DC Deciphered

Part 3 of my Obamacare Wars post (about the various ways the GOP is chipping away at Obamacare short of repeal) will be coming soon.  But I’m interjecting with this post, because news broke last night that the GOP is back with a new effort in their frontal assault on Obamacare.  Several members of the GOP House are working on a new “compromise” bill that will supposedly be able to get both the conservative “Freedom Caucus” and the more moderate “Tuesday Group” on board. The compromise was put together by House Freedom Caucus chairman Mark Meadows and Tuesday Group co-chairman Tom MacArthur.

You’ll probably remember that last time around, the bill had detractors on both sides: members on the conservative end who felt the bill retained too many elements of Obamacare and then members on the more moderate end who worried the bill was too austere and would cause too many constituents to lose insurance.  Members in both those camps were unwilling to vote for the version of the bill that was being discussed in March.

So this new version being discussed is supposed to bridge those divides.  However, it’s difficult to see how that’s going to happen, as the new version mostly just caters to the concerns of the Freedom Caucus.  The most important thing to know about this new “compromise” is that it would break the promise made by Trump and by many in the GOP to keep Obamacare’s protections for people with preexisting conditions.  This new bill would have a façade of giving such protections, so predictably, the GOP will try to claim that they’re keeping their promise.  But make no mistake, if this bill were to pass, the protections that are in Obamacare would be gone.

Protections for Preexisting Conditions Will Effectively Be Gone

In an effort to get this post out quickly, I’m not going to analyze a lot of the details behind the 2 provisions that are at issue in this new compromise, so I’ll leave you some links throughout this post that do a good job explaining.  In particular, read this Huffington Post article by Matt Fuller and Jonathan Cohn, which gives great analysis of the entire “compromise.”  But in short, under the new GOP plan, insurance companies would still be required to sell insurance to people with preexisting conditions, but they could sell it at any price (see discussion of “community rating” below).  This is a breach of the GOP promise to protect people with preexisting conditions.  For those with preexisting conditions, premium prices would likely be extraordinarily high, making it unattainable to most. The Plum Line’s Greg Sargent has some projections of what those price increases would look like, on average, and it’s eye opening.

Making the problem even worse, under this new GOP plan, insurers would no longer be required to cover the “essential health benefits” (EHBs) required under Obamacare (this includes things such as prescription drugs & emergency room visits). This means consumers might find it impossible to buy insurance that even covers the health services they need.  Again, this would be particularly harmful for those with preexisting conditions, who obviously need more health services.  And it would be way for insurers to avoid sick customers – insurers would either not offer comprehensive plans at all (knowing that it’s sicker people who’d need them), or only offer them for such high prices that almost no one would be able to buy them.

So under this so-called compromise, the dilemma for those with preexisting conditions is two-fold: (1) premiums will likely sky-rocket, to the point where insurance could become completely unattainable; (2) even where insurance is attainable, the plans might be complete junk, or at best would offer minimal coverage, not the comprehensive coverage anyone with any health issues would need.

Protections Nominally Remain, But States Will Be Able to Opt-Out

The way the new compromise bill would work is that, as a default setting, the bill would keep “community rating” which is the rule that says insurance companies must charge all customers the same rates (some allowances are made in Obamacare for limited price variation among age bands, i.e. allowing companies to charge older customers a set amount more.  But, importantly, there can be no price discrimination based on gender or health).  Then it would be up to the states to decide if they want to request a waiver to opt out of community rating.  In order to get a waiver to the community rating requirement, states would have to set up a high-risk pool (or participate in a federal high-risk pool) to cover residents with preexisting conditions.

The high-risk pool requirement is supposed to help take care of the concern that people with pre-existing conditions would have trouble getting insurance from private companies once the “community rating” provision is eliminated.  However, high-risk pools have been tried many times before in numerous states, and they have almost never been successful.  In fact they’ve usually been abysmal failures, with long wait lists for people to even get into them, then year-long exclusions for the very conditions people need covered, very high premiums, and severe under-funding by the government.  You can read about the problems with high risk pools here and here, just for a couple examples, though there’s been loads of good writing on this issue.

In return for the above, the supposed concession to moderates is the “return” of the ten “essential health benefits” to the bill.  But the idea that this is a concession is very odd.  For one thing, like with community rating, this new plan would allow states to opt out of this requirement.  And – making the argument even stranger – the essential health benefits were in the original AHCA bill for almost the entire time the GOP was negotiating over it.  EHBs were only removed from the bill at the very last minute to try to win more votes from Freedom Caucus members.  But even throughout most of the negotiations, when the EHBs were still in the bill, many of the moderate GOP members were not willing to vote for the bill. So why would they vote for the bill now when it lets states choose to remove the EHBs? This is not conceding anything to them, and it makes no sense.

Vox does a great job here explaining why EHBs are so, well, essential and why getting rid of them would be especially harmful to people with preexisting conditions.  (It was written a couple weeks ago, but is on point since Republicans have been trying to get rid of EHBs for a long time).  Also, note that removing the EHB requirement is harmful to all insurance customers, as it will likely lead to junk insurance policies that will turn out to be useless if and when you actually need to use the insurance.

Strange Idea of a Compromise – Medicaid Still Gutted

Additionally, this bill does nothing to fix one of the other major concerns the GOP moderates had in the first go-round, which was the huge cuts to both the Medicaid expansion (under Obamcare) and to the original pre-Obamacare Medicaid program.  So this bill would still cause many millions of people to lose insurance both through Medicaid cuts and through losses on the private market. It’s hard to see how this is a compromise, as it looks much more like an attempt to appease the Freedom Caucus.

I suppose the compromise idea is that as a default, the bill keeps the Obamacare protections, and then some states (and we know that would be pretty much all of the GOP-led states, which is the majority of states right now) would opt out.  But that essentially returns us to the pre-Obamcare status quo, where some Americans were lucky enough to live in states that had laws that protected them and others were just out of luck unless they had the ability to pick up and move to a state with better laws.

One can make an argument that that’s how things should work, but again, it’s disingenuous to say this is a compromise. And it would be an outright lie to say that this keeps the promise to protect patients with preexisting conditions.  Other than Rep. MacArthur, who brokered the “compromise” (and was already a “yes” on the previous version of the bill), it’s unclear so far whether any GOP moderates will actually support this. Any moderates who are willing to get on board are either being hosed or are hoping their constituents will be.