The Trump administration’s proposed new rules for Obamacare plans next year would shift more health care costs to Americans, with much higher deductibles that could lead to greater medical bills.
Under the proposal, people who rely on the Affordable Care Act for their health insurance coverage could choose plans with much lower monthly premiums. But that could leave them exposed to medical expenses totaling thousands of dollars more than A.C.A. plans do now before their insurance would kick in.
Heading into the midterm elections, offering these new plans is one of few options open to the Trump administration to lower Obamacare premiums that do not require congressional approval. Affordability has become a campaign mantra for Democrats: Health care costs were viewed as the top economic concern in a recent public opinion poll from KFF, a health research group.
In his State of the Union address, Mr. Trump blamed “the crushing costs of health care” on the Affordable Care Act, saying the program funneled money to the big insurance companies, He advocated sending the payments directly to Americans, so they could “buy their own health care, which will be better health care at a much lower cost.”
But Congress would need to pass legislation to allow the money to be redirected or make any major changes to the program. Instead, the administration is proposing a set of rules that would allow the introduction of new plans, including those that are much less expensive than ones available today. These plans are favored by Republicans who believe people will be much better at finding care at low prices when they spend their own money for a doctor or treatment.
The administration “did what it could within the confines of the statute to increase consumers’ choice, try to keep premiums low,” said Joel White, a health policy analyst who advises Republicans.
Dr. Mehmet Oz, the administrator for the Centers for Medicare and Medicaid Services, which oversees the Obamacare markets, promoted the new proposal. “The goal is simple: lower costs, more choice, and exchanges that work as intended,” he said. The agency declined to make anyone available to discuss the proposal.
Critics of the new approach warn that consumers are already abandoning costly health insurance coverage. More than 1 million people have dropped out of Obamacare this year to date, a decline that many attribute to a decision by the Republican-controlled Congress to let enhanced subsidies expire at the end of last year.
Millions of people who depended on the subsidy cushion under Obamacare were hit with monthly premiums that were double or more what they paid last year.
Dr. Oz’s new proposal would allow one kind of health plan to raise the annual deductible to more than $15,000 for an individual and $31,000 for a family; those are much higher than current Obamacare plans. The individual deductible would be eight times the average for someone with job-based insurance.
Many policy experts expressed doubt that the administration’s proposal would reduce the high cost of health care. “Nobody wants that product,” said Amitabh Chandra, a Harvard health economist who has studied high-deductible plans. “It’s going to be a really cheap product that nobody wants.”
The proposal involves a type of plan known as a catastrophic or skinny policies. While they may be appropriate for someone who is young and healthy, a sudden emergency room visit or unexpected hospital stay could cost thousands of dollars in unforeseen bills. People with chronic medical conditions also might have to pay for much — if not all — of their care out of their own pockets.
Dr. Joseph R. Betancourt, the president of the Commonwealth Fund, which finances health care research, pointed out that people are already struggling to pay for their medical care.
“There’s no doubt that we have an affordability crisis,” he said. “As we move forward to shifting more of the burden to patients, there’s a chance to really exacerbate the crisis.”
The proposed A.C.A. rules include numerous potential changes to the Obamacare markets. Some would make it harder for people to enroll, while others would redefine which benefits must be covered by a plan — adult dental care would no longer be considered an essential benefit.
The proposal could also erode other consumer protections. Overall, the rules could result in up to two million people dropping coverage in 2027, according to the administration’s own estimates.
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The administration’s proposal would also usher in other plans that could lead to severely restricted access to doctors and hospitals. Some people could be left without a dedicated network of sources for medical services, forcing them to search on their own for care and risk sizable bills.
Insurance companies could potentially sell multiyear policies as well as plans that do not offer an established network of hospitals and doctors. Those plans would instead pay a fixed amount for a doctor’s visit or procedure, and patients would have to pay any difference in price.
Many people sticking with Obamacare are already choosing cheaper, less comprehensive plans. In California, for example, more than a third have selected bronze plans with the highest out-of-pocket costs that are eligible for subsidies. Last year, less than a fourth of Californians picked that option.
The administration’s proposal focuses on catastrophic plans, policies that were originally envisioned under the law as a last resort for those who could not afford any other coverage. People can’t use federal subsidies on them, and they had typically been available to people under 30. Before meeting the proposed high deductibles, individuals could still be eligible for some preventive services, like screenings, and have coverage for three primary care visits in a year.
Catastrophic plans have been unpopular, largely because some bronze plans are not that much more expensive.
Public comments on the administration’s new proposal generated about 50 responses so far since the proposal was introduced earlier this month. One public comment from a California resident described the situation of his son, who has diabetes and needs expensive specialist visits and treatment for his condition.
Higher deductibles would “mean that he would not be able to access these critical supplies and visits, resulting in hospitalization or death,” the father wrote, urging the government to instead reinstate the expanded subsidies so people could buy better coverage.
Others worry about creating an inferior version of insurance. “We’re normalizing hardship, and we’re normalizing catastrophe,” said Katherine Hempstead, a senior policy adviser for the Robert Wood Johnson Foundation. The new rule “is not trying to make something comparable to employer coverage,” she said.
Republicans argue that high-deductible plans will encourage people to actively shop for medical care, choosing less expensive doctors and forgoing unnecessary treatments. They consider Obamacare to be a handout to large insurers, and believe consumers should decide which doctors and hospitals they want.
Mr. White, the analyst, endorsed the plans without networks, saying that giving people the power to find the best deal would ultimately drive down overall health care prices. “It is hugely pro-consumer,” he said.
What’s more, the plans without networks would most likely be much less expensive. The companies offering them would not need to negotiate with providers or incur high administrative costs in determining whether to pay for a claim.
Ellen Montz, a former Obamacare regulator who is now a managing director for the consulting firm Manatt Health, cautioned that regulators would need to to ensure people could actually have access to medical care under plans without an established network.
Someone with a costly medical condition would have to find providers to accept the prices established by an insurer. “It’s an important consumer protection,” she said.
Another risk is that these plans, because they are less expensive, will end up being used as the benchmark for the level of subsidies in a given market. People who want a traditional plan with an established network could end up paying more because they receive a lower subsidy.
Sidecar Health, a California-based insurer, appears to be the only company that offers Obamacare plans with no network. Dr. Marty Makary, the commissioner of the Food and Drug Administration, is a former adviser to the company.
“Our whole premise is to get people to treat health care dollars as their own,” said Patrick Quigley, Sidecar’s chief executive, in an interview. He would not disclose the size of Sidecar’s customer base.
If patients cannot find a doctor who will accept the insurer’s rate, they risk paying high medical bills.
“It is not going to work as insurance as most people understand it, and what most people are looking for,” said Katie Keith, a health policy and law expert at Georgetown University who has written extensively about the proposed rules.
Reed Abelson covers the business of health care, focusing on how financial incentives are affecting the delivery of care, from the costs to consumers to the profits to providers.
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