mcconnell-e1500409627537-294x300-4178448Washington lawmakers are contemplating fallback healthcare legislation that risks repeating one of Albany’s most notorious policy blunders – and triggering a “death spiral” in non-group insurance markets nationwide.

Lacking the votes to pass a comprehensive health plan, Senate GOP Leader Mitch McConnell (photo) has called for partially repealing Obamacare now, but with a two-year delay to give Republicans more time to develop a replacement.

The bill he has in mind, which previously passed both houses of Congress, would eliminate some provisions of the Affordable Care Act, including the mandate for individuals to buy coverage and the tax credits that offset high premiums for lower-income consumers.

But other, more popular provisions of the ACA would remain in place, including its requirement for insurance companies to cover pre-existing conditions, and its ban on charging higher premiums based on health status.

President Trump has tweeted his support for the repeal now, replace later approach. He and McConnell seem to think the two-year deadline would pressure more Republicans, and maybe even some Democrats, to support a replacement plan.

Already, however, several Republican senators have signaled their opposition to repeal the ACA without a replacement, raising doubt that such a bill could pass.

If such bill did become law, and were allowed to take effect, it would effectively replicate the insurance disaster that hit New York after 1992, when then-Gov. Mario Cuomo and the Legislature enacted ACA-like restraints on health plans without ACA-like subsidies or mandates for consumers.

Obliged to enroll customers with costly, chronic conditions without charging them extra, the state’s insurers had no choice but to hike premiums across the board. Health customers responded by dropping their coverage, leaving behind a sicker risk pool and pushing premiums up even higher.

Eventually, premiums soared as high as $100,000 a year, which only a few thousand very sick but wealthy individuals could afford to pay. It was a classic insurance death spiral, and a cautionary tale for health policymakers ever since. It ended only when the ACA took full effect in 2014.

Scoring an earlier partial repeal bill similar to what McConnell proposed, which would also roll back the ACA’s expansion of Medicaid, the Congressional Budget Office estimated that it would eventually add 32 million to the ranks of the uninsured – which was more than full repeal. The CBO further forecast that non-group premiums would jump 20 to 25 percent right away, and double over 10 years.

The lessons of New York history suggest that those grim projections are no exaggeration.

 

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

You may also like

State Offers Taxpayer-Funded Health Coverage to Unionized Home Care Workers

In a new subsidy for the health-care union 1199 SEIU, the Hochul administration is allowing the union's benefit fund for home care aides to shift some members into taxpayer-funded health coverage through the Essential Plan. Read More

Albany’s New Health Insurance Tax Comes with Few Limits

The newly enacted state budget imposes a multibillion-dollar tax on health insurance without specifying who must pay how much – leaving those basic details to be decided later by the health commissioner in negotiation wit Read More

The Wacky Math of New York’s Essential Plan

Thanks to an absurdly wasteful federal law, New York's Essential Plan is expected to continue running billion-dollar surpluses even as state officials more than double its spending over the next several years. Read More

Putting the Mission in Hochul’s Health Commission

Last week Governor Hochul answered one big question about her Commission on the Future of Health Care – the names of its members – but left a fundamental mystery unresolved:  W Read More

State Regulators Propose a $10 Fee for Filling Prescriptions

The Hochul administration is proposing to mandate a $10.18 "dispensing fee" for almost every prescription filled in New York, a change that would add billions of dollars to health-care costs statewide. Read More

What DFS Doesn’t Want To Tell You About Soaring Health Premiums

When the Department of Financial Services made its annual announcement about health insurance price increases last week, it neglected to mention one thing: how much the prices were increasing. Read More

New York’s Health Insurance Affordability Gap Grows Wider

New Yorkers paid some of the highest health premiums in the country in 2022, with one benchmark of affordability reaching its worst level yet, according to recently released federal survey of private-sector benefit plans. Read More

The Health Department’s Medicaid ‘Unwinding’ Report Leaves a Key Question Unanswered

As Medicaid downsizes in the aftermath of the coronavirus pandemic, reporting by New York and other states is missing data on an important group – outgoing enrollees who successfully made the switch to job-based insurance Read More