Key trade-offs complicate health care bills
Why it’s so hard to write legislation that will eventually pass
President Trump, who acknowledged weeks into his presidency that he hadn’t realized health care “could be so complicated,” expounded on that theme after Senate Republicans revealed Thursday their proposal to rewrite the Affordable Care Act.
“It’s a very complicated situation from the standpoint, you do something that’s good for one group but bad for another,” Trump told Fox & Friends’ Ainsley Earhardt in an interview in which he expressed optimism that the bill would nonetheless pass.
The president might have been referring to the fact that Senate Republicans haven’t figured out how to satisfy lawmakers calling for a full repeal of Obamacare without losing those who want fewer changes. But his observation also applies to the trade-offs that have to be made when setting health policy.
Here’s a look at why it’s difficult to address one issue without creating another:
OLD VS. YOUNG Older people have more health care needs so are more expensive for insurers to cover. The ACA tried to keep premiums affordable for older people by limiting how much more they could be charged for the same coverage. And the costs to insurers of paying the benefits was to be offset by drawing more younger, health- ier people into the market.
But insurers complain that the ACA’s incentives aren’t strong enough, including the penalties imposed for people who don’t buy coverage.
Provisions in the Republican bills could lower premiums for younger customers, but raise them for older ones. Both the House and Senate versions raise the limits on how much more older people can be charged. And both change premium subsidies in ways that would generally benefit younger people while increasing costs for older ones.
CUTTING TAXES VS. EXPANDING COVERAGE The ACA imposed new taxes on the wealthy and sectors of the health insurance industry to pay for new federal spending that expanded coverage to about 20 million Americans.
Republicans argue that the taxes are a burden on the economy and that their bills would roll them back. But doing that without increasing the deficit means cutting spending. Both the House and Senate bills would reduce the subsidies for private insurance and phase out federal funding for the low-income adults who became eligible for Medicaid under the ACA. The GOP bills would also reduce spending to the traditional Medicaid program.
LOWER PREMIUMS VS. COMPREHENSIVE COVERAGE Before the ACA, many plans were limited in what they covered. For example, many plans did not cover mental health or maternity care, and some did not cover pharmaceuticals. Some other services were available only at an extra cost. The ACA specified the benefits that must be included, which increased premiums.
It also upset some customers who preferred to buy bare-bones plans.
The Republican bills would give states flexibility to change the benefit rules. While that could result in cheaper plans for healthy people, it could raise them for others. For example, if insurers didn’t have to cover maternity services, the cost of adding that to a policy could be more than $1,000 a month, according to the non-partisan Congressional Budget Office.
States could also waive limits on how much customers have to pay out-of-pocket. That could lower premiums but raise deductibles.
NOT BEING DENIED COVERAGE VS. NOT GAMING THE SYSTEM One of the most popular Obamacare provisions is the ACA’s ban on insurers denying coverage to someone with a pre-existing condition. But to keep people from waiting until they are sick to buy insurance, the ACA required that most people have coverage or pay a penalty. That’s one of the law’s least-liked rules.
The GOP bills would end the individual mandate. Instead, House Republicans would let insurers charge people higher premiums if they let their coverage lapse. The Senate bill does not have a similar mechanism to prevent people from gaming the system. Lawmakers are still exploring the issue to see whether they can include language that will comply with Senate procedural rules.
STATE FLEXIBILITY VS. FEDERAL FUNDING Republicans argue that they want to give states more control over Medicaid, which is jointly funded by the state and federal government. But the tradeoff for loosening rules is lessening financial support. States would have to find new funding or cut the program through restricting enrollment, cutting benefits, reducing payments to health care providers or finding efficiencies.
But there’s not strong evidence that much savings can be achieved through efficiencies, according to the Kaiser Family Foundation.