One state’s role in fate of bill on health care

Nev. gov­er­nor’s po­si­tion could sway home-state Se­nate col­league

The Washington Post Sunday - - FRONT PAGE - BY SEAN SUL­LI­VAN AND DAN BALZ

providence, r.i. — Brian San­doval spent his Satur­day morning 3,000 miles from home tucked away in a con­ven­tion cen­ter ball­room where two top Trump ad­min­is­tra­tion of­fi­cials tried to con­vince him that ev­ery­thing would be okay un­der their plan to dra­mat­i­cally al­ter the na­tion’s health­care sys­tem. They couldn’t. As a re­sult, the Repub­li­can Party’s seven-year quest to over­haul the Af­ford­able Care Act re­mains at se­ri­ous risk. Se­nate Repub­li­cans were ex­pected to try to move to­ward a vote on the mea­sure this week, but late Satur­day, Se­nate Ma­jor­ity Leader Mitch McCon­nell (R-Ky.) an­nounced a de­lay in start­ing the de­bate be­cause Sen. John McCain (R-Ariz.) will have to stay in Ari­zona as he re­cu­per­ates from surgery for a blood clot above his left eye.

Whether the un­ex­pected post­pone­ment will pro­vide Se­nate lead­ers with the time to round up the votes they need for pas­sage or merely freeze the process or even har­den the op­po­si­tion was not im­me­di­ately clear. But the sud­den change in plans marked another un­ex­pected twist in the saga of the

Be­fore the Af­ford­able Care Act, in­sur­ance com­pa­nies could of­fer any com­bi­na­tion of ben­e­fits in most states and le­gally call them a health in­sur­ance pol­icy. A huge de­ductible? Cov­er­age for only one night of hos­pi­tal­iza­tion? Noth­ing for ma­ter­nity care, men­tal health or med­i­ca­tion?

If con­sumers were will­ing to buy such “bare bones” plans — and some peo­ple did, usu­ally at very low prices — those poli­cies were con­sid­ered health in­sur­ance cov­er­age.

“If they sold you a pol­icy that cov­ered [only] a tooth­brush, that qual­i­fied,” said Karen Pol­litz, se­nior fel­low at the Kaiser Fam­ily Foun­da­tion.

The ACA did away with that, mainly by re­quir­ing that all health plans on the in­di­vid­ual and small­group mar­ket in­clude cer­tain “es­sen­tial ben­e­fits” for ev­ery­one: pre­scrip­tion drugs, lab ser­vices, even ma­ter­nity care.

Now Sen. Ted Cruz (R-Tex.) wants to again al­low in­sur­ers to sell what­ever bare bones cov­er­age they de­sire and for con­sumers to pur­chase it. To qual­ify, in­sur­ers would have to of­fer just one plan that com­plies with the ACA’s com­pre­hen­sive ben­e­fits standard.

It may sound good in the­ory — free mar­kets and free­dom of choice — and it’s an idea that has long been pop­u­lar with con­ser­va­tives. But ex­perts say in­sur­ance sim­ply doesn’t work this way and that the “Cruz amend­ment” would un­leash de­struc­tive forces for in­di­vid­u­als with­out em­ployer-spon­sored cov­er­age, as well as for the sys­tem.

The se­na­tor and his al­lies “have been very clear,” said Sarah Lueck, a se­nior pol­icy an­a­lyst for the Cen­ter on Bud­get and Pol­icy Pri­or­i­ties, a left-lean­ing think tank. “They want lower pre­mi­ums, and they think that keep­ing healthy peo­ple and sick peo­ple sep­a­rate keeps pre­mi­ums lower. Well, it does. For healthy peo­ple.”

But, she added, “From an in­sur­ance per­spec­tive, and from a con­sumer pro­tec­tion per­spec­tive, it wouldn’t work.”

The in­sur­ance in­dus­try echoed that late Fri­day, strongly op­pos­ing Cruz’s “Con­sumer Free­dom Op­tion” in a let­ter to Se­nate Ma­jor­ity Leader Mitch McCon­nell (R-Ky.) and Mi­nor­ity Leader Charles E. Schumer (D-N.Y.)

“It is un­work­able in any form and would un­der­mine pro­tec­tions for those with sig­nif­i­cant med­i­cal con­di­tions, in­crease pre­mi­ums and could lead to wide­spread loss of cov­er­age for peo­ple cur­rently en­rolled in the in­di­vid­ual mar­ket,” wrote the main in­dus­try trade group, Amer­ica’s Health In­sur­ance Plans, and the Blue Cross Blue Shield As­so­ci­a­tion.

Ul­ti­mately, the starkly ex­plicit let­ter warned, “This pro­vi­sion will lead to far fewer, if any, cov­er­age op­tions for con­sumers who pur­chase their plan in the in­di­vid­ual mar­ket. As a re­sult, mil­lions of more in­di­vid­u­als will be­come unin­sured.”

Here’s how this all would play out: In­sur­ance pre­mi­ums paid by the vast ma­jor­ity of healthy peo­ple, who use rel­a­tively few med­i­cal ser­vices each year, cover the costs for those who are ill and re­quire the care pro­vided by the world’s most ex­pen­sive health sys­tem. Leav­ing aside myr­iad com­plex­i­ties of in­sur­ance mar­kets, ide­ally it bal­ances out. Peo­ple are cov­ered for much of the care they get, in­sur­ance com­pa­nies make a profit, and health-care providers are re­im­bursed for their ser­vices.

