Health plan leaders are "giddy" over repealing the health insurance tax, but believe that losing the individual mandate will deprive them of the much-needed healthy, young customers.
The American Health Care Act would bring welcome changes to the insurance industry, but also has health plan executives worried about how repealing the individual mandate will affect their mix of customers.
Payers are concerned that a repeal of the individual mandate provision in the current law will leave them with too few healthy customers.
This is one of the problems that caused many plans to leave the Affordable Care Act market exchanges, notes Public Affairs Director Jennifer Walsh with the law firm of Foley & Lardner in Washington, DC.
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She previously was vice president for federal government affairs at a top 20 Fortune 500 healthcare company and works closely with former U.S. Congressman Dennis Cardoza (D-CA), who chairs the firm's public affairs practice.
Walsh has been watching reactions of health plan leaders since the AHCA was released and she says they are skeptical about how much the bill would reduce healthcare costs, and worried that parts of the bill could be detrimental to the insurance industry.
The main concern of health insurers, she says, is that the AHCA would eliminate the individual mandate in favor of a financial penalty, sometimes steep, for those who go without insurance for a time and then buy a new policy.
"Losing the individual mandate is a problem because they think they won't have enough healthy people incented to buy insurance without that mandate," Walsh says.
"But they've also always felt that the individual mandate was kind of weak the way it was written [into the ACA]. With the ability to put a 30% hike on your premium if you drop coverage and then try to get back in, some plans think that's good. But some plans think it doesn't go far enough to make up for losing the individual mandate."
Health plan executives are responding favorably to the bill's structure for health savings plans, she says.
"They generally love the health savings account model, so they're responding well to the bill's proposal for moving away from help with premiums to an advanceable tax credit. They're both subsidies, more or less, but they like this move to put more money in health savings accounts," Walsh says.
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"Most of the plans have fared pretty well with Medicaid expansion, so they're not thrilled that Medicaid expansion would be phased out over time. However, because Medicaid will ultimately become a capitated rate to the states or a block grant, I really see that as ultimately states having to put their Medicaid patients in managed care. That would be a good thing for the plans."
Health Insurance Tax Repeal
The bill's plan for repealing the health insurance tax has health plan leaders "absolutely giddy," Walsh says. Eliminating the tax has been a priority for health plans since Obamacare was introduced, but the industry always felt the issue took a back seat to repealing the tax on medical device manufacturers, she explains.
The Republican bill is a big improvement in that regard, she says.
"They're not getting everything they want, but overall, they're pretty satisfied," Walsh says. "You're not going to hear them say that because it's not their style. They're not going to negotiate against themselves before all is said and done. But they definitely see it as an improvement over the Affordable Care Act."
Gregory A. Freeman is a contributing writer for HealthLeaders.