By Mara Lee
The Senate revised its Affordable Care Act replacement on Monday in an effort to replicate the effects of the individual mandate.
Starting in 2019, people who try to buy a healthcare insurance policy during open enrollment, or because of a life-qualifying event, will not be able to do so for six months if they had a break in coverage of 63 days or longer during the prior year.
The tweak to Better Care Reconciliation Act comes just hours before the Congressional Budget Office is set to release its score of the Senate GOP bill.
Under the ACA, consumers could not sign up for health coverage during a special enrollment period just because they had fallen ill. They had to lose coverage because of job loss, a spouse's job loss or a divorce in order to qualify.
The six-month waiting period would begin from the day of application, if the customer applied during open enrollment or if the customer qualified for special enrollment.
But if the person applied outside of open enrollment and did not have a qualifying event, the waiting period would be either six months or the first day of the following plan year, whichever is later.
The rule is intended to prevent the problem of people buying insurance only to cover a current illness. When that happens, premiums rise higher than they would if everyone was buying a policy, and those increases tend to drive out more customers, especially those without substantial subsidies.
Tim Jost, an emeritus law professor at Washington and Lee University, said the six-month lockout is likely to drive up bad debt for providers because many people who try to sign up after a cancer diagnosis, for instance, will still get treatment during that waiting period.
"It will create some bankruptcies," he said, for people who went without insurance and then got sick.
And, Jost said, in some cases, people will not be able to find a provider or a drug company to give them access to care, knowing they have no way to pay for it.
"There will certainly be cases, and lots of cases where people cannot get free or reduced cost care," he said.
The individual mandate has not been effective in convincing healthy people to buy insurance, especially if they don't qualify for subsidies, or have smaller subsidies, experts agree.
"I was never optimistic that was going to work," said Merrill Matthews, a resident scholar at a right-of -center think tank, Institute for Policy Innovation.
But Matthews said the mandate might still be marginally better at improving the risk pool in individual insurance than a lock-out period. With the mandate, consumers are reminded every year there's a cost to not buying a policy, he said. With a lockout period, consumers only recognize the pain once they're signing up.
The House's American Health Care Act, which would allow states to give insurers the option of charging sick people more, might inspire more fear, and therefore be more effective, he added.
"My statement is most major legislation starts out asking what's good policy and ends up asking what's good politics," he said. "We're at the what's good politics now."
Piper Su, vice president of McDermott + Consulting, said one of the tricky things about the rule will be what counts as creditable coverage. The Senate bill gives states the option of eliminating some of the essential benefits mandated by the ACA, which, proponents argue should lower costs because the plans will cover less. The question is, how skinny can those plans get and still count as creditable coverage if you later want to buy a more comprehensive plan?
"That is a question that will be a matter of ongoing discussion," Su said, adding that insurers would have a problem if a "mini-med" plan counted as coverage, because they want to make sure the market is a fair one.
Su said at the time the Affordable Care Act was drafted, policy makers considered a premium surcharge, a waiting period and the mandate before deciding the mandate would be the best tool to get everyone to buy a plan.
"It's fair to say the risk pool didn't shape up the way the ACA envisioned," she said. It's impossible to know much of that was because of grandfathered plans and the cost of premiums after subsidies, versus how much can be attributed to a too-small penalty, she said.
The same will be true if the Senate bill becomes law. Will the change in age ratio, and more generous subsidies to those under 50 improve the risk pool more than a waiting period will weaken it?
"I think it might be equally ineffective" as the mandate was, but it might be less effective, especially if employers are less likely to offer insurance under the new system, said Jost. "The CBO certainly believes the mandate has had an effect on employer coverage. I'm very curious how the CBO will model it."