Insurers brace for ObamaCare upheaval

President-elect Donald Trump says he wants to repeal ObamaCare but keep the protections for people with pre-existing conditions. Achieving that will be easier said than done. 

Insurance companies warn that requiring them to cover anyone, regardless of their health status, could have disastrous consequences if not paired with the right policies. 

{mosads}Without a mandate requiring people to buy coverage, insurers warn, only sick people would have reason to buy coverage. That could lead to sky-high premiums and the collapse of the insurance market — what has long been referred to as a “death spiral.”

Yet Republicans appear determined to repeal ObamaCare’s coverage mandate, along with much of the rest of the law, while potentially keeping the popular ban on discriminating based on pre-existing conditions in place.

“There’s a huge amount of uncertainty that I think freaks them out a little bit,” one insurance lobbyist said of health insurers’ thinking. 

The possibility that Republicans could repeal much of ObamaCare on a delayed timetable, giving themselves a year or two to come up with a replacement before repeal takes full effect, is adding even more uncertainty.

The Republican push to repeal ObamaCare has also put a cloud over the roughly 20 million people who could lose coverage once the law is repealed.

Before ObamaCare, insurance companies had long lists of illnesses and health problems that they viewed as pre-existing conditions. They could deny people coverage if they had anything on the list. 

In an interview with CBS’s “60 Minutes” on Sunday, Trump said he plans to keep the ban on such discrimination, calling it one of ObamaCare’s “strongest assets.”

But experts warn that the ban alone, without some incentive to get healthy people to sign up, could wreak havoc.

“There is a bipartisan desire to guarantee insurance for pre-existing conditions,” Larry Levitt, a healthcare expert at the Kaiser Family Foundation, wrote on Twitter. “Sadly, there’s no magic pixie dust that makes it easy.”

New York, for example, tried having a ban on discrimination based on pre-existing conditions without a mandate before ObamaCare and saw premiums skyrocket.

“You don’t have to go too far to find out what the effect would be,” said Sabrina Corlette, a health policy professor at Georgetown University, pointing to the New York example.  

“It was a market in a death spiral, and by that I mean the premiums were exorbitantly expensive,” she said. “Very few people were able to enroll.”

Republicans have put forward some proposals to replace the coverage mandate, though it is unclear if any of them would work. 

The House Republican plan spearheaded by Speaker Paul Ryan (R-Wis.), for example, would protect people with pre-existing conditions if they have what is called “continuous coverage.”

That is, people with pre-existing conditions would be protected when they switch insurance plans, but people who are uninsured and trying to sign up for the first time would not have protection.

Under that system, it’s unclear where people who do not already have coverage would turn. 

“That’s a way to maintain a stable market,” said Joe Antos, a healthcare expert at the conservative American Enterprise Institute. “That’s not a way to create a stable market.”

The House GOP plan also puts forward another longtime Republican idea: high-risk pools.

In a high-risk pool, people with pre-existing conditions can buy coverage separate from the regular market and receive a government subsidy to help afford it. 

But states tried high-risk pools before ObamaCare, and they are widely seen as not having worked. 

In 2000, research from Boston University health economist Austin Frakt found that just 8 percent of sick people who could not get coverage elsewhere were getting coverage through high-risk pools. 

The main problem was lack of funding. Subsidizing coverage for sick people through high-risk pools costs a lot of money, and Republicans would have to commit to a large, sustained funding stream, a tough task. 

“It’s not an implausible idea, but it requires a permanent commitment to funding,” Antos said. 

Avik Roy, a leading conservative healthcare expert and former adviser to Sen. Marco Rubio’s (R-Fla.) presidential campaign, wrote in Forbes that a GOP plan would not have to include a mandate. Instead, he said generous tax credits for the poor and sick would help those people afford coverage. 

But the House Republican plan would base its tax credits on people’s age, not their income, as ObamaCare does, meaning that poor people would not get any additional help. 

“Some Republican approaches to replacing Obamacare insist on deploying a non-means-tested tax credit that doesn’t vary based on income or prior health status,” Roy wrote. “That approach doesn’t help those with pre-existing conditions.”