Republican Senators Lamar Alexander, Orrin Hatch, and John Barrasso claim in a Washington Post op-ed today that they have a plan if the Supreme Court decides that health reform subsidies are no longer available to people buying coverage through federal marketplaces. Their “plan,” however, is extremely vague — perhaps intentionally so, because the details would likely show that it would make coverage less affordable for marketplace enrollees, particularly those who are older or in poorer health, and threaten the stability of the overall individual health insurance market.
The senators write that the plan would “provide financial assistance to help Americans keep the coverage they picked for a transitional period,” but they don’t furnish the most basic information about this assistance. Would people receive the same amount of help they do now, both for premiums and for deductibles and cost-sharing? How long would this transitional assistance be available? What, if any, financial assistance would be available when it expires — and if it were available, who would be eligible and for how much? The senators don’t say.
The senators also write that their plan would give states “the freedom and flexibility to create better, more competitive health insurance markets offering more options and different choices,” whether or not they have a federal marketplace. They don’t explain what this means either, but most likely it means permitting states to significantly weaken or drop health reform’s consumer protections and market reforms, as well as eliminate the individual mandate that people have coverage or pay a penalty.
Health reform established these protections for a good reason. Before health reform, insurers in the individual market could charge people with pre-existing health conditions exorbitant premiums or deny them coverage outright. They also could charge older people much higher premiums than younger people, pricing many out of coverage. And many individual-market plans had large gaps in coverage, such as no prescription drug coverage, or charged deductibles and other cost-sharing that people could not afford.
Health reform ended or limited those practices — requiring insurers to take all comers, barring them from charging sicker people more, limiting how much they can charge older people, requiring certain benefits to be covered, and establishing an annual limit on out-of-pocket costs. But to ensure that older and sicker people don’t disproportionately enroll, which would cause premiums to skyrocket, health reform also includes an individual mandate. That creates a balanced mix of people enrolled in health coverage — young and old, healthy and sick — which helps keep premiums more stable and affordable.
Permitting states to roll back these protections and eliminate the individual mandate would almost certainly make health coverage much less affordable for marketplace enrollees, particularly for people aged 50-64 and those with pre-existing health conditions. Even if some subsidies were available after the transition period, they would likely prove highly inadequate over time as plan premiums rose. That, in turn, would drive many people out of marketplace coverage and back to the ranks of the uninsured and underinsured.