Republicans are stuck on healthcare but they have no choice but to persevere

Republican health analysts said party officials had little choice but to keep trying to reach consensus — or at least enough consensus to pass a bill out of the House.

Will cancer research atrophy under Trump administration?

Chatter at an early morning session on the third day of the  43rd annual meeting in Washington, D.C., was largely focused on the state of healthcare — and the survival, or repeal, of the Affordable Care Act — under the new President Trump administration.

A conversation about the state of healthcare at the Association of Community Cancer Centers’ annual meeting mostly focused on speculation over the Affordable Care Act’s future under the Trump administration. But the discussion shifted to the standing of the Cancer Moonshot Task Force, put in place during the final year of President Obama’s tenure.

Dr. Kavita Patel of the D.C.-based think tank The Brookings Institution and Dan Todd of Todd Strategy, both former Capitol Hill staffers, said any push for increasing the funding for cancer research will most likely come from agency heads, at the Food and Drug Administration, the Centers for Disease Control and Prevention, and the National Institutes of Health.

“There’s a commitment on Capitol Hill,” Todd said. “But the moonshot folks all went to work with former Vice President Biden. If there’s nobody [in the White House], it’s going to atrophy.”

The task force, helmed by former Vice President Joe Biden whose son, Beau, died of brain cancer in 2015, left D.C. the same day as the rest of the White House staff when President Obama left on Jan. 20. Today, it lives on as the nonprofit Biden Cancer Initiative, and the former vice president said the nonprofit’s work will focus on bringing down the cost of cancer treatments, enabling wider access to clinical trials, and supporting community oncology efforts.

Even before Obama and Biden left the White House, national cancer research received a boost. In December, the 21st Century Cures bill was passed into law. Through the law — the Capitol Hill commitment to which Todd referred — Congress appropriated $1.8 billion in new funding for cancer research.

Whether President Trump’s White House will take up the mantle of moonshot cancer research is an uncertainty. Although former members of the Cancer Moonshot Task Force had spoken with the incoming administration about the research — which includes a conversation between Biden and his successor, Vice President Mike Pence, about continuing the work — the new White House’s proposed budget removes $6 billion in funding from the National Institutes of Health.

“Trump’s [administration] agreed to help continue some of those efforts,” Patel said. “Doing that but releasing a budget where you’re cutting the NIH by billions of dollars does not make sense to me.”

Photo: azerberber, Getty Images

Is Siemens Healthcare veteran Donald Rucker the new national coordinator for health IT? (Updated)

Donald Rucker, LinkedIn

A Department of Health and Human Services directory listing Dr. Donald Rucker as the new national coordinator for health IT seems to suggest the Trump Administration has filled the role. The news was first reported by Politico.

An email from a spokesperson for the Department of Health and Human Services in response to MedCity News said, “We are not commenting on personnel at this time.”

The move would mark Rucker’s first foray into the government. He was the chief medical officer at Siemens Healthcare USA for 13 years, according to his LinkedIn profile. For the past four years, he has worked as an adjunct professor at Ohio State University Wexner Medical Center for clinical emergency medicine and biomedical informatics.

He also served as a clinical assistant professor of emergency medicine at University of Pennsylvania Medical School.

Dr. Karen DeSalvo had served as head of the ONC for roughly two years until she shifted over to the role of Assistant Secretary of Health in 2016. Dr. Vindell Washington took over the role until he stepped down in January this year. Since then, Dr. Jon White has served as the acting national coordinator.

Correction: We incorrectly reported that Fierce Healthcare was the first to report the story, but have since discovered that Politico initially reported the story, which is available only to paid subscribers. We regret the error.

Beltway insiders struggle to predict what will happen to health insurance exchanges, essential benefits

From left: Leah Ralph of ACCC, Dan Todd of Todd Strategy, and Dr. Kavita Patel of The Brookings Institution at Cancerscape conference by the Association of Cancer Care Centers in Washington, D.C.  Photo: Andrew Zaleski

Mix concern for the future well-being of the insurance exchange market along with a healthy dose of ¯_(”/)_/¯ and you’ll have a decent analysis of healthcare in the U.S. circa 2017.

At the Association of Community Cancer Center’s 43rd annual meeting this week in Washington, D.C., there was a discussion about the state of healthcare under President Trump’s administration — a timely subject, given the recent failure of House Republicans to pass the American Health Care Act (AHCA), their repeal and replace version of the Affordable Care Act, or what’s commonly known as Obamacare.

