BEYOND THE NUMBERS
House Republican leaders seeking to revive their bill to repeal the Affordable Care Act (ACA) have unveiled a new provision intended to help stabilize the individual insurance market, which they cite as evidence that they’re making significant progress. But the change is effectively just an add-on to an existing bill provision and doesn’t address the fundamental flaws in the bill, which would increase the number of uninsured by 24 million while cutting Medicaid by $839 billion to finance tax cuts for high-income households and the drug and insurance industries. Nor does it address the gaping divides among House Republicans over major aspects of the underlying bill.
As we’ve explained, the House Republican bill would destabilize the individual market, raising premiums and reducing insurer participation. That’s because it would replace the ACA mandate that individuals buy health coverage or pay a penalty with a weak late enrollment fee, which would make the pool of people with coverage smaller and less healthy. And in 2020, it would replace the ACA’s premium tax credits with a flat credit, dramatically cutting subsidies for consumers — especially older people, those with low incomes, and those in high-cost states.
To help address this serious problem, the bill provides a $100 billion “stability fund” to help insurers and finance other state initiatives. While states could use the funds for various purposes, some of which have nothing to do with stabilizing the individual market, the Congressional Budget Office (CBO) and the Joint Committee on Taxation “expect that states would use those grants mostly to reimburse insurers for some of the costs of enrollees with claims above a threshold.” CBO, however, estimates that only $80 billion of the $100 billion would ultimately be spent because states would have to provide matching funds starting in 2020.
The new amendment would provide $15 billion between 2018 and 2026 to establish a Federal Invisible Risk Sharing Program to reimburse insurers for patients with certain health conditions who incur high-cost claims. (States could take over running the program starting in 2020.) But because the bill already includes the stability fund to achieve a similar purpose, the amendment likely would produce at best only a modest additional benefit in stabilizing the market. It might not produce any additional benefit, if the availability of the new program led states to use their stability funds for initiatives unrelated to mitigating the bill’s damage to the individual market.
This new provision also would likely be less effective than broader reinsurance, as it would only cover people with certain high-cost conditions, leaving states at risk for high-cost patients whose conditions — like major injuries from an accident or a rare illness — don’t qualify them for the new program.
Moreover, the amendment doesn’t do anything to close the major difference within the House Republican caucus on how to revive the bill, including how to address demands from the House Freedom Caucus for much more far-reaching, harmful changes. Freedom Caucus members have called for eliminating ACA consumer protections that prohibit insurers from charging higher premiums to people in poorer health or with pre-existing conditions and that require individual-market insurers to cover essential health benefits like prescription drugs, mental health and substance use treatment, and maternity care.