When you buy an insurance policy, it usually pays to read the fine print, and that should go double for lawmakers when they consider whether to vote for a piece of legislation that restructures the insurance markets in the United States. For example, a little-noted part of the most recent version of the Senate GOP’s Better Care Reconciliation Act would make it possible for consumers to purchase bare-bones insurance coverage but would penalize them if they sought to upgrade to a better policy.
The bill has been through several versions over the past few weeks, and the most recent iteration of the supposed replacement for the Affordable Care Act includes a provision pressed by Texas Sen. Ted Cruz. Among the Republicans who believe that early versions of the BCRA were not sufficiently conservative, Cruz said that his amendment would boost the cause of consumer freedom.
The amendment would allow insurance companies to sell the kind of bare bones insurance coverage that the ACA made illegal. The plans would have low premium payments but would come with high deductibles and other provisions, including annual and lifetime limits and refusal to cover some services, that had been made illegal under the ACA. From the insurers’ perspective, the only catch was that they would have to offer at least one ACA-compliant plan to the same population to qualify to sell the skimpy plans.
The ostensible point of the Cruz plan was to promote “freedom” by allowing people to buy cheap insurance if they want it. Politically, it would help the GOP achieve one of its primary goals -- bringing down average insurance premiums. However, it was always an open question whether independent analysts, including the all-important Congressional Budget Office -- would consider people with insurance that offers little in the way of protection from serious financial disaster to be truly “covered.”
It turns out that when one takes the time to read the actual legislative language of the bill, that the GOP has largely answered that question itself.
In doing away with the ACA’s individual mandate, the GOP recognized that it would create an incentive for healthy people to avoid purchasing coverage until they were sick. To address that free-rider problem, the bill needed some sort of incentive to get people who don’t receive health insurance coverage as a benefit tied to employment, and who aren’t covered by a government plan such as Medicare or Medicaid, to go out and buy policies on the open market.
Lawmakers settled on a penalty structure. If the BCRA were to become law, a person who applies for coverage in the individual market and who cannot show that he or she has had 12 months of continuous coverage (defined as having no breaks in coverage longer than 63 days) would face a six-month waiting period before an ACA-compliant plan would be required to take effect.
However, the legislative language also specifies that bare-bones policies like those allowed by the Cruz amendment do not count as being “covered.” For purposes of calculating whether a person has carried “continuous coverage,” the bill states, such a plan “shall not be deemed creditable coverage.”
On its face, this reads like an implicit admission that the latest version of the BCRA would allow insurers to sell policies of such low quality that, even for purposes of the GOP’s own bill, can’t really be considered insurance.
It’s always smart to read the fine print.