So far, Senate Republicans have held two votes on healthcare legislation since debate on the topic was approved Tuesday afternoon. Both bills — a full repeal and a version of the Senate’s earlier Better Care and Reconciliation Act — failed handily by votes of 43-57 and 45-55, respectively.
Now, the GOP is discussing a relatively new approach being referred to as skinny repeal. It’s hard to give much detail on the plan, because no legislative text has been released. But reports are that it would involve repealing the Affordable Care Act's (ACA) individual and employer mandates as well as the medical device tax.
A new estimate from the Congressional Budget Office (CBO) shows these measures would likely result in 16 million fewer people with coverage in the next 10 years and exchange premium increase of about 20%.
The mandates are the least popular aspects of the ACA, but trying to remove them is sort of like asking for dessert before you’ve finished your vegetables. The parts people don’t like are necessary to carrying out the parts they do – those that ensure adequate coverage for everyone.
The rollout of skinny repeal hasn't gone well for its supporters. It's not at all clear there is enough support in either the Senate or the House to pass it. Payers and provider organizations both vehemently oppose the plan. On Wednesday, 10 governors — half of whom are Republicans — also said Congress should reject the idea.
What happens the rest of this week is hard to predict. Several hours of scheduled debate time remain from Tuesday's motion to proceed on healthcare legislation. All eyes are on Senate Leader Mitch McConnell as he tries to put together a plan. In the meantime, here's how skinny repeal could affect the industry.
First, a caveat
Political insiders say the vote on skinny repeal is the beginning of a sort of bait-and-switch maneuver from McConnell. Any bill that makes it through the Senate can still be revised, or entirely rewritten, during the conference process when House and Senate members work together to agree on a draft. It’s likely party leaders will be focused on just getting something through, even if it’s far from their desired bill.
Bills that come out of conference have only 10 hours of debate and no amendments can be added. Edwin Park, vice president for health policy at the Center for Budget and Policy Priorities, called skinny repeal a “Trojan horse” in a tweet and said “GOP leaders then try the same approach they’ve been taking all along: make tweaks to bill & claim unfixable bill has been fixed.”
Although — another caveat — the House doesn't have to take the bill to conference. It could decide to vote on whatever makes it through the Senate without any changes.
So it’s important to remember the outcomes of other proposals.
The results of skinny repeal
The main issue with this plan is that it leaves intact several aspects of the ACA that don’t work as designed without the mandates. Insurers count on the mandates to push young, healthy people to get coverage. This helps cover the costs of those who need more health services — the elderly, people with disabilities, people with low incomes and those with pre-existing conditions.
If insurers are required to cover all the people in those categories but don’t have healthier people to balance the risk pool, they will reduce cost-sharing and increase out-of-pocket costs. It would also mean higher premiums for everyone. This leads to far lower insurance rates that increase uncompensated care costs for hospitals.
The CBO analyzed what would result from repeal of the individual mandate alone. The report shows 15 million fewer Americans with coverage by 2026 and individual market premium increases of about 20%. The Center for American Progress calculates that as an average increase of $1,238 next year.
Industry groups are staunchly against the skinny plan proposal, as they have been for other Republican plans that significantly reduce the number of people with coverage. American Medical Association President Dr. David Barbe said the skinny plan isn't acceptable. "Eliminating the mandate to obtain coverage only exacerbates the affordability problem that critics say they want to address," he said in a statement. "Instead, it leads to adverse selection that would increase premiums and destabilize the individual market."
It hasn’t worked in the past
States have tried to have strict coverage requirements without a mandate before, and it hasn’t worked. A 2012 study commissioned by America's Health Insurance Plans (AHIP) found that in looking at the experience of eight states, implementing such a plan caused individual insurance markets to deteriorate. “Often, insurance companies chose to stop selling individual insurance in the market after reform were enacted which resulted in a decrease in competition,” the report states. “Enrollment in individual insurance also tended to decrease, and premium rates tended to increase, sometimes dramatically. We also did not observe any significant decreases in the level of uninsured persons following the enactment of these original market reforms.”
When it happened in Washington state in the 1990s, all of the 19 payers that had been offering individual policies pulled out. Dr. Bob Crittenden, who wrote the original bill, told the Seattle Times earlier this year that after the mandate was removed, the "market went into a tailspin one-and-a-half years later."
The Blue Cross and Blue Shield Association said in a statement Wednesday any bill that passes should have “strong incentives for people to obtain health insurance and keep it year-round,” as well as immediate funding of the CSR program and dedicated funds “to pay for the care of those with significant medical conditions.” The statement concluded: “In order to ensure a stable individual insurance marketplace, any final legislation must include these crucial elements to avoid steep premium increases and diminished choices that would make coverage unaffordable and inaccessible.”
The American Academy of Actuaries and AHIP have consistently warned against eliminating the individual mandate. In a letter at the beginning of this year, AHIP told lawmakers doing so would diminish access to high quality and affordable coverage. "The clear lesson for policymakers is that any reforms that give healthy people incentives to delay purchasing coverage will lead to unintended consequences — higher costs and fewer choices — for the broader population," it read.
Don't forgot the other options
The only constants in this process have been lightning-fast decisions and general obfuscation. What's ahead is really anybody's guess. And there still are other plans on the table.
The latest versions of both the House and Senate bills repeal the individual and employer mandates and allow states broad latitude to avoid essential health benefit requirements. Both also cut Medicaid by about $800 billion, phase out Medicaid expansion and impose state per capita caps in the program.
The American Health Care Act, which narrowly passed the House in May, would result in 23 million people losing coverage and premium increases averaging 20% in 2018 and 5% in 2019, according to the CBO. An analysis from the Kaiser Family Foundation estimates is would also mean the loss of 725,000 healthcare jobs in the next 10 years.
The Senate’s Better Care and Reconciliation Act would cause 22 million people to lose health coverage and would dramatically increase deductibles and other out-of-pocket costs, according to the CBO. The Kaiser Family Foundation estimates it would result in 900,000 lost healthcare jobs. This bill was voted down Tuesday night, but its core elements could be put in subsequent bills.
The bill that repeals the ACA entirely after two years but puts in no immediate replacement would increase the number of uninsured by 17 million next year and 32 million by 2026. Premiums would increase by about 25% next year and nearly double in the next 10 years, the CBO analysis shows. That bill was defeated Wednesday afternoon by a vote of 45-55, with seven Republicans voting no.
None of the bills being discussed currently address the most urgent issue for payers – cost-sharing reduction payments. The White House awarded the payments last month, which help insurance companies cover the costs of low-income beneficiaries, but have made no future guarantees. Health insurance executives have repeatedly urged lawmakers to commit to CSRs.
If Republicans succeed with one of the ACA plans they have so far articulated, millions will lose coverage and, without other changes, insurance markets will wither. If not, this whirlwind of a week may not be the end of ACA repeal attempts. The industry will continue to push for bipartisan solutions, as unlikely as that now seems.