Health insurers are worried about the Senate health care bill.

Lack of incentive to buy would boost premiums

Insurers are fretting about the Senate Republican bill to replace the Affordable Care Act because it would repeal the individual mandate but — unlike the House bill — not provide an incentive for people to retain coverage.

Abolishing the health care law’s mandate with no penalty for coverage lapses would destabilize the individual insurance market by leading healthy people to drop their coverage, leaving insurance companies with sicker, more costly plan members in their enrollee risk pool.

As a result, premiums would increase as much as 20 percent, according to government estimates, making coverage unaffordable. And people with medical problems could game the system by enrolling only when they get sick.

“Particularly, if there’s something like, you know, you have to have knee surgery in April. And then sign up for coverage, get the surgery and then drop it,” said Katie Allen, executive director of the Council for Affordable Health Coverage. To avoid that scenario, the House Republican repeal legislation imposes a 30 percent surcharge on people who let their individual insurance lapse.

But Senate Republicans didn’t include the surcharge in their legislation because the provision conflicts with the Senate’s “Byrd Rule,” which governs what can be included in a budget reconciliation bill.

The mandate, long the most unpopular provision of the Affordable Care Act, requires most people to have insurance coverage or pay a penalty.

Because the health law guarantees access to individual coverage for people with pre-existing conditions and bars insurers from charging sick people more for coverage, the individual mandate helps ensure that a mix of healthy and sick people are covered. That helps keep premium costs in check.

In a May letter to Senate Finance Committee Chairman Orrin Hatch, R-Utah, America’s Health Insurance Plans, the lobbying association for health insurers, said any legislation that repeals the mandate “must include alternatives to incentivize continuous coverage.”

Repealing the mandate without the incentives would cause premiums to increase 20 percent, the nonpartisan Congressional Budget Office has estimated.

Sen. Orrin Hatch