As Senate Republican leaders continue to craft their bill to repeal and replace the Affordable Care Act (ACA), most attention has been focused on the number of individuals who would lose coverage if the legislation is enacted. To be sure, the ACA coverage expansions—through Medicaid and subsidized Marketplace plans—have been a lifeline for millions of people, particularly those who are low income, and have reduced the number of individuals without coverage to record lows. But the legislation that passed the House and the bill now under consideration in the Senate could also affect the more than 150 million people with employer-sponsored insurance (ESI) who gained federally guaranteed protections against catastrophic costs.
Earlier this year, I wrote about ACA reforms that apply to employer-based plans. At the time, we didn’t know yet what GOP repeal plans would retain of the ACA and what would be lost. Now, with the bills under discussion, we know more about what’s at risk for those with job-based plans.
What protections can people with ESI hope to retain?
Both the House-passed American Health Care Act (AHCA) and the Senate’s Better Care Reconciliation Act (BCRA) leave untouched the requirement that job-based plans cover recommended preventive services without cost-sharing, the prohibition on excluding coverage for pre-existing conditions, and the right to appeal your plan’s denial of care to an independent expert reviewer. The bills also retain the requirement that plans that cover dependents must make that coverage available until they turn 26. However, this latter protection could become illusory. Both bills repeal the requirement that large employers offer coverage to employees and their dependents. Thus, the right to keep a child on a parent’s plan until they turn 26 can only be exercised by those with employers willing to continue offering dependent coverage.
What are the risks for people with ESI who have pre-existing conditions?
Now let’s look at what might be lost. The biggest risks are for employees with pre-existing and chronic conditions because they can no longer count on comprehensive benefits and the ACA’s protections against catastrophic costs that are tied to those benefits. Both the House and Senate bills allow states to waive the essential health benefits (EHB), the ACA requirement that individual and small employer plans cover 10 categories of services, including services often excluded from coverage prior to the ACA. For people who work for small businesses (fewer than 50 workers), a waiver from EHB would mean skimpier coverage that may exclude key services such as prescription drugs, maternity care, or mental health treatment.
Additionally, employees of both large and small employers could lose the ACA’s protections against catastrophic out-of-pocket health care costs. These important financial protections apply to people enrolled in individual, small business, and large employer plans. Under the ACA, health plans are barred from placing an annual or lifetime dollar limit on coverage of essential health benefits. They must also cap the amount individuals are expected to pay out-of-pocket each year for essential health benefits (currently the maximum is $7,150 for an individual plan and $14,300 for a family plan).
Allowing states to waive EHB puts at risk these financial protections for those in employer plans. For example, if a state chooses to drop prescription drug coverage from EHB, employees could face annual or lifetime caps on their drug coverage, and unlimited financial liability for drug cost-sharing. For individuals with high-cost or chronic conditions, like a complicated pregnancy, cancer, or diabetes, a rollback of covered benefits would mean exposure to out-of-pocket costs that might force them to choose between forgoing needed care and racking up debilitating debt.
Threats to entrepreneurship
Beyond these key protections, the ACA established a guarantee of coverage even for those working people who choose to work for themselves. Both the House and Senate bills put that guarantee at risk, too.
Under the ACA, someone who wants to leave their job to start their own business can do so without having to worry about losing coverage or being charged more for insurance because of a pre-existing condition. Additionally, for those whose incomes qualify, the ACA makes premium subsidies available to help defray the cost of premiums.
Under the BCRA, the ACA’s premium subsidies are cut by $424 billion. Someone who is self-employed and making between 350 and 400 percent of the federal poverty level (between $42,210 and $48,240 annually) will lose eligibility for premium subsidies. The value of the coverage will also be less, as BCRA’s premium subsidies will be pegged to plans with significantly higher deductibles ($6,000 or more) than under the ACA.
Threats to retirement
The ACA also guarantees coverage to those who retire before they turn 65 and become eligible for Medicare. One in four marketplace enrollees are 55 or older, and older individuals represent up to one half of all marketplace enrollees who receive premium tax credits, depending on the state. Both the House and Senate bills would significantly increase costs for older individuals and force some people to work longer than they had planned to, in order to maintain health insurance until their Medicare kicks in.
The GOP proposals would allow insurers to charge older individuals up to five times the premiums they charge to younger individuals, leading to some older individuals paying over $25,000 more in premiums than required under the ACA. Furthermore, early retirees who qualify for federal financial help will find it may not go far enough to make coverage affordable. The fixed dollar tax credits in the AHCA give older individuals just two times the help given younger individuals, even though they would be charged up to five times more in premiums. Similarly, the BCRA skews premium help toward younger individuals and expects those 60 years of age or older to pay more than 16 percent of their income toward premiums. Furthermore, under both bills’ provisions giving states the option to waive EHB, early retirees leaving comprehensive job-based plans will find that individual policies covering the services they need are scarce or exorbitantly expensive.
As Congress continues to debate which ACA provisions to wipe out or rewrite, it’s worth watching what the legislation will mean for access to adequate, affordable coverage. The changes under consideration will affect not just those who rely on Medicaid or marketplace plans, but also the 150 million and more of us who count on good coverage at work.