Repealing and replacing Obamacare is a moving target as it goes through the legislative process, but insurers, advocates and agents in Texas agree on one thing — the cost of individual policies will continue to go up for many.
“There’s a lot we don’t know about and that we can’t speculate on,” said Stacey Pogue, senior policy analyst for the Center for Public Policy Priorities in Austin. “But the important, big-picture thing to take away is that this kind of coverage will be less affordable for millions of Americans and we can lose coverage for millions of Americans when premiums rise.”
The Affordable Care Act (ACA) has resulted in huge premium hikes and an exodus of insurers, broadening support for change or repeal of the law. Tarrant County went from having six insurers offering policies on the federal exchange, where qualified buyers could get federal subsidies, to just two this year. Around a third of the state — or 85 counties — have just one insurer left in the marketplace.
But those problems of affordability and choice will not be erased by the Republican-sponsored American Health Care Act (AHCA), according to a number insurance industry sources.
Under the ACA, around 900,000 Texans receive subsidies to help pay for health insurance premiums on a sliding scale based on age, income and where they live, Pogue said.
Under the proposed AHCA, the subsidy would be based only on age, and the tax credit in Texas would go down on average around $1,600 a year, she said. The new credit would be $2,000 for those under age 30 and cap out at $4,000 for people older than 60 who buy on the marketplace.
Since income is not factored into the formula, Pogue said a family making $300,000 a year would get the same tax credit as another making $30,000 a year.
Another change would allow insurers to charge older policy holders up to five times what they charge younger participants. Under the current law, insurers are only allowed to charge three times as much for older participants.
“The five-to-one proposal is more consistent to the claims ratio before the ACA, which was 6 or 7 to 1,” said Dale Mason, a Fort Worth insurance agent.
At the same time, the subsidy is higher in rural areas, which generally have higher costs of care because of fewer physicians and hospitals. Where you live will not be part of the new formula.
“People not old enough to get Medicare will be hurt by this. People in more rural areas of Texas will have to shoulder more costs under this plan,” Pogue said.
AARP, the American Medical Association and the American Hospital Association, which supported the ACA, have all come out against the new proposal.
“Before people even reach retirement age, big insurance companies could be allowed to charge them an age tax that adds up to thousands of dollars more per year,” said Nancy LeaMond, AARP executive vice president, in a statement. “Older Americans need affordable healthcare services and prescriptions. This plan goes in the opposite direction, increasing insurance premiums for older Americans and not doing anything to lower drug costs.”
LeaMond said AARP also did not support the Medicare vouchers in the new proposal or the cuts to Medicaid.
“Although no one believes the current healthcare system is perfect, this harmful legislation would make healthcare less secure and less affordable,” she said.
Policies also will cover less than they do now, Pogue said. The proposed plan repeals the ACA’s essential health benefits in 2020. These benefits included mental health, maternity, prescription drugs, emergency care and other coverage.
Two things that will stay in place under the AHCA are coverage for pre-existing conditions and allowing for children up to age 26 to stay on their parent’s policies.
The pre-existing condition exclusion has been a concern of some clients, said Mason.
“I don’t ever see us going back to that world,” he said. However, the new proposal does require continuous coverage to avoid a 30 percent surcharge if you drop your policy and have a gap of more than 63 days, he said.
“It’s an incentive to get on insurance and stay on it,” he said. Another change in the proposal is to eliminate the ACA mandate to have insurance or face a tax penalty, so the surcharge for dropped coverage would be the only incentive.
One insurance executive, J. Mario Molina, the chief executive of Molina Healthcare, which offers policies in Dallas, Houston, El Paso, Laredo and southern Texas, told The New York Times this week he expects premiums to go up 25 percent or more under the new proposal.
“The central issue is the tax credits are not going to be sufficient,” said Molina told the Times. Healthy people likely will drop out of the market, causing premiums to be coming in only from sicker patient groups, thus rise, he said.
Blue Cross Blue Shield of Texas, one of the largest providers of individual plans in the state and one of only two providers in the ACA marketplace this year in Tarrant County, is working with policy makers at the state and federal level on the proposed legislation, said Gustavo Bujanda, spokesman for the insurer.
“As we look towards 2018, it’s imperative that we have market stability and regulatory certainty to allow us to continue to serve our members,” he said in an email.
New insurance filings with the Texas Department of Insurance outlining premium rates are generally made in the spring for the following year.
“We will make decisions about our product offerings for 2018 once we have more information about any legislative or regulatory changes that will be made impacting the individual health insurance market,” Bujanda said.
Mason said neither the ACA nor its replacement address the heart of the problem — increased healthcare costs by providers.
“Until we get some way to make our healthcare markets transparent when it comes to cost, we will see insurance costs go up,” he said.
Teresa McUsic’s column appears Saturdays.