A New Penalty for the Uninsured in the GOP Health-Care Bill

Republicans would lock people out of coverage for six months if they go without insurance under a provision added to the Senate proposal on Monday.

Kevin Lamarque / Reuters

Republicans are trying to repeal the Affordable Care Act’s mandate forcing nearly all Americans to pay a tax if they don’t have health insurance. But they’ve just proposed a new penalty of their own for people who go without coverage: a six-month waiting period.

Under a provision added Monday to the Senate GOP’s health-care bill, an individual who is uninsured for more than 63 days would have to wait half a year to gain new health coverage. Like Obamacare’s mandate tax, the waiting period is a punishment designed to encourage people to maintain insurance coverage rather than wait until they get sick to purchase a plan and drive up costs for everyone else.

Republicans have assailed the Obamacare mandate as a punitive and even unconstitutional government dictate, but the need to incentivize people to voluntarily purchase insurance and discourage so-called “free riders” who rely on hospitals and the government to pick up emergency-room bills they can’t pay has long been a bipartisan pursuit. It’s not clear why Senate GOP leaders didn’t include what’s known as a continuous coverage provision in the discussion draft they released on Thursday, but policy analysts quickly pointed out that the omission, combined with other elements of the bill, could lead to a “death spiral” in the individual insurance market. Because the Senate bill maintains Obamacare’s requirement that insurers cover and offer an equal premium rate to people with preexisting conditions, analysts predicted that companies would have to charge higher premiums to stay profitable if there was no incentive for younger, healthier people to purchase coverage.

The House-passed American Health Care Act included a different provision with the same goal. Under that proposal, people who went more than 63 days without coverage would have to pay a premium surcharge of 30 percent. That provision, however, drew criticism from both liberals and conservatives, who argued that Republicans were simply forcing people to pay a tax to insurance companies instead of the government as in Obamacare. Under the Senate plan, people who are uninsured wouldn’t have to pay a penalty, but they’d be locked out of the market—even if they contracted a serious illness in the meantime.

“The likely biggest effect of a 6-month waiting period would be to prevent some sick people from getting care immediately after signing up,” tweeted Larry Leavitt, senior vice president at the Kaiser Family Foundation.

Senators are awaiting an analysis from the Congressional Budget Office of the GOP bill later Monday afternoon, which reportedly will include the new waiting-period. Leavitt said the provision could lower average premiums and reduce federal costs for the tax credits in the bill.

The late addition offers fodders for critics of how fast Republicans are moving to pass their health-care bill without hearings and with limited debate. And if the bill is to advance this week, it almost certainly won’t be the final change. Senators on both ends of the Republican conference have demanded amendments to the proposal in exchange for their votes that go well beyond a continuous coverage requirement. Whether McConnell can thread the needle to get the 50 votes he needs from his 52 members is unclear, but it’s possible that more changes will come at the last minute and without an updated analysis from the CBO.