Why Democratic States Might Dump PPACA Protections

Continued coverage of 10 “essential benefits” depends on fate of federal subsidies

Under the health care bill passed by the House, it’s up to states to decide whether they want to dismantle key parts of the Patient Protection and Affordable Care Act (PPACA). GOP-leaning states are sure to be interested in rolling back the act’s coverage requirements and in freeing insurers to charge people more when they have pre-existing conditions. But heavily Democratic states supportive of the PPACA, including California and New York, may be forced to do the same, according to a report from Kaiser Health News (KHN).

The GOP’s American Health Care Act (AHAC), which is now heading to the Senate, would significantly cut the federal subsidies on which many Americans rely to buy coverage under the PPACA. Unless the AHAC fails or changes substantially, many consumers across the country could see the amount they pay every year for premiums increase by thousands of dollars, making coverage unaffordable, the KHN article says.

Few, if any, states would be able to fund subsidies on their own. To keep insurers in the market and bring costs down, state leaders might feel compelled to seek exemptions from PPACA rules that require health plans to provide 10 “essential benefits” and prohibit them from charging higher rates for sicker consumers. The GOP health bill would allow such waivers.

The opt-out provisions in the GOP bill could accelerate the unraveling of the PPACA, even in states that fully embraced it, according to KHN.

“With the skimpier subsidies, states are going to be under enormous pressure to apply for these waivers,” said Dr. Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms.

Republican leaders insist the PPACA isn’t worth saving because it has left consumers with double-digit rate hikes, onerous deductibles, and little or no competition in some states as insurers exit the marketplaces.

Representative Kevin Brady (R-Texas), chairman of the House Ways and Means committee, said the GOP health care bill grants states the flexibility they need to remove the “crushing mandates” that have led to “Obamacare plans you don’t want and can’t afford.”

House Speaker Paul Ryan (R-Wisconsin) struck a similar note in urging his colleagues to pass the bill. “Let’s make it easier for people to afford their insurance. … Let’s return power from Washington to the states,” he said on the House floor.

Consumer advocates in North Carolina, Colorado, and other states are taking the threat of state waivers seriously.

Nationally, the average tax credit for enrollees in the online marketplaces would be 41% lower under the American Health Care Act by 2022, according to a recent study by the by the Kaiser Family Foundation.

The GOP bill also ends the penalty for not having coverage, which experts say might increase premiums as fewer healthy people sign up, leaving health plans with a higher proportion of sicker patients.

All this could put the focus back on which benefits are deemed essential in health insurance, according to the KHN article.

The PPACA requires all plans sold on the individual and small-group markets to cover the 10 essential health benefits, including hospitalization, prescription drugs, and mental health treatment. The act made coverage more comprehensive and prevented insurers from selling bare-bones plans that had cheaper premiums but often exposed consumers to huge medical bills after they sought care.

In liberal California, which enthusiastically implemented the PPACA, the act’s supporters are bracing for a fight over state waivers. Premiums and out-of-pocket costs would rise by $2,779, on average, under the House bill, according to an analysis by the Center on Budget and Policy Priorities.

“California policymakers will once again hear what we heard year after year before the [PP]ACA: ‘Some coverage is better than no coverage. More limited benefits are better than nothing,’” said Beth Capell, a lobbyist for the consumer advocacy group Health Access California.

Source: Kaiser Health News; May 8, 2017.