The American Health Care Act, passed by the House on Thursday to cheers from Republican members, would give states wide leeway over a host of provisions that many Americans have come to count on, creating a patchwork of health insurance rules across the nation.

The legislation, designed as a replacement for the Obama-era Affordable Care Act, would allow states to apply for waivers to exempt insurers from providing coverage for 10 “essential health benefits,” including emergency services, maternity care, and mental health treatment, among others. The level of coverage would depend on what each state decides. 

It also would permit states to apply for waivers to allow insurers, under certain circumstances, to charge higher premiums to people with pre-existing health problems, something that the ACA forbids.

The AHCA allocates $138 billion over 10 years to fund a Patient and State Stability Fund for states that apply for waivers, an amount  experts say is not nearly enough to cover the millions of Americans with pre-existing health conditions.

Granting those waivers would cause premiums to rise and also make it harder for people to get comprehensive coverage, especially those with health problems, says Betsy Imholz, special projects director for Consumers Union, the policy and mobilization arm of Consumer Reports.

“In combination, these features clearly allow states to do away with protections for pre-existing conditions, letting insurers charge our most vulnerable populations more, and to provide skimpy coverage for everyone,” Imholz says.

House Republicans and other conservatives disagree, saying the waivers, which would vary from state to state, could actually lead to lower premiums and give consumers a wider choice of plans. 

Reducing regulatory burdens could encourage insurance companies to enter new markets or to modify their existing policies and rates, giving consumers more coverage options, says Edmund Haislmaier, a senior research fellow in health policy studies at the Heritage Foundation, a conservative think tank.

"State governments have performed the basic function of regulating insurance reasonably well for over a century, and there is no need for the federal government to supplant these efforts as it is now doing under Obamacare," Haislmaier says.

While the debate over how to overhaul the ACA continues, many Americans say they are worried about being able to afford good quality medical care. In our CR Consumer Voices Survey conducted earlier this year, 55 percent of Americans said they lacked confidence they or their loved ones would have access to quality, affordable healthcare.

The bill now heads to the Senate, where leaders say the legislation could change dramactically. Then the Senate version must be reconciled with the House.

With the legislation still far from being finalized, it’s hard to predict how many states would seek waivers. But here’s how it might play out where you live.

Where Waivers Are Mostly Likely

Some exchanges, like California and Michigan, have robust markets with multiple insurers where things are working well, at least for now, says Chris Sloan, a senior manager in the policy practice at Avalere Health, a healthcare consulting firm. "You're more likely to see waivers in states that are struggling," Sloan says. 

States with sticker shock. In 2017, the average insurance premium on the most popular Silver plan on ACA exchanges was 17 percent higher than the year before, according to HealthPocket.com. But in some places, the increase was even sharper. In Arizona and Oklahoma, for example, premiums shot up more than 50 percent.

States with few insurers. One-third of counties in the U.S. have one insurer on their exchange, according to Kaiser Family Foundation. States particularly struggling to attract insurers include Oklahoma, which has only one insurer left, and Tennessee, where 16 counties have no insurer signed up for 2018.

States that didn’t expand Medicaid. A total of 31 states expanded their Medicaid program by taking federal money allocated by the ACA to cover most of the cost. States that didn’t expand Medicaid—mostly states with Republican governors—ended up with more people on the exchanges, including a larger share of sick people.



What States Could Do Under the AHCA

The AHCA earmarks $138 billion for a Patient and State Stability Fund, which states can use to create “risk sharing” programs to cover sick people who need help paying premiums.

Experts say that amount isn’t nearly enough to cover people who have pre-existing health problems, which include conditions such as asthma, diabetes, and cancer.

According to a new report by Avalere Health, 2.2 million enrollees in the individual market have pre-existing conditions. Only 660,000 people would be covered by the money allocated by the AHCA.

Vivian Ho, the chair in health economics at Rice’s Baker Institute for Public Policy and director of the institute’s Center for Health and Biosciences, agrees. “There are millions of people who have pre-existing conditions," she says. "This amount will cover just a fraction of the people who will face higher costs."

The money could be used in a number of ways, including to:

Create high-risk pools. These are special insurance funds for people considered at high risk for needing expensive care because they have or had an illness or disease. These pools could help lower premiums for other people. But they would sharply raise premiums for the sickest ones, individuals who need costly care. High-risk pools aren't a new idea. Before the ACA, 35 states had them. But the high-risk plans were very expensive, offered limited coverage, and programs were underfunded in most states, so there were waiting lists and no guarantee you could get coverage.

 

Are you worried about healthcare costs? Join Consumer Reports' efforts to #ProtectOurCare.

 

Create a reinsurance program. This would give money to insurers to subsidize the cost of providing health insurance for high-cost care generally, or for those most likely to require lots of medical attention. It can protect insurers if they enroll high-risk people, which would give them incentive to offer coverage for everyone and hold down rates for most consumers.

Provide subsidies for people with health problems. The money could also be used to directly subsidize the premiums or cost-sharing that high-cost consumers with pre-existing conditions might have to pay for insurance.

The ACA also allows states to apply for waivers, but has much stricter requirements and no state waiver has yet been formally approved. 

The requirements for state waivers under the AHCA are much looser and would automatically go into effect if the Department of Health and Human Services didn’t respond to the request within 60 days. “The curbs are much less defined under the AHCA,” says Sloan from Avalere Health.