Moderated by the ACCC’s director of health policy Leah Ralph, the discussion included Dr. Kavita Patel of the Washington, D.C.-based think tank The Brookings Institution and Dan Todd of Todd Strategy. As former Capitol Hill staffers, both offered instructive comments on congressional Republicans’ failure to pass the AHCA.

“The House is always this kind of chaotic, welcome-to-the-jungle kind of mess,” Patel said. “Bottom line: They didn’t have the votes.”

Todd echoed the sentiment, also noting that a dose of political miscalculation led House Republicans to believe all their members would vote for an Obamacare repeal bill. In recent days, members of the GOP have blamed the Freedom Caucus, the more conservative wing of the Republican Party in the House, for scuttling the AHCA. (Notably, President Trump tweeted this admonishment: “The Freedom Caucus will hurt the entire Republican agenda if they don’t get on the team, & fast.”). This happened about eight minutes before the discussion on Thursday.

Political dynamics aside, what does any of this mean for cancer treatment in the U.S., and the general state of healthcare? That was the question both Patel and Todd tried to make sense of for conference attendees.

The insurance exchange marketplace is where about 10 million people currently get their insurance, and how it fares in the year ahead is what Todd tackled head-on. Since passage of the ACA seven years ago, it’s now apparent that the small group market doesn’t look like the large group market — it looks much like the Medicaid market, made up of people who are sicker and older, and is highly cost-sensitive. The fix employed by President Obama’s administration, which wasn’t contemplated in the original healthcare law, was a risk adjustment payment paid to plans.

“Will the Trump administration make those payments like the Obama administration did? My gut tells me no,” Todd said. “If no, you don’t have a healthy market.”

Patel responded in kind, noting that if the Trump administration does away with cost-sharing subsidies, the result will be “people who have cancer who can’t afford insurance.” The reason? The financial stability of the federal healthcare marketplace will begin to falter. So far, the Trump Administration hasn’t said one way or the other whether it will continue providing those subsidies for insurers who participate in the federal marketplace, although House Speaker Paul Ryan said that the Trump administration should keep making those payments to insurers “to avoid destabilizing the market,” the Wall Street Journal reported Thursday.

Patel also highlighted the essential benefits component of the ACA, which required all plans sold in the marketplace to cover cancer screening, treatment, and follow-up care. The ACA tied out-of-pocket maximums paid by patients to essential benefits.

Health and Human Services Secretary Tom Price has signaled that Republicans will dismantle elements of Obamacare even without the votes in Congress. As the Chicago Tribune reported, Price described in testimony this week how “his department could make insurance plans cheaper by scaling back several federal mandates, including what the ACA currently defines as ‘essential benefits’ in coverage.”

“You get rid of [essential benefits], you actually get rid of those out-of-pocket annual maximums, which are crucial for cancer patients,” Patel said.

Although both the White House and Ryan vowed they would renew their efforts to repeal the ACA, it’s too soon to tell what will happen with healthcare this year.

Put another way: ¯_(”/)_/¯.

Featured photo: Justin Sullivan, Getty Images

How did it come to this? Ryan and Trump pull healthcare bill after coming up short on votes.

U.S. Speaker of the House Paul Ryan answers questions at a press conference at the U.S. Capitol after President Trump’s healthcare bill was pulled from the floor of the House of Representatives. (Photo by Win McNamee/Getty Images)

Despite days of intense negotiations and last-minute concessions to win over wavering GOP conservatives and moderates, House Republican leaders Friday failed to secure enough support to pass their plan to repeal and replace the Affordable Care Act.

House Speaker Paul Ryan pulled the bill from consideration after he rushed to the White House to tell President Donald Trump that there weren’t the 216 votes necessary for passage.

“We came really close today, but we came up short,” he told reporters at a hastily called news conference.

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When pressed about what happens to the federal health law, he added, “We’re going to be living with Obamacare for the foreseeable future.”

Ryan originally had hoped to hold a floor vote on the measure Thursday — timed to coincide with the seventh anniversary of the ACA — but decided to delay that effort because GOP leaders didn’t have enough “yes” votes. The House had been in session Friday while members debated parts of the bill.

