Graham-Cassidy 2.0: Taking Insurance Protections Out of the Individual Market

Earlier today, Republican Senators Lindsey Graham (SC) and Bill Cassidy (LA) updated a draft bill to repeal and replace the Affordable Care Act (ACA). This new version of the Graham-Cassidy bill makes numerous technical changes that continue to place health care for the roughly 90 million consumers who rely on the individual health insurance market or Medicaid at risk. The latest draft bill poses great dangers to the individual health insurance market protections under the ACA.

The current Graham-Cassidy draft creates block grants to states to replace the coverage expansions in the ACA including Medicaid expansion, premium tax credits, cost-sharing reductions, and the Basic Health Program. Under the block grants, states can waive some of the most important consumer protections in the ACA including:

  • Essential health benefits (EHB)
  • Coverage of preventive services without cost-sharing
  • Limits on annual out-of-pocket costs
  • Rating protections
  • Single risk pool

As states implement the “flexibility” provided in Graham-Cassidy, benefits will be cut, premiums for many individuals will rise, and insurance protections will be lost. This is an overview of some of the ways Graham-Cassidy will weaken insurance in the individual market for women, people struggling with chronic illness and addiction, older individuals, and others.

Cut Protections for Women

Graham-Cassidy throws a bone to women by continuing the prohibition on gender rating – the practice insurers used to use to charge women more than men for health insurance. But that is where the protections for women end. Under Graham-Cassidy, we can once again return to an individual insurance market that regularly excludes coverage for maternity services because states can waive the EHB requirements. Prior to the ACA, only 12 states required plans cover maternity services leaving many women without insurance coverage for their pregnancies. All of the important preventive services that plans must now cover without cost-sharing – birth control, well-woman visits, mammograms, breastfeeding support and supplies, and more – could be eliminated from individual market plans or be covered only after an enrollee meets her deductible. Being a woman may once again be a pre-existing condition. There are some inconsistencies in the latest draft, but the bill appears to allow for insurers to charge higher premiums to people based on their health status, which means women could be charged more for being pregnant, having a past cesarean section, a history of breast cancer, or a diagnosis of chronic condition such as lupus or rheumatoid arthritis. The bill may even allow a plan to raise rates on a woman at re-enrollment because she is pregnant.

Increased Costs for People with Chronic Illness

People with chronic illness will lose many of the protections they had under the ACA. Without limits on out-of-pocket costs, people needing high cost treatments such as HIV medications, transplant services, or immunoglobulin therapies could face tens of thousands of dollars in cost-sharing each year. The elimination of the EHB requirements means some of these services many not even be covered or will be covered but with annual or lifetime limits. Allowing states to eliminate a requirement that insurers have one risk pool for the individual market means that insurers can segment their products so that people with chronic illness enroll primarily in plans that have their own risk pool. This means rates for the plans designed for people with chronic illness will be higher – likely significantly higher – than rates for plans that have primarily health enrollees.

Eliminating Substance Use Treatment Coverage

At a time when we are facing an unprecedented opioid addiction crisis, Graham-Cassidy would allow states to eliminate the requirement that individual market insurance plans cover substance use treatment. About one third of people receiving coverage in the individual market before the ACA had no coverage for substance use treatment. Allowing states to eliminate or weaken the EHB requirements could worsen the opioid epidemic as plans return that do not cover inpatient or outpatient behavioral health services and substance use disorder treatment or exclude coverage for medication assisted treatment. In addition, if a state eliminates the preventive services requirements, adolescents may lose coverage of alcohol and drug assessments that may catch misuse in early stages.

Charge More to Older Individuals

The ACA limits the ability of insurers to vary rating based on age to a ratio of 3:1. Graham-Cassidy goes beyond many other proposals to repeal and replace the ACA to allow states to place no limits on age rating. Under the 5:1 age rating ratio proposed in other bills, people over the age of 50 could pay hundreds of dollars more in premiums each month. Without any limitations, plans could charge thousands of dollars more a year to older Americans seeking coverage in the individual market.

And more…

There are many more ways that Graham-Cassidy will weaken health care access and eliminate important coverage protections. The bill puts Medicaid for millions of Americans at risk and shifts financial risk of increasing health care costs entirely onto the states. States will be allowed to shift financial assistance from the lowest income populations to people with higher incomes, potentially providing assistance regardless of financial need. States that took the effort to expand Medicaid will face the largest cuts in federal funding, basically being penalized for expanding coverage. While Graham-Cassidy provides “flexibility” to states, the funding cuts will actually limit state options and the ability to provide adequate and affordable coverage.

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