- What If You Could Move Your Healthcare Insurance From Job to Job?
- March 6, 2017
Health Insurance: What If You Could Take It With You?
Republican leaders such as House Speaker Paul Ryan of Wisconsin and Ways and Means Chairman Kevin Brady of Texas have promoted the idea that consumers should have a “health care backpack,” which would make it possible to take insurance from job to job or when moving, starting a business or retiring.
The concept — often referred to as “portability” — is appealing. Why should a health plan be tied to where you work or live? Why can’t it go where you go? The answer, of course, is not that simple. As Republicans debate ideas for repealing and replacing the Affordable Care Act, portability might be central role to their plan. What does that really mean, how might it work and what are the issues involved?
It’s not easy to define.
The notion of “portability” in the purest sense means that consumers can stick with the same insurer, the same benefits and the same coverage limits, even if they move or change jobs. In the current policy discussion, though, portability is more likely to be viewed as a means for consumers to have access — possibly with the help of a tax credit — to a variety of health plans.
If keeping the same plan becomes the goal, accomplishing that would not be easy — mostly because the health care system is not built that way.
Even among job-based plans, which are the source of coverage for about 156 million Americans, only a few insurers offer national networks of participating doctors and hospitals. And most of the plans available to people who buy their own insurance through the individual or small group market are local, limited by specific geographic areas. Policyholders who move away generally must change carriers. And insurers sometimes pull out of markets, meaning consumers would also have to pick new plans.
Such factors could create a predicament for Republicans similar to the “if-you-like-your-health-plan-you-can-keep-it” problem that bedeviled President Barack Obama when tens of thousands of consumers had to change their coverage after the ACA took effect.
The plan won’t be portable, but the tax credit will be.
Because of these hurdles, some advocates suggest a portable tax credit. The proposals vary, but here’s how it could work: If a consumer moves or quits a job to start a business or go back to school or take an early retirement, their options for plans, benefits and medical providers might all change, but they would get a tax credit they could apply to pay for their insurance.
“To get to true portability, you have to be able to choose a plan and have the same subsidy … and take it with you when you leave,” said Stuart Butler, a senior fellow at the Brookings Institution, a D.C.-based think tank.
That’s how the ACA works. It uses an advance tax credit based on income and regional insurance costs.
Under various GOP proposals, the portability credit would be a bit different. Several proposals link the subsidy to age, instead of income, with older consumers who likely have higher health costs and premiums getting a bigger credit — although the amounts debated are generally less than what consumers now receive under the health law. Also, the plans generally do not link the credits to the cost of insurance, potentially creating unhappy consumers in high-premium regions.
Current examples of portable coverage pose political challenges and are not likely to be pursued.
Portable coverage already exists. The Federal Employees Health Benefit Program, the military’s TriCare and Medicare all offer such coverage. But enrollment in those programs is limited to specific groups: federal workers, military members and their families, certain qualifying people with disabilities and those older than 65.
When running for president, Sen. Bernie Sanders (I-Vt.) suggested a Medicare-for-all plan, an idea popular among the left. But the current GOP-controlled Congress is unlikely to adopt this approach or to call for opening the federal employee program or the military plan to the general public.
Covering everyone through a single-payer system — common in Europe — where the government pays the bills but private providers or government agencies offer the medical care, also would fall into this category but is currently a political nonstarter.
How portability is structured could undermine job-based insurance.
Employers who provide work-based coverage fear that if Congress makes health plans too portable, meaning everyone has access to the tax credits, the youngest and healthiest might peel away from their employer plans’ risk pools to buy insurance. This would drive up premiums for those who remain. To prevent that, several GOP plans — including Ryan’s — would bar people with job-based coverage from getting a credit. But others, including the plan put forward last year by now-Health and Human Services Secretary Tom Price, don’t include that prohibition.
People with preexisting medical conditions may face different rules.
To be truly portable, consumers must be offered plans regardless of their health status, age or other considerations. Before the health law was enacted, insurers could reject people with medical conditions. But the ACA prohibits insurers from redlining sick people or charging them higher premiums. Although popular in opinion polls, those Obamacare provisions may face some changes under the GOP plans. Ryan’s plan would allow a one-time open enrollment during which uninsured people could sign up no matter their health status. Waiting would result in higher premiums. Price’s plan would require insurers to accept all comers during enrollment periods every two years. His plan would also require consumers to maintain “continuous coverage,” or risk having preexisting conditions excluded from future coverage. Kentucky Sen. Rand Paul’s plan would do away with the “guarantee issue” requirement altogether and allow insurers to exclude medical conditions from coverage.
COBRA isn’t a snake, and HIPAA doesn’t live in a river. Congress may look again to these existing programs and protections.
Portability is in the title of a pre-ACA law that Paul points to as one way some people with preexisting medical conditions could be helped. The Health Insurance Portability and Accountability Act (HIPAA) of 1996 required insurers to offer coverage to people who lost job-based insurance, even if they were sick, although there was no upper limit to how much insurers could charge for those plans before the ACA. There are also other caveats. That’s where the Consolidated Omnibus Budget Reconciliation Act (COBRA) comes into play. Under COBRA, most employers have to give workers the option of continuing their job-based coverage for at least 18 months after they leave their position — although the workers must pay the full cost themselves.
“Most people have no idea what their share of the premium is, so it’s a huge shock to find out that a $20,000 policy divided by 12” is $1,666 a month, said Joe Antos of the American Enterprise Institute. And there’s another catch. To get a “conversion policy” that covers preexisting medical conditions under HIPAA, consumers had to pay COBRA premiums for 18 months. Some policy experts say Congress could ease this pinch by offering subsidies to help them get through the transition period.
Some plans will be less expensive than they are now — but they won’t cover as much.
Cost is essential to portability because if consumers can’t afford insurance, it doesn’t matter that it can move with them. To bring premiums down, some Republicans suggest easing the health law’s essential benefits requirements. More flexibility for these rules could spark competition and open the market to added options, from low-cost, “bare-bones” plans to high-premium comprehensive coverage, proponents say.
“From a consumer perspective, it’s important to have wide choice,” said Butler.
But the less expensive plans would likely be more restrictive and exclude coverage for some services, such as prescription drugs.
Some experts warn that without some benefit rules, plans could end up in a “race to the bottom,” with few insurers wanting to offer broad benefits at the risk of attracting the sickest enrollees.
“If their answer is to make it affordable by stripping down the benefits, then you leave families exposed to a lot of financial risk if something happens to them,” said Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University.
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