While I was writing this post, it looks like the Graham-Cassidy health bill died, with John McCain holding the bloody knife. But you never know, so I’m going to publish it anyway.
My latest Bloomberg View column explains some of the reasons I favor passage of the Graham-Cassidy health-care bill. (This editorial has a few more.) In the column I suggest that people with pre-existing conditions should not fear the bill. It
allows states to apply for waivers from the Obamacare regulation that requires insurers to charge the same premiums for the sick and the healthy. Before granting them, the federal government has to certify that those with chronic conditions will still find coverage affordable.
Progressives worry that states will apply for waivers without making adequate provision for the chronically ill and the federal government will rubber-stamp its approval. I assign a low probability to that scenario because political pressure will militate against it. It’s because it is highly unpopular to put those with pre-existing conditions at risk that opponents of the bill have made this possibility one of their chief attacks.
I go on to suggest that states
could ask for a waiver that let insurers charge higher premiums — say 20 percent higher — for those without insurance who become sick and then want to buy insurance. At the same time, it could use its federal block grant to fully fund a high-risk pool for those who fall through the cracks. That policy mix would enable cheaper insurance and encourage healthy people to buy it.
On Twitter, Dennis Shea asks why, given my argument, people with pre-existing conditions weren’t adequately protected prior to Obamacare. Continuous-coverage protections and high-risk pools were around back then, and people with pre-existing conditions were presumably just as sympathetic, but a lot of people—while it’s a disputed question, I think two to four million is the most reasonable estimate—could not get affordable insurance.
My answer starts by noting the differences between the policy mix I’m advocating and the pre-Obamacare one. The first difference is that the federal continuous-coverage protection that existed then required insurers to cover people with pre-existing conditions but did not limit the price they could be charged. Under the protection I’m discussing, people with continuous coverage would have to be charged the same price whether or not they had a pre-existing condition, and people without it would have their premium hike capped.
The second difference is that people without access to Medicare, (traditional) Medicaid, or employer coverage received no help from the government in getting health insurance. Under Graham-Cassidy, states would be able to use their block grants to give people in that situation money to buy insurance on the individual market. That’s how I’d recommend they use the bulk of the money. (And while I don’t mention it in my column, I’d also recommend that states use auto-enrollment to assign people to a catastrophic policy, as Senator Cassidy has suggested they could.)
As a result of those two differences, we should expect the population that would need help from a high-risk pool to be much smaller than the pre-Obamacare population, and thus expect any given amount of funding for the high-risk pools to cover a higher percentage of those applying for it.
Assuming this policy mix would work, would states actually either adopt it, keep the Obamacare regulations, or design some other carefully-considered way to take care of people with pre-existing conditions? Or would they instead come up with a band-aid solution and get federal sign-off?
As I said, I think there would be strong political pressure to provide real protection. In part that’s because Obamacare changed the policy baseline and the political background. Covering people with pre-existing conditions was always popular, and has probably become more so after the last few years of debating health policy, but taking coverage away from them is even more unpopular. Covering people required an affirmative act of government, and there were multiple veto points that could block it, so the existence of a pro-coverage sentiment wasn’t enough by itself to prevail. Now it’s a change in regulatory protections that would require an affirmative act, by both a state and the federal government.
I’m not sure, in fact, that a single state would apply for a waiver on the treatment of people with pre-existing conditions, even the one I’d like them to apply for, if Graham-Cassidy were to pass. Thanks to Senator McCain, Rand Paul, and others, I suppose we are unlikely to find out.