HHS: Allowing non-ACA compliant insurance lowers premiums, assumes $12k deductibles

Enrollment in the individual market would increase while premiums would decrease under Sen. Ted Cruz’s “Consumer Freedom” amendment, according to an HHS analysis obtained by the Washington Examiner.

The amendment, included in the now-scrapped healthcare bill crafted by Senate Republicans, would allow insurers to offer plans which don’t comply with Affordable Care Act (ACA) regulations, like what benefits must be covered and whether health status can be taken into account for a customer’s premiums, as long as they also offer ACA-compliant plans on the exchanges. Insurers came out strongly against the proposal, arguing it would separate the law’s single risk pool and leave only people with pre-existing conditions in compliant plans, sharply increasing their premiums.

HHS, however, came to different conclusions. The report said in 2020, high-risk patients likely to sign up for ACA-compliant plans would pay an average monthly premium of between $370 and $430. Healthier customers likely to choose non-ACA compliant plans would pay between $230 and $290 per month. Under the ACA, it estimated premiums in 2020 would be between $570 and $630.

The analysis also said the Cruz plan would increase individual market enrollment to 16.1 million by 2024, above the ACA estimate of 13.9 million. Premiums would be lower and enrollment higher, the report said, if the ACA-compliant and non-compliant were split into two separate risk pools, which was also opposed by insurance groups.

The non-ACA compliant plans, however, are assumed to have deductibles and out-of-pocket limits of $12,000. The analysis doesn’t specify whether this would be an individual or family plan. If it for an individual, it would be far higher than the $6,092 average deductible for ACA plans in 2017. The average deductible for employer-sponsored plans in 2016 was $1,478.

Before the Senate’s healthcare bill, the Better Care Reconciliation Act (BCRA), was tabled, the Independent Journal Review had reported Republicans could rely on an HHS analysis of the bill rather than one from the Congressional Budget Office. The CBO had estimated earlier versions of Republican plans to cause between 22 and 24 million more people to become uninsured while potentially destabilizing the individual market.

HealthExec had asked Sen. Dick Durbin, D-Illinois, whether such an analysis could be trusted, given that HHS is run by Secretary Tom Price, MD, a vocal opponent of the ACA.

“I worry about people who can’t win a ballgame and want to change the rules and that’s what we hear from the Republicans,” Durbin said.