Republican plan: Lower premiums for some, but less coverage

Supporters contend that the American Health Care Act proposed by Republicans overall would lower the cost of health insurance sold directly to individuals and families.

They usually don’t mention the reason: The health plans on average would have higher deductibles and provide less coverage.

That’s partly how five executives with health insurance companies — four based in Wisconsin and one that does business in the state — see the market for insurance eventually evolving under the proposed Republican plan.

“There’s this promise that insurance is going to be less expensive,” said Cathy Mahaffey, chief executive officer of Common Ground Healthcare Cooperative in Brookfield. “How is that going to be accomplished?”

Insurance companies will lower premiums, she said, by providing less coverage.

“That’s the method we always have used,” Mahaffey said.

The cost would be less because people will be buying less insurance, and that’s not the same as lowering the actual cost of insurance, she said.

“If we want to reduce the cost of insurance,” she said, “we’ve got to start talking about the cost of medical care.”

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The proposed Republican plan also could lower premiums because fewer older people, who have higher medical bills, would buy health insurance, the insurers said.

The plan would allow health insurers to charge older people up to five times more than younger people as opposed to the current cap of three times under the Affordable Care Act.

The higher cap is in line with the actual cost of insuring people who are 55 and older, said Rob Plesha, an actuary and vice president who oversees the small group and individual markets for Quartz Health Solutions, which manages Gundersen Health Plan and Unity Health Insurance in Sauk City.

However, the Republican plan also would provide tax credits tied to a person’s age and not the cost of insurance. The tax credits — $3,500 for people 50 to 59; $4,000 for people 60 and older — would not offset the increase in premiums.

As it now stands, the cost of insurance would jump for older people — and, as a result, fewer of them would buy insurance.

“The age composition (of the plans) changes dramatically,” said Marty Anderson, chief marketing officer of Security Health Plan in Marshfield,

However, an amendment was added Monday night that featured an unusual approach: language paving the way for the Senate, if it chooses, to make the bill’s tax credit more generous for people ages 50 to 64. Details in the documents released were initially unclear, but one GOP lawmaker and an aide said the plan sets aside $85 billion over 10 years for that purpose.

About 57% of the people who have bought health plans from Security Health are over 50 – in part because the health plan’s market is largely rural and has an older population.

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The Congressional Budget Office last week estimated that the cost of health insurance for someone 64 would increase 20% to 25% by 2026 — and Anderson believes the increase could be even higher if older people didn’t leave the market.

That could happen.

“There are sick people who will go to great lengths to buy insurance,” said J. Mario Molina, a physician and president and chief executive of Molina Healthcare.

The CBO report released last week also found that premiums would be lower under the Republican plan because health plans would provide less coverage and because fewer older people would have insurance.

All this, though, is in flux.

The House is making changes to the initial plan, and the Senate is expected to do the same.

President Donald Trump conducted closed-door meetings with Republican legislators Tuesday, trying to win enough support for the House to approve the bill on Thursday.

“This is our long-awaited chance to finally get rid of Obamacare,” Trump said at a rally in Louisville, Ky., Monday night. “We’re going to do it.”

Parts of the Republican plan — particularly enabling health insurers to offer lower-cost health plans that hold more appeal to healthy people — are needed to stabilize the market, several insurance executives said.

“We currently are in an unstable market,” said Coreen Dicus-Johnson, president and chief executive of Network Health in Menasha.

As a generalization, younger people who are healthy care more about premiums and are more open to buying health plans that cover only major medical expenses than older people.

“It’s not a one-size-fits-all in health insurance,” said Mahaffey, of Common Ground Healthcare. “It’s just not.”

The Affordable Care Act forces younger people to buy more insurance than they may want or need, effectively subsidizing the cost of insuring older people. As a result, too few young people bought insurance.

That doesn’t make for a stable market, said Plesha, of Quartz Health Solutions.

The challenge is finding a way to get more healthy people to buy health insurance while ensuring that older people won’t be forced out of the market.

How the Republican plan — at least in its current form — would do that isn’t clear.

The Republican plan also would end the additional subsidies that are available to people with low incomes — such as someone making less than $11.50 an hour, or $24,000 a year — to offset deductibles and other out-of-pocket expenses.

People in that income group are the most likely to lose their health insurance because the tax credits under the Republican replacement plan are less than they receive under the Affordable Care Act.

That said, money included in the Republican plan to help stabilize rates could help lower costs for people who are older or who have very low incomes.

“It all depends how that program is structured,” said Anderson, of Security Health.

States would decide how to use the money, and how the plan would work isn’t clear.

What is clear is the proposed plan would bring widespread changes to the market for health insurance sold directly to individuals and families. But how the changes will play out is anyone’s guess.

“It is not clear that these changes will stabilize the market,” said Dicus-Johnson, of Network Health. “There still are a lot of questions.”

However, she and the other executives believe that fewer people — particularly older people — will have health insurance under the Republican plan.

“And that’s a problem,” Dicus-Johnson said.

The Associated Press contributed to this report