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.
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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.
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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.
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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.