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The revised American Health Care Act, which passed the House on Thursday, allows states to opt out of key Obamacare rules, including, most notably, the rule banning insurers from charging people with preexisting conditions more for health insurance.
People with preexisting conditions, not surprisingly, tend to need more health care than people with spotless health histories. Insurers will now be free to make those consumers bear much more of the cost of their care. This, in turn, means that, in states that choose to opt out of the Obamacare rules, private insurance for people with preexisting conditions is likely to become prohibitively expensive (as it was before Obamacare).
Without help, then, some people won’t be able to afford insurance premiums that take into account their diabetes, heart attacks, or cancer. So the AHCA also provides money for states to set up so called “high-risk pools. Through such pools, the states themselves will provide insurance for people who can’t afford it on the open market. And while the provision that allows for states to opt out — the “MacArthur Amendment,” for its author Rep. Tom MacArthur (R-NJ) — was added late in the process, its vision of the health care market is one conservative Republicans, including Paul Ryan, have been pushing for from the start.
Indeed, during the debate over the original AHCA — the bill that was ignominiously pulled from consideration March 24 — Ryan regularly talked about the benefits of segregating people with preexisting conditions into their own separate market. When he gave a slideshow presentation on health care reform in DC in early March, Ryan argued that the basic problem with Obamacare is that it requires healthy people to subsidize sick ones, which drives up insurance premiums for the healthy, encouraging them to drop out of the insurance market, which in turn raises premiums even higher.
Ryan was mocked for this: His critics pointed out that this is the way all insurance works. But what was really interesting about Ryan’s presentation was that the solution he offered to this “problem” was, yes, high-risk pools. We’ll put people with preexisting conditions into separate insurance pools, Ryan argued. That will drive down premiums for healthy people. Meanwhile, the AHCA’s subsidies for the pools will ensure that sick people get the coverage they need.
Risk pools for costly patients were a late addition to the AHCA. But they represent a return to the GOP’s original vision.
Now, that’s a fairly standard conservative health insurance proposal. But what was peculiar about Ryan’s talk about high-risk pools, at the time he was making that presentation, was that such pools were completely irrelevant, given the way the AHCA was originally written.
To the chagrin of the right-wing Freedom Caucus, the original AHCA preserved Obamacare’s protections for people with preexisting conditions: Insurance companies had to offer insurance to anyone, regardless of health status (“guaranteed issue”), and they were prohibited from charging people with preexisting conditions more for health insurance than they charged healthy people of the same age (“community rating”). As a result, there was no reason for people with preexisting conditions to enter a high-risk pool, since they were guaranteed the right to buy insurance at the same price as everyone else, and therefore no reason for states to set these pools up.
Ryan’s invocation of high-risk pools, in other words, was a sign that the GOP planned, either by legislation or regulatory changes, to eventually remove Obamacare’s protections for people with preexisting conditions, since it’s only once those protections are gone that high-risk pools become necessary. In that sense, the MacArthur Amendment, in getting rid of the principle of community rating, moved the AHCA much closer to what conservatives had intended it to be all along.
The amendment means that in at least some states, sick people who don’t maintain “continuous coverage,” that is, those who drop their insurance for some period, won’t be able to afford insurance on the individual market, sending them to high-risk pools — exactly where Ryan said they needed to end up.
Now, there are myriad well-documented problems with high-risk pools. Such pools existed in many states before Obamacare made them unnecessary, and they were historically underfunded. That led to long waiting lists, and meant that premiums in the pools, even though they were subsidized, were still much more expensive than premiums in the individual market. And so insurance was still out of reach for many sick people. The AHCA’s high-risk pools are likely to have similar problems, particularly if more than a few states decide to ask for waivers. (Since the amount of money allocated to high-risk pools is set at the federal level and fixed in the bill — $115 billion, over 10 years — the more states that want to set up high-risk pools, the less money there will be to go around.)
On a more fundamental level, the inclusion of high-risk pools in the AHCA represents an explicit rejection of Obamacare’s most important principle: that your health status should have no impact on the price you paid for insurance. That principle happens to be very popular: Polls suggest close to three-quarters of Americans support it. But conservative Republicans don’t.
The GOP has tried to pretend that it shares the view of the majority of Americans on this question. The House GOP’s website originally said that people with preexisting conditions would never have to pay more for health insurance. (That sentence has since vanished.) And Trump has repeatedly said that he opposed making people with preexisting conditions pay more — as recently as Monday, he told Bloomberg he wanted the AHCA “to be every bit as good on preexisting conditions as Obamacare.”
But the truth is that, as the MacArthur Amendment makes clear, conservative Republicans believe that people who have higher medical costs should also pay more for insurance, and that, as Ryan argued, it’s wrong to ask healthy people to subsidize sick ones.
The bill reflects a vision of health insurance that blames the sick for their conditions.
Representative Mo Brooks of Alabama caused an uproar the other day when he said that the good thing about the AHCA’s waivers is that it would make people with higher medical costs “contribute more to the insurance pool, so people who “lead good lives” could pay less. But Brooks was just saying, in an especially impolitic way, what was implicit in Ryan’s arguments for high-risk pools.
It’s true that the amended AHCA is not, from a conservative point of view, perfect. If conservative Republicans had their way, the bill would presumably have restored the pre-Obamacare status quo, abolished community rating for the country as a whole, and forced people with preexisting conditions in every state into high-risk pools. But the new bill is at least a step in that direction. That makes it easy to see why conservatives supported it, and impossible to see why GOP moderates did.
James Surowiecki is a senior story producer at Vice News Tonight. Twitter: @JamesSurowiecki
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