The legislation was damaged by a variety of issues raised by competing factions of the party. Many members were spooked by reports by the Congressional Budget Office showing that the bill would lead eventually to 24 million people losing insurance, while some moderate Republicans worried that ending the ACA’s Medicaid expansion would hurt low-income Americans.

At the same time, conservatives, especially the hard-right House Freedom Caucus that often has needled party leaders, complained that the bill kept too much of the ACA structure in place. They wanted a straight repeal of Obamacare, but party leaders said that couldn’t pass the Senate, where Republicans don’t have enough votes to stop a filibuster. So they chose to use a complicated legislative strategy called budget reconciliation that would allow them to repeal only parts of the ACA that affect federal spending.

The decision came after a chaotic week of negotiations, as party leaders sought to woo more conservatives. Trump personally lobbied 120 members through personal meetings or phone calls, according to a count provided Friday by his spokesman, Sean Spicer. “The president and the team here have left everything on the field,” Spicer said.

On Thursday evening, Trump dispatched Office of Management and Development Director Mick Mulvaney to tell his former House GOP colleagues that the president wanted a vote on Friday. It was time to move on to other priorities, including tax reform, he told House Republicans.

“He said the president needs this, the president has said he wants a vote tomorrow, up or down. If for any reason it goes down, we’re just going to move forward with additional parts of his agenda. This is our moment in time,” Rep. Chris Collins (R-New York), a loyal Trump ally, told reporters late Thursday. “If it doesn’t pass, we’re moving beyond health care. … We are done negotiating.”

Trump’s edict clearly irked some lawmakers, including the Freedom Caucus chairman, Rep. Mark Meadows (R-North Carolina), whose group of more than two dozen members represented the strongest bloc against the measure.

“Anytime you don’t have 216 votes, negotiations are not totally over,” he told reporters who had surrounded him in a Capitol basement hallway as he headed into the party’s caucus meeting.

Shortly before Ryan’s press conference, Trump called Washington Post reporter Robert Costa to say they were pulling the bill back from consideration. Costa said the president seemed at ease with the decision and did not blame Ryan for the defeat.

Trump, Ryan and other GOP lawmakers tweaked their initial package in a variety of ways to win over both conservatives and moderates. But every time one change was made to win votes in one camp, it repelled support in another.

The White House on Thursday accepted conservatives’ demands that the legislation strip federal guarantees of essential health benefits in insurance policies. But that was another problem for moderates, and Democrats suggested the provision would not survive in the Senate.

Republican moderates in the House — as well as the Senate — objected to the bill’s provisions that would shift Medicaid from an open-ended entitlement to a set amount of funding for states that would also give governors and state lawmakers more flexibility over the program. Moderates also were concerned that the package’s tax credits would not be generous enough to help older Americans — who could be charged five times more for coverage than their younger counterparts — afford coverage.

The House package also lost the support of key GOP allies, including the Club for Growth and Heritage Action. Physician, patient and hospital groups also opposed it.

It’s not clear what will happen next to the Republican effort to overturn or modify Obamacare. But White House officials told members Thursday that if they couldn’t pass the legislation, the president wanted to turn to other priorities, including tax reform. “The president understands this is it,” Spicer said. “We had this opportunity to — to change the trajectory of health care, to help improve — put a health care system in place and to end the nightmare that Republicans have campaigned on called Obamacare.”

As House health bill vote nears, what would be consequences of dumping essential benefits?

A last-minute attempt by conservative Republicans to dump standards for health benefits in plans sold to individuals would probably lower the average consumer’s upfront insurance costs, such as premiums and deductibles, said experts on both sides of the debate to repeal and replace the Affordable Care Act.

But, they add, it will likely also induce insurers to offer much skimpier plans, potentially excluding the gravely ill, and putting consumers at greater financial risk if they need care.

For example, a woman who had elected not to have maternity coverage could face financial ruin from an unintended pregnancy. A healthy young man who didn’t buy drug coverage could be bankrupted if diagnosed with cancer requiring expensive prescription medicine. Someone needing emergency treatment at a non-network hospital might not be covered.

What might be desirable for business would leave patients vulnerable.

“What you don’t want if you’re an insurer is only sick people buying whatever product you have,” said Christopher Koller, president of the Milbank Memorial Fund and a former Rhode Island insurance commissioner. “So the way to get healthy people is to offer cheaper products designed for the healthy people.”

