Policy experts parse what the Senate’s bill would mean for the individual insurance markets

Signs saying healthcare reform
Senate Republicans have unveiled a draft version of their bill that would repeal and replace the Affordable Care Act. (Getty/Eugenia)

If there is anything that the Senate’s stab at a healthcare bill proves, it’s that it is difficult—if not impossible—to solve the same pressing problems that the Affordable Care Act tried to address.

“With healthcare reform, we can’t get around the fact that it’s expensive, and that someone’s going to have to pay for it,” says Kosali Simon, a healthcare policy expert and professor at Indiana University’s School of Public and Environmental Affairs.

“And if we want access for everybody and we want access to good care for everybody, there’s just no magic answer,” she adds.

That means, of course, that there is both good and bad news for health insurers that operate in the individual marketplaces—and the customers they serve—in the discussion draft revealed by Senate GOP leadership on Thursday.

RELATED: Four conservative senators say they're not ready to support draft of ACA repeal bill

The insurance industry’s largest trade group, America’s Health Insurance Plans, wasn’t yet ready to issue an assessment of the Senate’s draft bill.

“We continue to analyze the bill, consistent with our previous positions,” AHIP spokeswoman Kristine Grow wrote in an email, noting the organization outlined those positions in a previous letter to the Senate Finance Committee.

On the plus side for insurers, the bill would fund cost-sharing reduction payments through 2019, which both payers and providers have urged lawmakers and the Trump administration to do, since the uncertainty about those payments made it difficult to price their exchange plans for 2018.

Like the House bill, the Senate’s draft bill would repeal ACA taxes like the health insurer tax, which the industry has lobbied hard against.

But as was the case with the House bill, one major question mark about the Senate’s measure would be the implications of waivers that allow states to opt out of certain ACA provisions, noted Beth Halpern, health law partner in Hogan Lovells.

“When states want to use these waivers, what’s going to be left?” she said. For instance, if they opt to gut the ACA’s essential health benefits requirements, it opens the door for insurers to sell bare-bones plans and leaves enrollees’ potentially facing high out-of-pocket costs.

As for how the waivers would affect insurers, Simon noted that the House bill let states opt out of the ACA’s community rating provision, which prevented them from charging higher premiums for individual market enrollees with pre-existing conditions. That is not the case in the Senate’s version, she said, which could expose insurers to greater financial losses.

The repeal of the individual mandate, meanwhile, will likely make both make young, healthy consumers less likely to buy individual market insurance, which could skew the risk pool in the wrong direction, Simon noted.

Indeed, “actuaries will be watching this closely to determine the financial impact, as well as the implications for overall medical risk in the marketplace,” Rebecca Owen, a health research actuary with the Society of Actuaries, wrote in an email.

On Twitter, Larry Levitt, senior vice president of the Kaiser Family Foundation, pointed out another part of the Senate bill that could lessen consumers’ motivation to buy insurance unless they really need it:

In addition, changing the actuarial value benchmark to a bronze plan will likely result in narrower plans with higher deductibles, shifting costs to beneficiaries, Owen wrote. Further, she noted that dropping the subsidy eligibility to 350% of the federal poverty level will also result in more cost shifting to beneficiaries.

As for the individual markets themselves, the bill would set aside $15 billion per year in 2018 and 2019, and $10 billion per year in 2020 and 2021 to help stabilize them. It would also set up a "long-term state stability and innovation program," which would get $62 billion in funding over eight years.

Levitt, though, wrote on Twitter that “the Senate bill would likely keep the insurance market stable in the short-term, but the long-term is much more questionable.”

It's also possible that any mechanisms used to try to fix the individual markets—like high-risk pools—won’t be entirely effective, according to Simon.

“This is not a new idea—it’s been tried various times before, and each time the problem is the amount of money that is needed for that pool is far larger than whatever gets allocated toward it,” she said.

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