Yet if the sick and the well are sorted — or sort them­selves — into sep­a­rate pools, the sys­tem can start to fall apart. With the well no longer sub­si­diz­ing the sick, the lat­ter may face ever-es­ca­lat­ing pre­mi­ums or fewer choices en­tirely if in­sur­ers no longer are re­quired to sell to any­one who wants to buy a pol­icy.

And in a re­lated sce­nario, peo­ple who are priced out of the mar­ket be­cause of a pre­ex­ist­ing med­i­cal con­di­tion, who turn to a health-care plan with min­i­mal cov­er­age, can find them­selves un­ex­pect­edly fac­ing very high bills. So can in­di­vid­u­als on such a plan who are di­ag­nosed with a se­ri­ous dis­ease, such as can­cer.

Mean­while, ev­ery­one else who re­ceives in­sur­ance through the work­place or can af­ford to pur­chase ro­bust cov­er­age con­tin­ues in a de facto sep­a­rate sys­tem.

“It’s just In­sur­ance 101,” Lueck said. “You don’t cre­ate two dis­parate mar­kets and then let healthy peo­ple leave your mar­ket­place.”

Un­der the Se­nate bill, the ACA’s pre­mium sub­si­dies would still be avail­able to those earn­ing as much as 350 per­cent of the fed­eral poverty level, blunt­ing the cost for many. But mid­dle-in­come Amer­i­cans who earn more could face sky­rock­et­ing costs with­out the same con­sumer pro­tec­tions af­forded un­der the 2010 health-care law.

Those Amer­i­cans would still be sub­ject to a penalty if they didn’t main­tain con­tin­u­ous cov­er­age. The Se­nate leg­is­la­tion erases the ACA’s in­di­vid­ual man­date to buy cov­er­age, re­plac­ing it with a six­month wait­ing pe­riod for those who have been unin­sured for at least two months in the pre­vi­ous year.

The Cruz amend­ment would go an ex­tra step, po­ten­tially prod­ding mil­lions of peo­ple with prob­lems like di­a­betes or heart con­di­tions to stay in­sured. But de­pend­ing on what they pur­chase, it wouldn’t guar­an­tee them the ACA’s con­sumer safe­guards.

Con­ser­va­tives have crit­i­cized the Cruz amend­ment as well. Dou­glas Holtz-Eakin, for­mer Con­gres­sional Bud­get Of­fice di­rec­tor un­der pres­i­dent George W. Bush, warned that it would send pre­mi­ums sky­rock­et­ing for older and sicker peo­ple.

But Holtz-Eakin was more pos­i­tive about the lat­est it­er­a­tion of the Se­nate GOP leg­is­la­tion, which pro­vides an ad­di­tional $72 bil­lion that states could use to sta­bi­lize their in­di­vid­ual mar­ket­places.

“Ev­ery­one will want to stay on the ex­change and use that money to sub­si­dize off-ex­change peo­ple,” Holtz-Eakin said. “All that money is fun­gi­ble.”

The idea of min­i­mal cov­er­age was tried be­fore the ACA be­came law, with lit­tle suc­cess. In 2009, dur­ing the Great Re­ces­sion, Con­sumer Re­ports noted that an es­ti­mated 14,000 peo­ple a day were los­ing em­ployer-based health in­sur­ance. When some turned to in­di­vid­ual or small-group plans, they found that they had pur­chased “cov­er­age so rid­dled with loop­holes, lim­its, ex­clu­sions, and gotchas that it won’t come close to cov­er­ing their ex­penses if they fall se­ri­ously ill,” the magazine wrote.

At the time, the sys­tem fa­vored young, healthy peo­ple who wanted to buy plans with­out all the frills. And those are the peo­ple who have shied away from many of the Oba­macare mar­ket­places, frus­trated by pre­mium hikes and will­ing to in­stead pay the rel­a­tively small fine for lack­ing cov­er­age.

But there were also con­sumers who bought lower-cost cov­er­age with­out un­der­stand­ing the lim­i­ta­tions of such plans, which com­pa­nies and bro­kers mar­keted heav­ily, said Pol­litz at the Kaiser Fam­ily Foun­da­tion.

“Peo­ple don’t re­ally get health in­sur­ance,” she said. “They mostly price-shopped, and if a pol­icy was only 50 bucks a month, they said, ‘I can af­ford that.’ ”

As Repub­li­cans have fo­cused on re­peal­ing and re­plac­ing the ACA this year, con­ser­va­tive law­mak­ers have started defin­ing suc­cess by just one bench­mark: Whether a GOP bill would lower in­sur­ance pre­mi­ums. That wouldn’t nec­es­sar­ily make plans af­ford­able, how­ever; many com­pen­sate with much higher de­ductibles and co­pays.

Cruz has fully em­braced the nar­rower goal. The ul­ti­mate test of suc­cess, he said in May, is whether a fi­nal GOP plan low­ers pre­mi­ums.

“If we drive down the cost of pre­mi­ums so that peo­ple who are strug­gling can more eas­ily af­ford health in­sur­ance for their fam­ily, we will have suc­ceeded,” he said. “If the cost of pre­mi­ums con­tin­ues to sky­rocket, as they have un­der the last seven years un­der Oba­macare, than we will have failed.”

OLIVER CONTRERAS FOR THE WASH­ING­TON POST

Sen. Ted Cruz (R-Tex.) speaks with mem­bers of the me­dia af­ter an­nounc­ing his plans for the GOP health-care bill: al­low­ing in­sur­ers to of­fer low-cost “bare bones” plans aimed at healthy peo­ple.

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