The Senate health care bill will aim to penalize Americans who have breaks in insurance coverage, an updated draft released Monday shows.
The new bill includes a six-month waiting period for those who want to purchase individual market coverage but have had a more than two-month break in coverage at some point in the past year. Vox broke the news Saturday that Republicans planned to include this provision.
The six-month waiting period fills a big policy gap in the first draft of the Better Care Reconciliation Act, which required health plans to accept all patients — but didn’t require all Americans to purchase coverage, as the Affordable Care Act does. Experts expected that this would cause a death spiral, where only the sickest patients purchase coverage and premiums skyrocket.
The new six-month waiting period aims to fix that problem. It is meant to nudge healthy people into purchasing coverage because they may fear the consequences of getting locked out of the market down the road.
But it will also complicate Senate Republicans’ repeal efforts, because it may run afoul of the chamber’s complex budget reconciliation rules. Republicans are using 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 added 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 preexisting 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 adviser 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 have settled a six-month waiting period as their replacement policy. This means that those who show up during open enrollment to purchase coverage, but have had a break in coverage longer than 63 days, will have to wait six months from the date of their application for their coverage to kick in. They would not have to pay premiums during that time period.
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’s Dylan Scott. “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, this week to decide what can be included in the bill and what cannot.