Jul 13, 2017

The new Senate bill: Better for the healthy, worse for the sick

AP Photo/J. Scott Applewhite)

The most significant revisions Senate Republicans have made to their health care bill, taken together, point largely in the same direction: They would make the individual insurance market even better for healthy people — and thus worse for sick people.

And they aim to soften the blow to health insurance markets by spending more money on sick customers, rather than trying to prevent disruptions from happening in the first place.

Ted Cruz's "consumer choice" option: As the insurance industry has explained, if Cruz's proposal becomes law, healthier people would likely gravitate toward a new set of insurance plans with lower premiums, less coverage, and fewer benefit mandates/consumer protections. If people with pre-existing conditions are the only ones buying policies that have to cover pre-existing conditions, those policies will get pretty expensive — maybe prohibitively expensive.

Catastrophic coverage: The revised bill would let people use their premium subsidies to buy the most bare-bones policies on the market today — those that only cover catastrophic care. And it would let anyone buy those policies through the exchanges; the ACA limited them to people younger than 30. That would, again, nudge more people into plans with less coverage, lower premiums and higher deductibles — a great option for people who don't need much health care.

This was already the underlying dynamic of the initial Senate bill. The new version turns up the volume:

  • It still repeals the individual mandate.
  • It eventually repeals the ACA's subsidies for co-pays, deductibles and other cost-sharing — expenses people only incur when they go to the doctor.
  • It retains the ACA's subsidies for insurance premiums, but pins the value of those subsidies to plans with less coverage and higher deductibles (again — a better deal for people who don't need much health care).
  • It adjusts those subsidies based on age, giving some young people (who tend to be healthier) more help than they're getting now, while many older people (who tend to use more health care) would get less.
  • The main solution to the problems those changes would create for sick people: more money. Republicans added another $70 billion to help fund temporary stabilization programs — mainly, direct payments to insurance companies that end up with especially expensive customers.

Bottom line: Health care for sick people is wildly expensive. Within the individual market, the ACA tried to offset those costs in two ways: with direct federal spending; and by heightening the "subsidy" healthy people's premiums provide for sick people's expenses. With each revision, Republicans' bills increasingly accept the first half of that equation while dismantling the second.

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