a requirement — called community rating — forbidding insurers from charging different prices to people based on health status. Both are provisions that the GOP’s ultraconservatives have pushed to eliminate as part of the repeal effort, contending that these coverage mandates drive up the cost of insurance.
States opting out of the community rating rules would be forced to set up separate insurance pools, known as high-risk pools, where people priced out of the private market could purchase coverage.
Right, in theory high-risk pools should make coverage more affordable for the very sick — but it hasn’t always worked out that way in practice. Much depends on how much money a state is willing to able to pour into one. Would a fiscally conservative red state that obtains a waiver from the community-rating mandate really be inclined to lavishly fund a high-risk pool?
As noted in the excerpt, community rating isn’t the only thing states could waive under the deal. They could also dump ObamaCare’s Essential Health Benefits, i.e. the federal requirement that every health plan cover certain services, like ER visits, prenatal care, and so on. There too, they’d be required to show some sort of offsetting benefit: Per HuffPo, they can get a waiver only if they show that eliminating EHBs “would lower premiums, increase the number of people insured, or ‘advance another benefit to the public interest in the state.'” (The last sounds like a catch-all that would make waivers easy to come by under a friendly Republican-run federal government.) You can understand why the compromise might appeal to both the conservative and moderate wings inside the GOP. For the Freedom Caucus, it means red states will be able to shed onerous federal regs and offer a greater variety of health-care plans, replete with lower premiums for consumers. For the Tuesday Group, the fact that waivers are available but not mandatory means that blue states will be able to keep the more robust ObamaCare rules intact if they like. In that sense, the plan bears a slight resemblance to Bill Cassidy’s and Susan Collins’s proposal, which would have repealed ObamaCare and then let each state choose whether to “reimplement” it or to build their own tailor-made system. The new GOP deal doesn’t go that far but it’s a step in that direction vis-a-vis EHBs and community rating. If you believe a Freedom Caucus source who spoke to CNBC, there are 25 to 30 FC members ready to flip to yes to vote for this deal — a bit surprising given libertarian suspicions that waivers will be harder for states to obtain than everyone thinks.
But how many other House Republicans will flip to no? You can also see the political problem looming here for Ryan and Trump: Americans really like the rule that insurers have to cover people with preexisting conditions, and watering it down by letting states opt out so that insurers can blow up sick people’s premiums is apt to poll poorly. A CNN poll taken last month found 87 percent in favor of keeping O-Care’s protections regarding preexisting conditions; another poll taken in December found 69 percent support forcing insurers to cover people with those conditions. Trump and Ryan will plead with the public that under their plan insurers will still be forced to cover everyone who wants insurance, but Schumer and Pelosi will be waiting with numbers to show that that insurance will become prohibitively expensive for some sick people who live in states that obtain waivers. Republicans have been attacking high deductibles under ObamaCare for years by noting that having coverage doesn’t do you much good if you can’t afford actual health care. Democrats will now make the same argument. Will centrist Republicans want to end up on the wrong side of that by voting yes? Even if they’re willing, does this deal sweeten the pot enough to let them swallow the bitter pill of rolling back ObamaCare’s Medicaid expansion? Remember, according to one poll taken last month shortly before the House bill fell apart, the GOP plan was at 17 percent nationally. How much better are those numbers likely to get for vulnerable GOPers now that a proposal to let states dump community rating for the very sick has been tacked on? Or should I say, how much worse?
The rumor circulating last night was that the House might vote on the bill next week, to get it just under the wire of Trump’s first 100 days, but the news this afternoon is that that looks unlikely. Exit quotation: “216 votes unclear.”