The proposed change could give carriers wide room to do that by eliminating or shrinking “essential health benefits” including hospitalization, prescription drugs, mental health treatment and lab services from plan requirements — especially if state regulators don’t step in to fill the void, analysts said.

The Affordable Care Act requires companies selling coverage to individuals and families through online marketplaces to offer 10 essential benefits, which also include maternity, wellness and preventive services — plus emergency room treatment at all hospitals. Small-group plans offered by many small employers also must carry such benefits.

Conservative House Republicans want to exclude the rule from any replacement, arguing it drives up cost and stifles consumer choice.

On Thursday, President Donald Trump agreed after meeting with members of the conservative Freedom Caucus to leave it out of the measure under consideration, said White House Press Secretary Sean Spicer. “Part of the reason that premiums have spiked out of control is because under Obamacare, there were these mandated services that had to be included,” Spicer told reporters.

Pushed by Trump, House Republican leaders agreed late Thursday to a Friday vote on the bill but were still trying to line up support. “Tomorrow we will show the American people that we will repeal and replace this broken law because it’s collapsing and it’s failing families,” said House Speaker Paul Ryan (R-Wisconsin). “And tomorrow we’re proceeding.” When asked if he had the votes, Ryan didn’t answer and walked briskly away from the press corps.

But axing essential benefits could bring back the pre-ACA days when insurers avoided expensive patients by excluding services they needed, said Gary Claxton, a vice president and insurance expert at the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

“They’re not going to offer benefits that attract people with chronic illness if they can help it,” said Claxton, whose collection of old insurance policies shows what the market looked like before.

One Aetna plan didn’t cover most mental health or addiction services — important to moderate Republicans as well as Democrats concerned about fighting the opioid crisis. Another Aetna plan didn’t cover any mental health treatment. A HealthNet plan didn’t cover outpatient rehabilitative services.

Before the ACA most individual plans didn’t include maternity coverage, either.

The House replacement bill could make individual coverage for the chronically ill even more scarce than a few years ago because it retains an ACA rule that forces plans to accept members with preexisting illness, analysts said.

Before President Barack Obama’s health overhaul, insurers could reject sick applicants or charge them higher premiums.

Lacking that ability under a Republican law but newly able to shrink benefits, insurers might be more tempted than ever to avoid covering expensive conditions. That way the sickest consumers wouldn’t even bother to apply.

“You could see even worse holes in the insurance package” than before the ACA, said Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University. “If we’re going into a world where a carrier is going to have to accept all comers and they can’t charge them based on their health status, the benefit design becomes a much bigger deal” in how insurers keep the sick out of their plans, she said.

Michael Cannon, an analyst at the libertarian Cato Institute and a longtime Obamacare opponent, also believes dumping essential benefits while forcing insurers to accept all applicants at one “community” price would weaken coverage for chronically ill people.

“Getting rid of the essential health benefits in a community-rated market would cause coverage for the sick to get even worse than it is under current law,” he said. Republicans “are shooting themselves in the foot if they offer this proposal.”

Cannon favors full repeal of the ACA, allowing insurers to charge higher premiums for more expensive patients and helping consumers pay for plans with tax-favored health savings accounts.

In an absence of federal requirements for benefits, existing state standards would become more important. Some states might move to upgrade required benefits in line with the ACA rules but others probably won’t, according to analysts.

“You’re going to have a lot of insurers in states trying to understand what existing laws they have in place,” Koller said. “It’s going to be really critical to see how quickly the states react. There are going to be some states that will not.”

Mary Agnes Carey and Phil Galewitz contributed to this story.

Photo: byakkaya, Getty Images

White House delivers ultimatum on healthcare bill, setting scene for dramatic House vote Friday

There’s so much drama on Capitol Hill today and this evening. After years of failed attempts, the Republicans are finally positioned to repeal and replace the Affordable Care Act. But the vote, which was expected to take place Thursday, was delayed as it became clear that there weren’t enough votes from the conservative members of the “Freedom Caucus” and moderate members of the House Republicans to push the bill through.

Who would have thought there was so much diversity in the Republican party?

Republican leadership met with White House officials and party members Thursday evening to sway undecided or no voters to a yes. The White House also delivered an ultimatum to Republicans considering a no vote: Negotiations are over. Vote yes or move on with Obamacare.

