Some Republican health policymakers want to give each state a pot of cash the state could use to try to improve its commercial health insurance system however it wanted.
A state could draw on the same pot of cash to pay for wellness programs, subsidies for health purchasers of individual or small-group health coverage, special “risk pool” health plans for people with health problems, or efforts to stabilize the individual or small-group markets.
Republicans put the all-purpose state health grant idea in a brief presented Thursday, at a private Republican meeting. At press time, the Republicans had not posted a public version of the brief on the web. A number of other organizations, including the HSA Coalition, have posted copies. The HSA Coalition’s version of the brief is available here.
Rep. Kevin Brady, R-Texas, chairman of the House Ways and Means Committee, and Rep. Greg Walden, R-Ore., chairman of the House Energy and Commerce Committee, presented the brief at the Republican meeting, according to press reports.
The new brief is based in part on A Better Way, an Affordable Care Act replacement proposal. House Speaker Paul Ryan released the Better Way proposal in June.
Analysts at the Henry J. Kaiser Family Foundation say about 5 million of the 20 million people who now use commercial individual major medical coverage have serious health problems. People with those health problems, such as cancer or diabetes, would have a hard time buying ordinary major medical coverage if the United States went back to letting health insurers consider people’s health when deciding whether to sell them health insurance.
The average user of individual coverage pays about $3,600 per year for the coverage, according to eHealth Inc., the company that runs eHealthInsurance.com.
When the United States offered a temporary federal risk pool program, the Preexisting Condition Insurance Plan, soon after the Affordable Care Act came to life, the 125,000 enrollees in that program averaged about $32,000 in claims per year.
The Better Way proposal called for providing $25 billion for state commercial health insurance market program grants and $25 billion for risk pool subsidies, or about $5,000 for each individual coverage user with serious preexisting conditions.
If Congress passed a bill that created a $50 billion all-purpose state health insurance support fund, that might make up to $10,000 in subsidies available per high-risk individual per year, but programs for high-risk people would have to compete for that cash with health coverage subsidy programs for healthy people.
The new policy brief also calls for providing an age-based, refundable tax credit provision for all health coverage purchaser. The authors do not say how big the new tax credits should be, but they note that Sen. John McCain, R-Ariz., once proposed providing a credit of $2,500 per year for individuals and $5,000 for families.
If an insurer received a $2,500 tax credit, $4,000 in enrollee payments and $5,000 in state high-risk subsidies for covering a high-risk enrollee, it would get a total of about $11,500 per year for covering the enrollee.
An insurer might get $17,500 for a high-risk enrollee if a state paid an average of $10,000 in subsidy cash per high-risk enrollee.
Some have suggested that the Better Way plan would provide a maxmium of $50 billion in grants for states over 10 years, not per year. If states averaged just $5 billion in federal commercial health insurance funding of all kinds, then an insurer might get a maximum of $1,000 per year in subsidy money per high-risk enrollee. In that situation, an insurer might get $6,000 per year to cover a high-risk enrollee.
H.R. 1221, a GOP medical underwriting bill, would ban use of personal health information in pricing coverage, but it would allow for a 50 percent wellness program participation discount. (Photo: Thinkstock)
Medical underwriting ban might stay
The authors of the new brief suggest that they might keep the current version of the ACA premium tax credit subsidy during a transitional period.
The authors also propose eliminating a general ACA tax on health insurance premium revenue.
Aside from the all-purpose state health insurance fund and the elimination of the health insurance premium tax, the authors do not propose any other kinds of subsidy payments, tax credits, regulatory relief or other measures designed to persuade health insurers to keep offering individual major medical coverage.
In related news, Walden has introduced a medical underwriting bill, H.R. 1221.
If Congress repealed the ACA, H.R. 1221 would save the ACA rule that blocks health insurers from using applicants’ personal health information when deciding whether to sell them coverage. The bill would also keep insurers from using personal health information when setting coverage prices.
The bill would let an insurer tie as much as 50 percent of the price of health coverage to participation in a wellness program.
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