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Senate Republican leadership is expected to release an updated version of its healthcare bill Monday, closing a loophole that healthcare experts said would have hurt the insurance market.
The discussion draft of the bill, named the Better Care Reconciliation Act (BCRA), released Thursday was missing an important piece that experts say would be needed to stabilize the marketplace and encourage enrollment in the insurance marketplace.
To avoid adverse selection in the individual insurance market, the legislation needs a continuous-coverage provision to keep healthy people buying insurance instead of waiting until they’re sick. The new version of the legislation is expected to add that feature.
Healthier people help to pay into the pool and ensure that costs for everyone stay lower. To make sure that the market isn’t full of exclusively sick people – resulting in higher costs and financial losses for insurers – there needs to be some reason for healthy people to sign up. The most effective way to do so is not only the carrot of coverage benefits, but also a stick to punish those that do not have coverage.
Under Obamacare, this stick was the tax penalty for not having coverage. In the House Republican bill, people that did not maintain coverage the year before could have their premiums raised as much as 30% on top of normal costs as a penalty.
The Senate’s updated version contains a provision that, for six months, freezes out anyone signing up for insurance that did not maintain coverage the previous year.
This is designed to keep people in the pool, but experts say it could also lead to increased costs. People still may not get coverage until they are sick, and faced with a six month delay that could just opt to go to the emergency room in the interim period.
This waiting period would likely help to keep healthy people in the market, but it could hurt people that get sick.
“A waiting period may get some healthy people to enroll,” tweeted Larry Levitt, senior vice president at the Kaiser Family Foundation, a nonpartisan health policy think tank. “More significantly, it stops uninsured sick people from immediately using services.”
In the end, said Levitt, it may not even achieve the desired effect.
“I doubt this encourages many healthy people to sign up,” he said. “That requires a lot of foresight among people not very focused on insurance.”