Buried in the Senate bill is a potential nugget — insurance for low-income people
© Greg Nash

For those of us who thought the Senate might save the day with a rational approach to modifying ObamaCare, that day has passed. The Senate’s newly-released bill is similar to the previously-passed House legislation in adopting an approach that will surely increase the numbers of uninsured and do little to stem the rising costs of health care.

ObamaCare’s Medicaid expansion is dead, and we do not know how much the Medicaid programs will be cut, but the Congressional Budget Office will tell us in short order. The conventional thinking is that low-income people are in for deep trouble. But that might not be entirely true.

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The Senate health bill is called the “Better Reconciliation Act of 2017.” What a name — all about reconciliation and nothing about the health of people. For those who make less than 200 percent of the federal poverty level ($23,760 for a single person), the bill allows people to pay only two percent of income ($40 per month), and the government will subsidize the rest of the payment to be able to purchase an insurance plan.

 

Here’s the rub and the opportunity — just what is in that insurance plan?

In the Senate bill, the essential benefits are repealed, meaning that insurers are free to create whatever plans they want. They can re-create the insurance industry that existed pre-ObamaCare, when insurers were permitted to sell health plans that had extremely low benefits. Back then, Consumer Reports said that these plans were “so riddled with loopholes, limits, exclusions, and gotchas that [they] won't come close to covering their expenses if they fall seriously ill,” such as covering only $1,000 of hospital costs per year. For comparison, a single visit to an emergency room costs about $1,500 and coronary bypass can cost $50,000.

Some of these plans were popularized in so-called “association health plans,” that were purchased through small groups of businesses that could band together. Pre-ObamaCare, the National Association of Insurance Commissioners, the National Governors Association and others issued a consumer alert on association health plans. A return to those days would be disaster.

However, the bill has given insurers an opportunity. They should create “catastrophic plans” (that cover serious health problems but not simple conditions such as colds) with a low deductible. The design of the plans is not trivial: they could cover things like accidents and pregnancy (though maybe we need a different word than ‘catastrophic’). But when would the plan start covering heart failure or cancer? The trick is that these plans need to be affordable — and that means they’d need a low premium plus a low deductible. We should avoid repeating the mistakes of the ACA, which focused on coverage of many types of benefits, at the cost of a deductible that was unaffordable to many. The way the insurers can stay afloat with these plans is by ensuring healthy people can and do buy them.  

Whether or not this bill survives, the concept should be carried forward: low income people may not need Medicaid if they can afford to buy insurance that provides coverage for what they need. Will they buy it even if they are healthy? We know from our Texas Medical Center-Nielsen survey 96 percent of people across five states said they would buy insurance if it is affordable. Let’s give it to them and see.

Dr. Arthur Garson is a pediatric cardiologist, former medical school dean and director of the Texas Medical Center Health Policy Institute in Houston.


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