“Build Back Better” expanded ACA subsidies will hurt those with pre-existing conditions
The large spending bill moving through Congress proposes to permanently expand Affordable Care Act (ACA) subsidies, also known as Obamacare subsidies, to make coverage “more affordable.” While the goal to improve affordability is laudable, the nonpartisan Congressional Budget Office (CBO) recently confirmed the proposal carries massive unintended consequences for those with pre-existing conditions. When looking at all of the health provisions in the bill, CBO projects that roughly three million Americans would lose their private employer insurance. These folks would have no choice to stay or keep a plan they like. Those plans would be dropped.
As Congress and Senator Manchin consider ways to trim the massive spending bill down, these health coverage provisions should be the first to go. They’re simply not ready for primetime.
The fact is, losing job-based coverage will impose a substantial burden. That’s because, generally, private employer coverage is better for those with pre-existing conditions than ACA exchange plans. Instead, ACA plans tend to limit choice to only certain doctors, and patients have to pay more before the insurance kicks in.
Let’s give some specifics. The most popular health plan employers offer, according to the Kaiser Family Foundation, is something called a Preferred Provider Organization. These plans provide the broadest networks and allow patients to see specialists without a referral, allowing someone with a pre-existing condition to find the right doctor.
As open enrollment for 2022 ACA exchange coverage starts on November 1, these plans, unfortunately, are not available to West Virginians on HealthCare.gov. New insurers would need to enter West Virginia to start offering this product, which is highly unlikely.
Plans that protect patients from large out-of-pocket expenses are also not available. Each plan sets a maximum a patient would have to pay in a year to see in-network providers. They call this the maximum out-of-pocket (MOOP). This does not include the cost of premiums. The lowest MOOP available in West Virginia for 2022 coverage is $6,500. By contrast, Kaiser finds that the MOOP for employer coverage is often less than $2,000 and averages around $4,000. Thus, passing the spending bill would mean West Virginians with pre-existing conditions, and everyone else who has their employer coverage canceled, will be far worse off than before. They’ll be left with fewer provider options, and higher costs to see them.
Imagine how this impacts a 40-year-old woman with diabetes who gets coverage at work. She sees her doctor regularly to properly manage her diabetes, and her medications mean that she maxes out her insurance every year. She’ll likely pay an additional $2,500, if not $4,500 every year out of her wallet under the new bill. On top of that added expense, her long-time, trusted specialists may not be available in her narrower network, forcing her to switch to new doctors. If she wanted to stay with her current doctors, she may have to pay for that care herself.
This disruption doesn’t have to happen, so long as Congress removes this section from the final bill. At the end of the day, the result of these new subsidies is an additional $210 billion of deficit spending that mainly lines the pockets of insurance companies.
After Obamacare kicked off in 2014, monthly premiums in West Virginia skyrocketed from $404 in 2014 to $986 in 2020—a 144 percent jump.
The design of the ACA subsidies fueled these premium hikes because the subsidies go up dollar-for-dollar with premium increases. This keeps premiums stable for subsidized enrollees, but essentially gives insurance companies a blank check to keep increasing costs. Put another way, insurers get rewarded by raising premiums.
This is clearly a broken system. Rushing to expand ACA subsidies without making any meaningful reforms will only lead to higher costs.
What should Congress do instead? Three things.
First, Congress should switch ACA subsidies to a fixed amount based on what a patient can afford on their income, not on whatever amount the insurer wants.
Second, Congress should create a reinsurance program that funds a portion of high-cost claims. Similar state programs have proven to lower premiums, without undermining insurers’ incentives to control costs.
Finally, Congress should give insurers more flexibility to design tailored health plans for those with pre-existing conditions.
These policies work to deliver a more competitive, affordable market without forcing patients off job-based insurance. It’s time for Democrats and Republicans to begin working together.
This article originally appeared at Forbes.com.