Now that the House has passed the American Health Care Act, Senate Republicans should work on improving it. They could either try to replace the bill with another one that attempts to achieve the same basic goals—allowing people to purchase cheaper policies, reducing regulations and taxes—or merely modify it. (There’s talk of the former, but my bet is that senators will follow the second, easier path.)
In either case, they should aim to provide some more protection for three overlapping groups of people who could end up paying higher premiums under the House bill: those in their 50s, those with incomes just above the level that would make them eligible for Medicaid, and those with pre-existing conditions.
The debate over this last group of people has been filled with wild exaggerations from Democrats and the media, which have been countered by inept defenses from Republicans. Take this article from CNBC, which publicizes an “analysis” holding that the bill’s risk-pool funding would allow it to cover only five percent of Americans with pre-existing conditions. That’s a meaningful figure only if you assume that every American with one of those conditions will a) live in a state that applies for and gets a waiver from Obamacare’s regulations on pre-existing conditions and b) allow their insurance to lapse (since even in waiver states the Obamacare regulations will still cover those who stay on the rolls).
But some people with pre-existing conditions—chiefly those who are right above the Medicaid eligibility line and those in their 50s—could run into problems in waiver states if their tax credit does not buy them much coverage. If Senate Republicans want to start with the House bill and modify it to prevent this possibility, one way would be to limit the bill’s waivers to cap what insurers could charge even for people who let their coverage lapse: say, allowing them to charge only 30 percent more for people with pre-existing conditions.
Alternatively, beefing up tax credits for older and poorer people would make it less likely that people with pre-existing conditions would fall through the cracks. It would also improve the bill’s overall coverage numbers. Even under the unamended bill, a large proportion of the people who would “lose” their coverage as a result of its passage would really be choosing to drop coverage that they are currently buying only to avoid a fine. That proportion of voluntary drop-outs would be even higher under a bill with larger credits for those who need more assistance.
An additional amendment could stipulate that insurance companies that take the tax credit must include among their offerings a policy with a premium equal to the tax credit, so that it will always be possible for someone to buy some degree of protection without having to supplement that credit. State governments that apply for waivers could set up a default enrollment plan that assigns people to one of those policies if they don’t sign up for any coverage—so that inertia doesn’t take them off the rolls.
Some of these steps don’t strike me as strictly necessary: It seems likely that insurance companies would offer policies priced at the credit level so as not to leave money on the table. But even they would offer an additional bit of security and thus reduce the political cost of getting rid of large parts of Obamacare. That’s probably what a lot of senators are going to want to do.