Insurance

Graham Cassidy healthcare bill would cause chaos for insurance, states



graham cassidy mcconnell
Sen. Bill Cassidy looks on
as Sen. Lindsey Graham talks about their healthcare bill during a
press conference with Mitch McConnell.

Alex Brandon/AP Images

Republicans are taking one last stab at repealing and replacing
the Affordable Care Act, but experts say their latest attempt
runs the risk of bringing chaos to the US healthcare system.


Experts say the so-called Graham-Cassidy healthcare
bill
, whose legislative fate became more uncertain
Friday
, would set up a deadline for states that
could cause massive upheaval and sow uncertainty in
insurance markets.

The legislation would keep intact several provisions of the law
known as Obamacare for 2018 and 2019. But it would force states
to set up an entirely new individual insurance market — for
people who don’t get coverage through an employer —  and
Medicaid by 2020.

The bill’s authors have presented the two-year window as a
cushion to ensure no disruption for people in those insurance
markets. But Larry Levitt, a senior vice president at
the Kaiser Family Foundation, said the transition isn’t
nearly long enough.

This would be a really heavy lift for states,” Levitt told
Business Insider in an email. “They’d have two years to figure
out what kind of health insurance system they want to create,
starting essentially from scratch, and then implement it. This is
close to unprecedented.”

The Graham-Cassidy bill would give states a chunk of money,
known as block grants, every year based on a formula
around the number of enrollees in certain programs. The
states would be allowed to determine how people in the individual
market received care.

The legislation’s proponents argue it would
give states new flexibility. But it would
also force states to pass legislation to create a formula
for dividing up subsidies that help people
buy insurance — as well as to create state-level enforcement
and regulatory schemes.

Matthew Fiedler and Loren Adler, health policy analysts at
the Brookings Institution, said the challenges for states would
be even more daunting than amid the implementation
of the Affordable Care Act.

“States would have only around 15 months to get new
policies in place to do so before insurers would need to begin
developing products for 2020 and only about 27 months before the
new rules would have to be in effect,” Alder and Fiedler
wrote as part of an analysis Friday
. “For comparison, the
process of drafting and implementing the ACA began close to five
years before the new rules would be in effect. It seems likely
that many states would simply fail to meet this timeline or meet
the timeline only by deploying ineffective policies.”

The researchers said the challenges would lead to an
increase in the number of people uninsured due in part to
the heightened uncertainty for insurers and beneficiaries.

“Transitions are difficult even under the best of
circumstances. Government agencies need to gain experience
administering their states’ new regulatory regimes and subsidy
programs,” their analysis said. “Private insurers need to learn
to set premiums for a new market, while individuals need to learn
how to access new coverage arrangements.”

Levitt pointed to the rapidly changing market and
possibility of market disruption as consequences that would
likely scare off insurers, which like to set prices and
participation areas in advance to get a sense of their bottom
line.

“I think it’s quite unpredictable how insurers might react
to passage of Graham-Cassidy,” he said. “Insurers are not going
to know what states will do, and some may exit the market now to
wait and see how things shake out.”

And Adler and Fiedler wrote that insurers may enter the new
markets with higher premiums to counteract the
uncertainty.

As with the years leading up to 2020, uncertainty
about what rules will govern the individual market in the future
may put downward pressure on individual market participation,
increasing premiums and reducing coverage,” the analysis
said.

That could also be a reaction to the lessons learned from
Obamacare. Insurers underpriced many of their Obamacare plans in
the first few years of the exchanges, leading to
significant financial losses and rapidly rising premiums
over the past few years.

So even with the two-year window, the massive upheaval would lead
to a mad dash by states, insurer chaos, and potentially higher
costs for insurers.

Or as Jon Kingsdale, a public health professor at Boston
University,
told the New Times Times
: “That’s not enough time for
most states to figure it out.”



Source link