Under Obamacare: The benefit rules established a floor for all insurance products. They also created a benchmark for related rules on how much patients could be asked to pay directly for care. But they have been criticized for increasing the cost of insurance.
Republicans’ plan, with Tuesday’s amendment: States could waive the benefit rules and set up their own standards instead.
Upshot: This change would permit states to choose the benefits rule they prefer. But eliminating the requirements will most likely mean that certain benefits, like maternity coverage, are rarely covered in the states with waivers.
2) Community Rating
Under Obamacare: The rule requires insurers to charge the same price to every customer in the same area of the same age, eliminating the system where insurers would evaluate customers’ health status, then charge them according to their health.
Republicans’ plan, with Tuesday’s amendment: States would be allowed to waive this rule and charge higher prices to sick customers who had experienced a lapse in insurance coverage of more than 63 days. States that waive this rule would be required to set up a program to help people with high health care costs buy insurance in a separate pool. The bill would establish funding to help states subsidize the high cost insurance.
Upshot: Eliminating community rating would undermine Obamacare’s guarantee of coverage for people with pre–existing conditions, which President Trump and many Republican lawmakers have said they value. A House website on the bill still says that “Americans should never be denied coverage or charged more because of a pre-existing condition.” In states that waive this rule, insurance could become substantially more expensive for those with serious illnesses, or even with a history of minor health problems, like allergies. But taking sick customers out of the main insurance pool could make health plans much less expensive for people who are healthy.
3) Age Rating
Under Obamacare: Insurers can charge their oldest customers no more than three times the price they charge their youngest ones. The rule effectively lowers prices for older Americans and raises them for younger ones, since the expected health care costs for Americans in their 60s tend to be about five times that of those in their 20s.
Republicans’ plan, with Tuesday’s amendment: The Republican bill would shift the default from 3:1 to 5:1. But states could waive that rule and establish a higher ratio under the amendment.
Upshot: The American Health Care Act would provide subsidies to help most Americans who buy their own insurance. Those subsidies range from $2,000 for the youngest adults to $4,000 for the oldest. Widening the range in prices between young and old customers could make insurance less expensive for the young, but would probably push coverage further out of the financial reach of older people, who would experience a growing gap between the price tag and their tax credit.
Not every state would apply for a waiver, of course. But the standards for approval under the proposed amendment would make it easy for interested states to waive the insurance rules for up to 10 years.
These changes would be layered atop the existing text of the American Health Care Act, which would make major cuts to state Medicaid programs and reshape the subsidies that help middle-income Americans buy their insurance coverage.