Republican senators trying a last stab at tackling Obamacare are pushing a bill that lets states partly waive key regulations that include protections for people with pre-existing conditions, an issue that has doomed other attempts at repealing former President Barack Obama's healthcare law.
The bill, co-sponsored by Republican Sens. Lindsey Graham of South Carolina, Bill Cassidy of Louisiana, Ron Johnson of Wisconsin and Dean Heller of Nevada, seeks to provide Obamacare funding to states in the form of $1.2 trillion in block grants from 2021 to 2026.
Critics of the approach quickly said that the bill's waivers from key Obamacare insurer regulations would erode protections for people with pre-existing conditions. It also would waive essential health benefits such as maternity care or mental health.
"State waivers would effectively end important national standards for private coverage, taking away essential benefits from people with pre-existing conditions," according to an analysis from the pro-Obamacare group Families USA.
Key among the waivers is for community rating, a regulation that requires insurers on the individual market to charge everyone the same rate regardless of health history. While the bill doesn't let states waive the requirement that insurers cover people with pre-existing conditions, experts say that repealing community rating would make insurance quickly unaffordable for those people.
The bill's co-sponsors counter that the legislation includes protections for people with pre-existing conditions and that the block grants would spur greater innovation.
"We are trying to get as many approaches to helping sick people as there are out there," Graham said at a press conference Wednesday. "Under Obamacare the innovation is almost zero, under our block grant approach innovation is pretty wide."
The block grants would be funneled through the Children's Health Insurance Program and would be a mandatory appropriation. States would have leeway on how to use the money, which would replace appropriations for Obamacare's Medicaid expansion and tax credits and cost-sharing payments to reduce costs for Obamacare plans.
Cassidy said that while community rating could be waived, it wouldn't benefit states to do so.
"At some point the [block grant] amount that a state gets depends upon how many people they have insured," he said. "If they have a fractured market in which people are not getting insured then they will get less money."
Cassidy added that CHIP effectively has essential health benefits, including mental health.
However, a state waiving community rating must tell the federal government "how they will ensure that individuals with pre-existing conditions have access to affordable and adequate coverage," a Senate aide familiar with the legislation told the Washington Examiner.
It is not clear what the criteria for proving that coverage would be.
Johnson said at the press conference that states could adopt a high-risk pool or reinsurance program that subsidizes the costs for people with pre-existing conditions.
But a state would not be required to set up a high-risk pool or reinsurance program.
The waivers could be key to drawing support from reluctant conservatives who say the regulations are the biggest driver of high premiums on the individual market, which is used by people who don't have an insurance plan through work or the government and includes Obamacare's exchanges.
"We are still reading the bill, but that waiver language is encouraging," said Conn Carroll, spokesman for Sen. Mike Lee, R-Utah, a conservative who has pushed for scaling back Obamacare's insurer regulations.
But a broad waiver could lead to more obstacles for the four senators, who have to muster 50 votes for the bill by the end of the month. Vice President Mike Pence can serve as the tie-breaking vote.
The instructions for Republicans to pass a healthcare bill using reconciliation expire at the end of this month.
Experts say relaxing or repealing community rating can lead to people with pre-existing conditions paying unaffordable rates, leaving healthcare out of reach.
"The bill would prohibit pre-existing condition exclusions, but the requirement would seem meaningless if insurers could charge unaffordable rates based on pre-existing conditions," wrote Timothy Jost, an Obamacare supporter and law professor at Washington & Lee University, in a blog post for the journal Health Affairs.
However, the waivers would apply only to insurers that get funding under a state's program and individuals who receive benefits under the program.
Jost says that is a move to appease the Senate parliamentarian, which limits the measures allowed to be considered in a reconciliation bill. A bill passed under reconciliation must reduce the deficit and include provisions only affecting budget or spending levels.
The bill's co-sponsors said during a press conference Wednesday that they are going to protect people with pre-existing conditions.
But the waivers bring up a key conflict that has bedeviled Republicans throughout their effort to repeal Obamacare.
The House experienced a similar issue that sought to address through waivers after conservatives rebelled against an earlier version that left the law's insurer regulations intact. An amendment authored by Rep. Tom MacArthur would have let insurers waive community rating and essential health benefits.
Republicans also added $23 billion in funding for high-risk pools, which subsidize high-cost enrollees on the individual market.
While the amendment shored up support from the conservative House Freedom Caucus, it cost support from key moderate Republicans.
The Congressional Budget Office said the $23 funding was not sufficient to fully cover a high-risk pool. It found that premiums for sick people in states that get a waiver would rise over time to the point where people couldn't buy comprehensive insurance on the individual market.
The Senate sought a different approach to getting around insurer regulations. An amendment from Sen. Ted Cruz, R-Texas, would have let insurers sell plans that don't comply with the regulations as long as they sold one plan that did.
But the amendment ran into complications with the Senate parliamentarian.
A score from the CBO and a new ruling from the parliamentarian will be needed before the Graham-Cassidy bill goes to the Senate floor. The four co-sponsors hope to get that score in the next two to three weeks.