BEYOND THE NUMBERS
Alexander’s ACA Replacement Plan Leaves Key Questions Unanswered
Senator Lamar Alexander, Chairman of the Health, Education, Labor, & Pensions Committee, said this week what more congressional Republicans are starting to acknowledge: policymakers shouldn’t repeal the Affordable Care Act (ACA) without first enacting “concrete, practical reforms” to replace it. But his plan lacks critical details needed to compare it to the ACA in coverage, affordability, and the adequacy of coverage it would provide. In particular, his plan fails to reflect an actual ACA replacement in these ways:
- It might not retain key ACA protections, including for people with pre-existing conditions, women, and older Americans. Sen. Alexander said his plan wouldn’t disqualify people with pre-existing conditions from getting insurance. But he didn’t explain whether it would retain the ACA protections enabling all people with pre-existing conditions to purchase any health plan offered in the individual market at a fair price, or would only allow them to buy limited, expensive coverage in a high-risk pool, or would only give this protection to people who’d maintained continuous coverage. For example, his plan is silent on whether insurers could charge higher premiums based on people’s health status or exclude pre-existing conditions from coverage, which the ACA prohibits.
Nor did he say whether insurers could once again charge higher premiums based on gender and occupation and hike premiums for older people. These are crucial questions. As we’ve explained, it’s hard to see how eliminating the ACA’s individual mandate wouldn’t destabilize the individual market if existing protections for people with pre-existing conditions were fully retained. Many healthier people would likely go without health insurance, which would leave mostly sicker people in the risk pool. That would drive up premiums and cause insurers to withdraw from the market.
- It might not maintain benefits that the ACA requires insurers to provide. Sen. Alexander’s plan suggests giving states “flexibility” around the “essential health benefits” that insurers in the individual and small-group markets must provide, but it doesn’t say how many benefits they could drop altogether. For example, it doesn’t say insurers must continue covering prescription drugs, maternity care, or mental health services, which the ACA requires but many individual-market plans before the ACA omitted. Nor does his plan prevent insurers from once again imposing lifetime or annual limits on benefits or from eliminating caps on beneficiaries’ out-of-pocket costs.
- The number of people who are uninsured or face higher out-of-pocket costs would likely grow significantly. Senate Majority Leader Mitch McConnell and Trump advisor Kellyanne Conway have said a replacement bill should cover at least as many people as the ACA. (Repeal without a replacement would leave 30 million more people uninsured, the Urban Institute estimates.) Sen. Alexander didn’t explain in detail how he would replace the ACA’s main coverage expansions — the subsidies for marketplace coverage and the Medicaid expansion — and how the outcome would compare to the ACA.
For example, he proposed “eventually” creating a new tax credit to replace the marketplace subsidies but didn’t explain who would qualify, how much it would be worth, and whether it would be sufficient to limit premiums to a share of income, as the ACA does. Likewise, he called for expanding state Medicaid flexibility through waivers but didn’t say what kind of flexibility or what consumer protections (such as requirements that states cover certain groups and benefits) it might allow states to drop. Nor did he say whether his plan would maintain the ACA’s Medicaid expansion and how it would ensure that children, seniors, people with disabilities, and low-income families could continue receiving affordable Medicaid coverage.
Also, his proposal to expand Health Savings Accounts, which is at the center of many Republican health plans, would do little or nothing to help low- and moderate-income people get coverage. High-income people — who likely already have health coverage — would be the biggest beneficiaries.