A proposal to overhaul Obamacare is slim on key details about protecting people with pre-existing conditions, healthcare experts say.
A group of more than two dozen policy analysts and think tanks on Wednesday released the proposed replacement to convert Obamacare funding into block grants. Obamacare allies and Democrats say the plan would “gut” protections for people with pre-existing conditions such as cancer or diabetes, but the group says those protections are included.
“No matter how they try to spin it, it contains the same devastating provisions: it would gut protections for people with pre-existing conditions, impose an age tax on older Americans, and end Medicaid expansion,” said Brad Woodhouse, campaign director for the pro-Obamacare group Protect Our Care.
His group and others staged a protest outside of a news conference Wednesday in Washington announcing the plan.
The group, led by former Sen. Rick Santorum and supported by the Heritage Foundation and the conservative Galen Institute, say that the bill doesn’t hurt pre-existing condition protections.
“We are not changing the pre-existing condition clause,” Santorum said at the press conference. “Unlike Obamacare, we are giving money to states to make sure those that are sick get coverage.”
The proposal would keep the law’s requirement that insurers cover pre-existing conditions. It also would keep Obamacare’s requirement that insurers cannot charge people with pre-existing conditions higher prices.
But policy experts say there is too little information to adequately determine whether people with pre-existing conditions would be protected.
“There are not enough details in the plan to really make an assessment to what happens to someone that has a $200,000 plan year,” said David Anderson, a policy analyst at Duke University. “We just don’t know.”
For instance, the plan requires a state to set aside a portion of the block grant to fund a risk mitigation system such as a high-risk pool, which segregates sick people into a single insurance pool and then covers their costs.
But the proposal doesn’t say how much of the block grant must go to such a program. Santorum said that number is still being ironed out and that the group wants to leave it up to Congress.
The plan does say that 50 percent of the funding must go to help low-income people get coverage and the other 50 percent to support purchase of insurance on the private market, but the proposal added that the two categories could overlap.
To receive a block grant, a state must agree to waive certain Obamacare regulations for insurers, including a requirement that insurers cannot charge seniors more than three times the premium they charge a younger person.
Before Obamacare, plans could charge seniors five times the premium. That meant that younger people could get a cheaper plan, but seniors ineligible for Medicare would pay more. Opponents of the proposal charge that is an “age tax” on low-income seniors who cannot qualify for Medicare yet.
Another is waiving the requirement for insurers to cover essential health benefits that range from hospitalization and prescription drug coverage to maternity care.
A key requirement that states also must waive is a regulation that forces insurers to put all individuals in and off Obamacare’s insurance exchanges into a single risk pool. Experts say the requirement was key to ensuring that sick people received affordable coverage.
“The single risk pool requirement ensures that sick people and healthy people pay similar premiums, adjusted for the generosity of the coverage, no matter what plan they enroll in,” said Larry Levitt, senior vice president of the Kaiser Family Foundation. “Without a single risk pool, premiums could be determined based on individual products insurers offer. For example, a plan with comprehensive benefits will likely attract sicker enrollees, while a plan with skinnier benefits will attract healthier people.”
But Levitt cautioned that it is not known if that issue could occur because of what is known as “guaranteed issue,” a regulation that requires an insurer to charge a premium without taking into account a beneficiary’s health status. “A weaker guaranteed issue rule could only require insurers to guarantee access to at least one product,” Levitt said as an example.
“That product would end up with a lot of sick people, while other products would enroll a much healthier group,” he said. “On the other hand, if people are guaranteed access to all products an insurer offers regardless of their health, then there’s likely to be somewhat less segregation.”
But the proposal keeps the same guaranteed issue requirement as in Obamacare, said Doug Badger, senior fellow at Galen and a visiting fellow at Heritage. Badger is a member of the group that drafted the proposal.
He also said that he didn’t think that a state would allow a plan to not cover benefits like hospitalization or prescription drugs.
He added that the block grant would be run through the Children’s Health Insurance Program, which includes requirements to cover categories such as hospitalization or doctor visits. “You have to have those categories of benefits at a minimum,” he said.
Anderson said the removal of essential health benefits could allow plans to be altered to only cover certain things.
“For instance, a plan that has no maternity coverage is attractive to me as I have no maternity coverage needs,” he said. “But for individuals who need certain services not covered by [essential health benefits] they will pay through the nose.”
He said that a lot will depend on what states want to do surrounding how to structure their block grants.
Santorum said Wednesday that the group is still drafting legislative text and that he is still in talks with Republican senators. The proposal faces a stiff climb in the Senate, where Republicans have a slim 51-vote majority.
“The group has had conversations with about every single senator,” he said.
