The Republican health-care bill could cut benefits in employer-backed plans, too

Better hope your insurer isn’t from a state that opted out of ER coverage!
Better hope your insurer isn’t from a state that opted out of ER coverage!
Image: AP Photo/Paul Beaty
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The health-care bill passed by Republican lawmakers has gotten attention for how it would change marketplaces for individual insurance and cut subsidies for low-income Americans.

Now, it appears that efforts to overhaul the health-care system could also remove benefits from those with insurance plans sponsored by their employer, leaving them on the hook for huge costs in the event of a major illness.

With 49% of Americans receiving health insurance from their employers, it is the most popular avenue for coverage—and the most politically sensitive.

The original Affordable Care Act (ACA) enacted by the Obama administration called for increasing taxes on these plans as a cost-cutting incentive. The move has been virtually killed by bipartisan agreement, delaying the application indefinitely.

Now, House speaker Paul Ryan and president Donald Trump are trying to repeal the ACA and replace it with the American Health Care Act, a bill that cuts health-insurance subsidies and ends the requirement to obtain health insurance. Forecasters predicted that it would result in 24 million people losing coverage.

That bill originally didn’t have enough votes from the Republican majority to pass—it wasn’t extreme enough for hardliners nor moderate enough for moderates. Now, it has been further changed to win over conservative hardliners. A new amendment would allow states to opt out of requirements imposed by the health-care law, particularly that they provide 10 essential types of coverage for fundamental issues ranging from pre-natal care and check-ups to pediatrics and prescriptions, with no annual limits or life-time cap.

If states opt out of these requirements, insurers could lower premiums by pushing more of the risk (and eventual cost) onto individuals who purchase barebones plans. It would also allow them to refuse coverage to people with pre-existing conditions. While the president has promised that his health-care overhaul will provide universal coverage, Republicans say they are simply giving states the choice to opt out, so their bill does not violate his pledge.

Health experts say the amendment would also allow insurers who sell group plans to go on a regulatory shopping trip around the country. If they adopt the standards of a state that has opted out of essential coverage areas, they could limit their coverage, a move currently forbidden by the Affordable Care Act.

A staffer on the committee that wrote the bill tells Quartz that the Trump administration could prevent large-group insurers from lowering their standards, with an administrative order that takes away their ability to choose their own set of essential benefits. Yet a Brookings Institute analysis of the issue notes such a move would not line up with Trump’s executive order that Obamacare administrators “provide maximum regulatory flexibility.”

It’s not clear whether employers would take advantage of this opportunity to offer cheaper, riskier coverage; before the ACA passed, more than half of companies put no cap on the benefits they offered. Indeed, many employers use generous benefits to attract employees. On the other hand, jurisdiction shopping between states by financial industry players suggests that insurers will come under pressure to find the most permissive regulator.

The bill, which is still opposed by doctors, nurses, retirees, and hospitals, now moves to the senate, where a more moderate mix of lawmakers has expressed skepticism about the implications of the legislation.