One of the fiercest complaints about the Affordable Care Act is that it imposed a government mandate on consumers to purchase coverage with a broad and specific set of benefits — including maternity care, mental health treatment and limits on out-of-pocket costs — whether they wanted those benefits or not.
More choice is always better, critics argued. But what if choice trumps protection?
With the latest Senate bill — drafted solely by Republicans and now in limbo, even collapsing, as four GOP senators have now expressed opposition — that question is again at the heart of the debate and central to the potential changes for consumers.
“I think choice is great when it comes to buying cellphones or pizza slices,” said Sabrina Corlette, a research professor at Georgetown University’s Health Policy Institute. “It’s a very different thing in insurance. None of us is immune from someday becoming one of those sick people. Insurance is supposed to protect us from unpredictable risk.”
One bill provision, dubbed the “Cruz amendment” for backer Texas Sen. Ted Cruz, would allow insurers to offer plans stripped of most of the ACA’s requirements so long as they also offer some policies that do meet those rules.
The provision aims to win support from conservatives who want lower premiums, which would be achieved with the more limited benefit package. But it’s not so simple. Consumers would have to weigh the trade-offs between price and their somewhat unpredictable future needs.
“This is the fundamental divide,” said Christopher Condeluci, an attorney and former counsel to the Senate Finance Committee.
“You are taking a risk in purchasing a less comprehensive plan because you never know what’s going to happen. But, if you feel this is the right type of plan, then you should have the ability to make that economic and risk decision.”
ACA supporters, though, see high value in the strong consumer safeguards.
The ACA, they say, rescued consumers left wanting by some of the choices on the individual market. Before the ACA, some policies had very limited coverage, not covering hospitalization, for example, or paying only small amounts toward doctor visits, tests or drugs.
Sometimes consumers were misled by insurers or agents about the breadth of coverage. Sometimes they were just confused and didn’t realize the limits until after the medical problem occurred — their most vulnerable point — leaving some on the hook for hefty medical costs.
The ACA’s comprehensive benefit rules, supporters say, may add to premium costs but protect consumers from making bad choices — deliberately or inadvertently — that could result in tens of thousands in unpaid medical bills or no treatment altogether.
The next steps in the Senate’s consideration of the GOP health plan are now uncertain as Sen. John McCain (R-Ariz.), a key GOP vote, recovers from surgery and the intraparty fissures emerge.
McCain issued a statement urging that the chamber return to “regular order, hold hearings, receive input from members of both parties” to produce the legislation. But Majority Leader Mitch McConnell (R-Ky.) signaled his intent to hold a vote to repeal the health law with a two-year delay. As the discussion continues from this point, here are five things you should know about how this marketplace provision could play out:
1. Premiums would be lower, but maybe not for you.
Because they would cover less, premiums on such policies would be lower for healthy people. That’s how the market was before the ACA passed, when insurers could reject people with preexisting medical conditions in most states.
The ACA barred that practice, so insurers generally raised everyone’s rates to cover those who were ill. Premium increases were softened for consumers who received subsidies to purchase ACA coverage, but really hit people with incomes of more than $48,000 and who are not eligible for subsidies.
Still, the Cruz plan might not lower premiums for everyone.
Insurers could use a person’s health — including their claims history and genetic profile — to set rates, a move barred in ACA plans. They could also outright reject people deemed too risky or sick. People with medical conditions — or those who develop them while covered — could be charged far more than those without. And the Senate bill doesn’t offer consumers help in buying the plans. Federal subsidies cannot be used to purchase the Cruz amendment plans.
2. Coverage would be less generous.
Because the plans would not have to include the ACA’s 10 “essential health benefits” — hospital care and prescription drugs among them — consumers could end up paying those expenses themselves.
Those costs could be high, as insurers could also forgo the ACA’s annual out-of-pocket caps, which this year are $7,150 for individual coverage and $14,300 for family plans.
The policies cannot set annual or lifetime dollar limits on care, but under the Cruz amendment insurers could use deductibles or other out-of-pocket costs to achieve a similar goal: shifting more costs to consumers. For example, chemotherapy might have unlimited annual coverage, but only after a huge deductible — say $10,000 or $20,000 — is met.
3. It would create essentially two different markets.
Insurers could offer Cruz amendment plans, so long as they also offered at least one gold level, one silver level and one “benchmark” plan that meets the ACA rules. But there’s nothing saying they would have to actively market those plans.
Most policy experts fear the result would be market segmentation — a siphoning off of the healthiest people into Cruz plans. “The attempt here is to turn what we know as Obamacare today into a high-risk pool,” said Robert Laszewski, an insurance industry consultant.
Then what would happen? Premium costs could rise rapidly for people in the ACA plans and, at the same time, subsidies for consumers purchasing those plans would become less generous for many, particularly older people.
Even the insurers’ trade lobby has sounded alarm about the Cruz approach, sending a letter last week to Senate Majority Leader Mitch McConnell (R-Ky.) and Democratic Leader Chuck Schumer (D-N.Y.) that called it “simply unworkable in any form.”
4. You might be temporarily barred from broader coverage.
Because the plans won’t be considered “creditable coverage,” consumers who buy one and then decide to switch to a plan that is consistent with ACA rules might face a penalty of having to wait six months for that coverage to begin. That lockout period aims to keep people from jumping in and out of comprehensive coverage.
Here’s how that would work: Someone with a stripped-down plan gets cancer and wants to switch to coverage that is more generous. Under the current proposal, that person might have to wait six months, which could complicate if not threaten their cancer treatment.
Some experts read the proposal as appearing to offer a small exception to that six-month lockout — but only if consumers don’t have a single-day gap between the day their Cruz amendment policy expires and the new ACA-compliant plan kicks in.
“People would have the freedom to choose, but the difference between the choices and the consequences of those choices are extraordinary,” said Laszewski, a longtime critic of the ACA who has blasted the proposed Senate replacement. “Do they roll the dice with their health and hope they never get sick?”
5. They are different from “catastrophic plans.”
The bill would also expand eligibility for coverage known as catastrophic plans. These are not the same as the Cruz amendment plans. Catastrophic plans include the broader array of ACA benefits. They also allow three doctor visits annually exempt from the deductible.
At the same time, however, their deductibles are higher than any of the other types of ACA plans sold, equal to those previously mentioned annual out-of-pocket limits. So far, they haven’t been terribly popular. They are currently limited to people age 30 and younger, with a few other exceptions. The Senate bill would make them available to all ages — and allow subsidies to be used to purchase them.
This story was produced by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.