If the bill is defeated, what would that say about the Trump’s negotiating skills? After all, Press Secretary Sean Spicer quipped at a media briefing yesterday, “There is no Plan B”.

The turn of events provoked plenty of discussion about what this vote means for the Republican party’s identity, whether Trump is setting House Speaker Paul Ryan as a scapegoat and evaluating the job Trump has done selling the healthcare bill to the American voters.

Amidst the drama, there was some room for a little comedy

And some apologizing…

A Congressional Budget Office Report published Thursday afternoon contended that under the revised bill 24 million would still lose their health insurance by 2026, despite reducing savings in federal spending.

The Republicans occupy a position they have strived to be in for years and yet as the bill makes it final approach to the floor of the House, Congressmen are feeling the full weight of this vote and the growing realization that some of the constituents will like it but many of them won’t. Just as passing ACA led many Americans to lose insurance when their previous plans became voided by the Act’s requirements, there will be winners and losers with this bill as well.

At the very least, there will be a lot of questions to address in the next 24 hours, whatever the outcome.

Photo: Justin Sullivan, Getty Images

D-Day for the ACA?

If you are a sports fan, March is your month. The past week has been filled with near non-stop coverage of the NCAA tourney, and there are still a few more weeks to go.

However, if you are apathetic toward sports and filled out a bracket at the last minute only out of office-pool guilt (like I did), then March is your month for a whole other reason. Not only have SCOTUS confirmation hearings happened this week, but the very fate of the Affordable Care Act (ACA) is up for a vote in the House of Representatives today as well.

Regardless of where you sit on the political spectrum, and whether you have found this week exciting of terrifying, you have to admit that it has been captivating. But even with all of this Kardashian-esque drama, frankly I am ready for it to be over!

That is not a political statement, nor is this a political post.

Repeal and replace the ACA versus amending and improving? I will leave it to you to turn to your favorite cable news channel for the latest on that debate. Rather, as in-house for a hospital network, I am ready for the whole debate to be done so a little certainty can return to our business operations and give our patients some peace of mind.

I have been fielding “what if the ACA goes away” hypotheticals since Trump won the Republican nomination last summer. I have been contemplating what a post-ACA life would look like for our hospital network with renewed vigor since Trump won in November. I have worked Biglaw-like hours since the House introduced its repeal bill a couple of weeks ago. And frankly, I am tired.

I am tired of monitoring CNN and Fox News simultaneously for the latest breaking news or theories on the repeal measure.

I am tired of explaining to my non-legal colleagues that reconciliation in Washington, D.C. has nothing to do with being a Catholic.

And I am tired of reviewing hastily drafted bills and amendments and evaluating their potential impact on our organization and our patients.

I understand this sort of work comes with the territory of being in-house, and I am happy to do it. Sadistically, as a self-professed political nerd, I even enjoy it. However, any real appreciation the present ACA debate is having on thousands of hospitals and millions of patients across the nation seems to be absent from the current political debate in Washington.

If you are a patient currently covered by expanded Medicaid coverage or if you are a family with insurance paid for by a subsidy, the fact that the AHCA would not take effect until 2020 is likely of little solace to you. Similarly, if you are an insurance company or a hospital attempting to forecast your financials for the coming years, the current political instability may cause you to rethink your future staffing model.

While I have my own opinions as to what health reform in America should look like I understand, just like March’s sports fans, there are winners and losers. And I am happy to respect whatever sort of outcome our elected officials in D.C. do, or do not, implement. However, our health care system is already shaky enough as is, without the political interjections every few years.

Whatever happens in D.C. today, I and my fellow in-house counsel in the healthcare sector will prepare for it. But please recognize this is not a fire drill we can engage in every four to eight years.

Yes, it may be painful, but reach across the aisle and find a solution both parties can live with for many years to come.

Not only will I thank you on behalf of my in-house colleagues, but on behalf of the millions of patients across the country who can now focus on getting  better, not on whether their health insurance coverage is still valid.


Stephen R. Williams is in-house counsel with a multi-facility hospital network in the Midwest. His column focuses on a little talked about area of the in-house life, management. You can reach Stephen at stephenwilliamsjd@gmail.com.

Government Accountability Office will investigate potential abuses with Orphan Drug Act

Acting on a request from three influential U.S. senators, the government’s accountability arm confirmed that it will investigate potential abuses of the Orphan Drug Act.

