Over the last few years, Republicans correctly identified the thing Americans hate most about the health insurance system: out-of-pocket costs. Rising premiums are bad enough, but what's really maddening is when you have insurance, but you still have to keep shelling out for going to the doctor. Many insurance plans, particularly on the individual market, have deductibles of $5,000, $8,000, even $12,000 or more. It makes you feel like you're being screwed: We pay hundreds of dollars every month for this plan, and now that my kid broke his arm our insurance won't pay a dime for his care? That's not to mention copays, coinsurance, and all the other creative ways insurers have devised over the years to pay as little as possible when you actually try to use the insurance you bought from them.
As time went on and high deductibles became a central part of the insurance industry's profit strategy, Republicans homed in on the displeasure they create as a way of arguing that the Affordable Care Act is a disaster that simply must be repealed. "Our health-care plan will lower premiums and deductibles — and be great health care!" President Trump tweeted last month. Ask any Republican what's wrong with the ACA, and they'll be sure to bring up those dastardly deductibles.
So their health-care plan brings them down, right?
Well, no. Quite the contrary, in fact: The Republican plan will cause deductibles to skyrocket. And that's by design.
Before we get into how the plan that the Senate could pass this week will increase deductibles and other out-of-pocket costs, it's important to understand that boosting those costs was always how Republicans envisioned their preferred health-insurance system would work. They used to refer to it as "skin in the game" — once consumers were directly responsible for paying out of pocket, the magic of the market would take hold, they'd start shopping around for better prices, and that would push costs down.
In the real world, it doesn't work — people don't shop around for their treatment, just one of many ways health care is entirely unlike any other commodity. But Republicans believe they will, because their theology tells them that the market can solve any problem. They also want people to have the "freedom" to buy plans that are as skimpy as insurers can offer, plans that cover very little (and will have lower premiums because insurers will rarely have to make good on the promise of the insurance).
That's why the plan Republicans are now considering will allow states to opt out of the "essential health benefits" requirement of the ACA, which requires insurers to cover key health needs. One of the little-understood consequences is that such state waivers could lead to the return of lifetime caps on coverage — even for those who are on employer-provided plans — which for so many people used to make a serious illness or accident turn into a financial calamity as well.
But that's just the beginning. The GOP plan allows insurers to charge more to older enrollees. It lowers the subsidies that low- and middle-income people now get, pegging them to the cost of cheaper plans — the ones with higher deductibles. Under the ACA, your subsidy was calculated based on the cost of a "silver" plan, one with an actuarial value of 70 percent, meaning the typical customer would end up paying 30 percent of the cost of their health needs, while the insurer would pick up 70 percent. Under the Republican plan, subsidies are pegged to plans with an actuarial value of only 58 percent, or roughly what a lower-level "bronze" plan might cover. If you've shopped around on the exchanges, you know that those are the plans with extremely high deductibles. Under the Republican proposal, that's all many people would be able to afford.
That's not all. Under the ACA, insurers now cover out-of-pocket costs (like copays and deductibles) for lower-income customers; they then get reimbursed by the government. These are the "cost-sharing" payments you might have heard of, since Republicans filed suit to challenge the way the Obama administration was distributing them. The Republican plan eliminates the cost-sharing payments after 2019, meaning many people with modest incomes will suddenly be facing huge out-of-pocket costs.
And then of course there's what they'd do to Medicaid. Not only would they eliminate the ACA's Medicaid expansion, meaning millions of low-income people would no longer have any coverage at all, they'd also transform the program's rules, allowing states the "flexibility" to kick enrollees off and cut back benefits. That means vast numbers of the country's most vulnerable would not be able to get insurance at all, and if they could, the only insurance they could afford would be the kind with high deductibles.
When the Congressional Budget Office released its assessment of the Senate plan on Monday, it confirmed the damage: 22 million more people without health coverage, fewer benefits, higher deductibles, greater out-of-pocket spending. The offerings would be so expensive and unappealing that "few low-income people would purchase any plan."
Put it all together, and it adds up to quite a feat: Republicans took the thing that makes Americans maddest about the current state of health insurance, and plan to make it much, much worse. That is, if they can pass their bill before enough people realize what's happening and rise up against it.