Consumer Protections at Risk in Senate’s ACA Repeal Bill

Consumer Protections at Risk in Senate’s ACA Repeal Bill

Under section 1332 of the Affordable Care Act (ACA), states can seek federal approval to waive certain provisions of the law that apply to insurance plans offered in the individual market. However, these waiver applications are subject to specific safeguards and a stringent review process. The Secretary of Health Human Services (HHS) has the discretion to reject requests that would reduce coverage. HHS may grant waiver requests only if states demonstrate that the proposed plan would provide coverage as comprehensive, as affordable, and to at least a comparable number of individuals as under the ACA. These safeguards prevent states from seeking to ignore parts of the ACA without an appropriate policy to support it.The Better Care Reconciliation Act (BCRA), the Senate bill that would repeal the ACA, eliminates the ACA’s safeguards and significantly weakens the waiver application review process. BCRA allows states to eliminate key consumer protections by simply showing that the proposed plan does not increase the federal deficit.

BCRA lets states seek to avoid the requirement that plans in the Marketplace provide coverage for a set of essential health benefits (EHBs), including maternity care, prescription drugs, and mental health (MH) and substance use disorder (SUD) treatment. Waiving the EHB requirement would lead to skimpier Marketplace plans that do not provide coverage for basic health care services. Individuals who need access to these services will either be unable to get covered or will find comprehensive coverage unaffordable.

States will also be able to ignore the ACA’s annual limits on cost-sharing. The ACA requires all individual plans sold through the Marketplace to limit the amount consumers and their families pay out-of-pocket for covered services. While waiving the limits on cost-sharing may lower premiums for healthy individuals, it would do so at the expense of individuals with high health care costs who would experience an increase in their out-of-pocket medical costs. States can also waive cost-sharing limits as a workaround for the EHB requirement so that even if a state keeps the EHB requirement, these benefits would be inaccessible to consumers if there is no limit on cost-sharing and insurers are allowed to dramatically increase out-of-pocket costs for basic services.

BCRA would also allow states to waive the actuarial value limits for plans being sold in the Marketplace. The actuarial value determines how much of the consumer’s health care costs the plan will cover in a given year. If states waive the actuarial value limits, insurers would be allowed to substantially increase out-of-pocket costs, like deductibles, copays, and coinsurance – disproportionately harming individuals with preexisting conditions and the elderly who rely on insurance coverage for their high medical expenses.

Finally, BCRA allows states to request waivers to permit non-qualified health plans (QHPs) to be sold in the Marketplace, directly competing with plans that must comply with all ACA requirements. This provision is similar to an amendment being proposed by Senator Cruz (R-Texas) to allow insurers to offer non-ACA compliant plans in the Marketplace. This would mean that plans with skimpier coverage and higher cost-sharing could be sold in the Marketplace to attract healthier individuals with lower health care needs and costs. Separating healthier individuals from sicker individuals would simply lead to higher premiums for people who have more health care needs.

The ACA protections at risk in the individual market are critical to ensure consumers have access to basic health care services at an affordable cost. If states are allowed to waive these provisions without appropriate safeguards in place, health care coverage would be inadequate, more costly, and harder to access. For a more in-depth analysis of BCRA’s proposed changes to section 1332, see NHeLP’s fact sheet, “The Senate ACA Repeal Bill Allows States to Erode Affordable and Comprehensive Coverage.”

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