The Better Care Reconciliation Act Isn't Better or Caring

I have at least two members of my immediate family who would be affected directly by the so-called Better Care Reconciliation Act (BCRA). It could cost them – and others like them – their money and their lives.

The Senate bill released this week has two important improvements over the House American Health Care Act.

First, like Obamacare but unlike the House version, it requires insurers to continue to offer coverage in the regular marketplace to people with pre-existing conditions.

Second, it corrects a major flaw in the Affordable Care Act – as interpreted by the Supreme Court – by extending health insurance subsidies to everyone below poverty who is ineligible for Medicaid. Today, the poorest pay the same as the richest for health insurance, because the subsidies are limited to those between 100 and 400 percent of poverty.

That’s the good news. But it all quickly unravels after this.

Here are ten reasons why.

First, while pre-existing conditions are covered, existing conditions are not. The essential benefits have been eliminated. This means that while mental illnesses or cancers may not disqualify you from obtaining insurance, the insurance you get might not cover these conditions. You might be able to buy insurance, but it won’t necessarily cover the services you need.

Explain that to my daughter with Stage 4 cancer.

Second, the legislation creates a new benchmark standard for how much insurance companies have to pay out in benefits. It changes the required actuarial value of the benchmark plan in every state, and eliminates the universal minimum loss ratio requirements.  The details of these changes take some time to explain, but the bottom line is this. Insurers will pay out a whole lot less for care than they do today, and the difference could amount to an increase of out-of-pocket costs – for everyone – of at least 40 percent.

So are insurance companies making out like bandits under this plan?  Not really, and the third reason explains why.

There is no mandate that anyone have insurance. Coupled with the requirement that insurers cover pre-existing conditions, the only logical marketplace result is this. No one will buy insurance until they become sick, leading to the largest stampede of “adverse selection” in history.

There’s more.

The only way for insurers to protect against people with cancer buying insurance products that cover cancer, and people with mental illnesses buying insurance products that cover mental illnesses, etc., is to offer products that don’t cover chronic diseases. People will have to pay those bills out of pocket, and providers will have to write off what people can’t pay – after they’re bankrupted first. That’s the fourth reason this system will unravel.

Unfortunately, the flood continues after that.

The Medicaid program is being cut back dramatically. By law, the federal Medicaid share will no longer keep up with inflation related to long term care for seniors and people with disabilities.  A private long term care insurance program might have offset some of this, but long term care insurance isn’t part of the Senate plan.  So, the sixth reason why this legislation won’t work is that the long term care system as we know it will slowly unravel. In a couple of decades we’ll see a lot of people in their 70s, 80s, and 90s with literally no place to go.

The Medicaid cut also offers the seventh reason our system will unravel. Low income people – who often have higher health costs than the general public – are being pushed from Medicaid into regular private insurance markets.  This means that sicker – not healthier – people are going to be in the market for private insurance.

My son with serious mental illness will eventually be among them. Covering him and people like him in the private insurance market will raise everyone’s rates – even if your income puts you squarely in the middle class and you’re fortunate enough to be pretty healthy.

Which brings us to the eighth reason.

Once you earn 350 percent of poverty – that would be around $42,000 for a single person – your tax credit subsidy disappears under this bill. And the subsidy up to that level is less generous than it has been under Obamacare. So, for everyone up to 350 percent of poverty, what you pay for insurance will go up. And for everyone between 350 and 400 percent of poverty, you’ll fall off the side of a cliff.

Tired yet? There’s still more. The ninth reason is that the Senate did not correct the problem rates for “young elders” – early retirees not yet eligible for Medicare. Those rates will still skyrocket – to five times those paid by younger people, no matter how healthy you may be.  

And the tenth reason is this. Many millions more will still become uninsured.

The BCRA wants your money and your life. Is there really no way we could have done better than this?