A major criticism of the draft Republican Senate healthcare bill, the "Better Care Reconciliation Act," has been that it will destabilize the individual health insurance marketplace. The amendments recently suggested by Texas Senator Ted Cruz were said to make that possibility much more severe. The revisions released today to the BCRA, however, clarify that the "Cruz amendment" is not nearly as problematic as supposed. In fact, the revisions substantially reduce the risk of market instability and may well permit a Obamacare-like market and a substantially deregulated market to coexist. The wise GOP decision to abandon tax cuts for the wealthy will help fund the changes needed to permit this dual market situation. That decision also liberates Republicans credibly to cite the need for serious deficit reduction to rebut arguments that their healthcare bill actually reduces the number of uninsureds.
The big clarifications that eliminate glaring issues with the earlier version of the BCRA are as follows:
1:Making clear that purchasing an individual policy outside of the "community-rated" and benefit-regulated Obamacare framework -- "off-Exchange policies" -- does not count as "continuous coverage." This means that even healthy people will have to think twice about purchase off-Exchange coverage. Basically, under the revised BCRA, if you exit the Obamacare framework, even if you purchase perfectly fine coverage off the Exchange, you are subject to a six month waiting period if you ever want to go back to the Obamacare framework. If, as I suspect, this denial of "creditable coverage" status means that more healthy people will preserve their rights by staying with the Exchanges, the gross premiums for those policies should not go up as much as would have been the case were these off-Exchange policies treated as creditable.
2:
Making clear that off-Exchange policies are not eligible for the potentially large premium subsidies that will continue for policies purchased on the Exchanges. Persons purchasing off the Exchange may thus not only get skimpier coverages, they may also find that their net price is greater. Again, this means that healthier people may choose to stay in the Obamacare framework. And this means prices for Obamacare Exchange policies should not escalate nearly as much. In short the Clarified Cruz Amendment gives people one form of freedom: choose Obamacare policies with their benefits and burdens (coverage for things you don't need, for example) or escape Obamacare, both its burdens and, for many, the substantial federal subsidies it provides.
3:Establishing $70 billion in subsidies that the federal government can provide to insurers selling on the Exchanges and covering high risk individuals. These payments are roughly similar to the amount now being spent (illegally) for cost sharing reductions. The Secretary of HHS could use this money to restore stop loss reinsurance that existed for the first few years of the ACA that substantially lowered premium costs at that time and that would make it less frightening for insurers to offer policies that attracted high risk individuals. When one couples this sum with the amount the BCRA gives the states to help stabilize their insurance markets, we now have a significant use of the federal taxing and conditional spending powers to assist the states in providing insurance markets that meet the needs and preferences of their constituents
