Senate Republicans are expected to revise their health bill early next week, adding in a provision that could lock Americans out of the individual market for six months if they fail to maintain continuous insurance coverage.
Health insurance industry sources familiar with the plan say the change could be announced as early as Monday.
The six-month waiting period would fill a big policy gap in the current Better Care Act, which requires health plans to accept all patients — but doesn’t require all Americans to purchase coverage, as the Affordable Care Act does. Experts expect that this would cause a death spiral, where only the sickest patients purchase coverage and premiums skyrocket.
But the six-month waiting period could also complicate the Senate Republicans’ repeal efforts, because it may run afoul of the chamber’s complex reconciliation rules. Republicans are using what’s called “budget reconciliation” to pass their health care bill with a bare majority of 50 votes and avoid a Democratic filibuster. But the rules governing reconciliation restrict what policies the GOP can include in their bill — the waiting period is one of the provisions thought to be in doubt.
Why Senate Republicans want an individual market waiting period
All health insurance markets need healthy enrollees and sick enrollees to keep premiums affordable. The healthy people end up subsidizing the high medical bills of the sick people — and also purchase protection against financial ruin should they become one of the sick people themselves.
The Affordable Care Act required all insurance companies to accept all Americans regardless of pre-existing conditions. It also required all Americans to purchase coverage or pay a penalty, a way to push healthy people into the marketplace.
The individual mandate is the least popular provision of the Affordable Care Act and Republicans have promised for years to repeal it. But policy experts agree that they need some other policy to replace it — or else risk sending the individual insurance market into collapse.
Many were puzzled to see that the Senate bill released Thursday contained no such provision. Former Republican Senate health policy advisor Rodney Whitlock tweeted that the Senate bill looked like the “definition” of a death spiral. Avik Roy, a supporter of the bill, agreed that this issue would need to be revised.
Something I missed when tweeting about the Senate HC bill earlier: no continuous coverage / waiting period provision. Important to fix.— Avik Roy (@Avik) June 22, 2017
Senate Republicans appear to have settled on a six-month waiting period as their replacement policy. This means that those with a break in coverage would need to wait a half-year before they would be eligible to purchase an individual market health insurance plan.
The idea would be to encourage healthy people to buy coverage during open enrollment regardless of whether they expect to use significant medical care with the threat of being locked out of the market should they want to purchase coverage in the future.
The provision still needs to comply with the Senate’s ‘Byrd Rule’
Several lobbyists and outside experts theorized that the waiting period had been excluded from the initial draft of the Senate’s health care bill because of concerns about the ‘Byrd Rule.’
The Byrd Rule, which Vox has explained in greater detail, limits what policies can be included in legislation considered under reconciliation. The provisions in the bill must directly affect the federal government’s spending or revenue — it’s a way to restrict what policies can pass under the special privileges of reconciliation, which allows a bill to advance with only 50 votes instead of the usual 60.
Several provisions in the Senate plan could be in jeopardy under the Byrd Rule, but the waiting period is one of the most important, given its policy consequences.
The House bill had included a different kind of continuous coverage provision — a surcharge people would have to pay on their premiums if they went without coverage — and some procedural experts thought it ran afoul of the Byrd Rule.
The House provision “seemed to me like a strong possibility of a Byrd Rule violation,” Sarah Binder at George Washington University told Vox. “It seemed pure policy — and thus ‘extraneous’ under the Byrd rule.”
It’s not yet clear if the Senate’s proposal, a waiting period instead of a premium surcharge, would be permissible. Republicans and Democrats will be negotiating with the Senate parliamentarian, who oversees the chamber’s rules, next week to decide what can be included in the bill and what cannot.
But if the waiting period is deemed to comply with the Byrd Rule, it is expected to be added to the Senate bill.