“Figure out a way to change the state that you live in.” That was the controversial advice White House budget director Mick Mulvaney offered to those worried about a proposal that would allow states to repeal required essential health benefits in health-insurance plans. That provision didn’t quite make it into the last round of the Republicans’ effort to repeal and replace Obamacare, and Mulvaney later clarified that he was urging citizens to persuade their legislators to enact changes where they lived, not encouraging them to move. But the soundbite, endlessly replayed on cable news, became a rallying point for the plan’s opponents. If Americans want their insurance to cover things like maternity care, hospital stays, or mental health under the future written by the American Health Care Act, they warned, they might soon have to pack up and move to another state.
The last round of Republican negotiations on the AHCA died last month in the House, driven by defections both among the ultra-conservative Freedom Caucus, who balked at the elements of Obamacare individual cost controls that it maintained, and also by moderates, who thought that the controls the law cut were too draconian, especially for their working-class base. But President Trump and congressional Republicans have renewed negotiations on the AHCA in recent weeks, hoping to mollify the rebellious Freedom Caucus with more conservative additions to the bill. A new proposed amendment from Rep. Tom MacArthur might accomplish just that, but in the process might actually be the final nail in the bill’s second coffin.
The amendment is rather plain in its language and what it seeks to accomplish. It would allow states to opt out of federal essential health benefits requirements for exchange plans and create their own requirements, which could allow more insurers to sell barebones plans on the tax-subsidized marketplaces. MacArthur’s amendment would also allow states that participate in the AHCA’s high-risk-pool funding mechanism to waive some parts of Obamacare’s “community rating,” including the parts that protect people from higher costs because of pre-existing conditions and limit the premium multiplier for older people. While the law doesn’t allow insurers to bar coverage for sick and elderly people, it doesn’t limit how much they can be charged, which means they can be functionally priced out of coverage.
While MacArthur’s provisions today gained the fealty of the troublesome Freedom Caucus, when leader Mark Meadows gave his stamp of approval to the amendment, they don’t actually address the issues that have turned public support and likely the majority of the Senate against the bill, and introduce some more potential process and policy snags.
To start, the AHCA’s main policy flaw—and one that seemed to blindside the Republicans who wrote it—was the fact that its combination of removing the cost controls and eliminating the income adjustment for the ACA’s insurance subsidies, and its allowance of a wider age-rating scheme that allows older people to be charged more for insurance would dramatically and almost comically inflate costs for older low-income people, sometimes by as much as ten times their current premium amounts. Since average statewide insurance costs are not accounted for in the original AHCA subsidy framework, the amount people are charged for insurance could differ by thousands of dollars simply based on their zip code. MacArthur’s amendment not only fails to address those issues, it makes them worse, as there is no hard limit to the age-rating or the other relaxations of insurance-rating schemes.
The ACA’s ban on denying people coverage for pre-existing conditions has long been a sticking point among voters, Democrats, and moderate Republicans, and this amendment also challenges that strong constituency. While it doesn’t quite overturn the ban, it does essentially allow states to do so by letting insurers price people with pre-existing conditions out of the market. This extreme is probably unlikely, since states would then have to deal with the resultant political backlash, but allowing insurers to charge more for sicker people would certainly be back on the table. These tend to be the older and lower-income people who would already be pushed to the margins by the AHCA’s rating schemes. Additionally, MacArthur plans to exempt members of Congress and their staffs from the provisions, which probably won’t play well politically.
While it doesn’t change the AHCA’s provisions to scale back the federal commitment to Medicaid, the amendment does interact with those provisions to create a strange dynamic for federalism. In allowing states to define almost all of the core parameters of what might amount to a half-trillion-dollar federal investment in the form of health-insurance subsidies while also reducing incentives for price gouging and decreasing the “skin in the game” among states to cover people left out or stabilize state health-care systems, MacArthur’s plan essentially incentivizes insurers and states to raid federal coffers, which makes it an odd proposal to win the backing of the fiscally-conservative Freedom Caucus.
Some states might decide to allow insurers to sell plans with minimum actuarial value, thus bringing in federal subsidies for as many healthy citizens as possible. With a reduced federal requirement to take care of the sicker, older people who might enter the ranks of Medicaid without subsidized insurance, states would be rather free to let insurers simply price them out of all affordable insurance altogether. It’s even more of a boondoggle in favor of insurers, healthy people, and wealthy people than the AHCA was originally, all on the federal dime.
While this amendment might help the AHCA get more traction in the House—and that’s still far from certain since moderate Republicans in the chamber appear unswayed—it seems even less likely than before to advance through the Senate. Not only have Senate Republicans been much less welcoming to the bill’s scorched-earth and unpopular insurance provisions than their House counterparts, MacArthur’s amendment may jeopardize the mechanism intended to pass the law. Republicans are using reconciliation in this budgetary process to sidestep the possibility of a Democratic filibuster in the Senate, but that mechanism can usually only be used on concrete budgetary items. The state opt-outs in this amendment are murky at best for reconciliation, and could very well fail the test of the Senate parliamentarian before the bill even comes to a vote.
Indeed, for all the talk on the Hill and the renewed energy behind Republican health reform, the goal of changes like the MacArthur amendment seems not to pass a workable nationwide law, but to provide some narrow political victories. Its construction suggests that Republicans still don’t have an Obamacare replacement that can satiate the appetite for repeal on the right without simply taking coverage away from millions of Americans. While anything is still possible in the House and Senate, actually fixing health care still seems beyond reach for Republicans right now.
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