The Government Accountability Office still must determine the full scope of what it will look into and the methodology to be used. Determining the scope will take some months, said Chuck Young, GAO’s managing director for public affairs.

Earlier this month, Sens. Orrin Hatch (R-Utah), Chuck Grassley (R-Iowa) and Tom Cotton (R-Arkansas) sent a letter to the GAO and raised the possibility that regulatory or legislative changes might be needed “to preserve the intent of this vital law” that gives drugmakers lucrative incentives to develop drugs for rare diseases.

Grassley’s office said Tuesday they expected the GAO to begin its work in about nine months. The delay is typical as the agency has a queue of requests it is pursuing.

The senators have asked the GAO to “investigate whether the ODA is still incentivizing product development for diseases with fewer than 200,000 affected individuals, as intended.”

Congress overwhelmingly passed the 1983 Orphan Drug Act to motivate pharmaceutical companies to develop drugs for people whose rare diseases had been ignored. Drugs approved as orphans are granted tax incentives and seven years of exclusive rights to market drugs that are needed by fewer than 200,000 patients in the U.S.

In recent months, reports of five- and six-figure annual price tags for orphan drugs have amplified long-simmering concerns about abuse of the law. The senators’ call for a GAO investigation reflects that sentiment.

“While few will argue against the importance of the development of these drugs, several recent press reports suggest that some pharmaceutical manufacturers might be taking advantage of the multiple designation allowance in the orphan drug approval process,” the letter states.

In January, Kaiser Health News published an investigation that found the orphan drug program is being manipulated by drugmakers to maximize profits and to protect niche markets for medicines being taken by millions.

That investigation, which also was published and aired by NPR, found that many drugs that now have orphan status aren’t entirely new. More than 70 were drugs first approved by the Food and Drug Administration for mass-market use. Those include cholesterol blockbuster Crestor, Abilify for psychiatric disorders and the rheumatoid arthritis drug Humira, the world’s best-selling drug.

Others are drugs that have received multiple exclusivity periods for two or more rare conditions.

The senators asked the GAO for a list of drugs approved or denied orphan status by the FDA. It also asked if resources at the FDA, which oversees the law, have “kept up with the number of requests” from drugmakers and whether there is consistency in the department’s reviews.

And they said it would be important to include patient experiences in the GAO review. The GAO does not provide updates on ongoing work but rather reports its findings once they complete an assignment.

The rare-disease drugs have become increasingly popular with pharmaceutical and biotech companies and are expected to comprise 21.4 percent of worldwide prescription sales by 2022, not including generics, according to consulting firm EvaluatePharma’s 2017 orphan drug report.

That’s in part because of the exorbitant prices that can be charged. Of the top 100 drugs in the U.S., the average cost per patient per year for an orphan drug was $140,443 in 2016, compared with $27,756 for a non-orphan, EvaluatePharma said.

KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.

Photo: Sezeryadigar, Getty Images

House GOP tosses individual mandate from ACA replacement but adds penalty for insurance lapses

The Affordable Care Act’s tax penalty for people who opt out of health insurance is one of the most loathed parts of the law, so it is no surprise that Republicans are keen to abolish it. But the penalty, called the individual mandate, plays a vital function: nudging healthy people into the insurance markets where their premiums help pay for the cost of care for the sick. That has required Republican lawmakers to come up with an alternative.

The GOP approach is called a “continuous coverage” penalty. It increases premiums for people who buy insurance if they have gone 63 consecutive days without a policy during the past 12 months. Their premiums would rise by 30 percent and that surcharge would last for a year. While the ACA assesses a fine for each year people don’t buy insurance, the GOP plan would punish those who decide to purchase it after not being in the market.

Much is at stake. If this approach fails to prod enough healthy people into buying insurance, rates for everyone else in the insurance pool will rise, destabilizing promises by President Donald Trump and GOP leaders to make their Obamacare replacement more affordable. The nonpartisan Congressional Budget Office projects that millions fewer people will buy insurance if the individual mandate is repealed and replaced with a continuous coverage surcharge.

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Why do people allow their insurance to lapse?

Some simply can’t afford the premiums, like Sheila Swartz. She and her husband, Don, who has a heart condition, dropped their policy in December after learning monthly premiums were going to increase by about $140 to $530. “You can’t get blood out of a turnip,” said Swartz, who lives outside Nashville, Tenn., and works as a house cleaner. “If you can’t afford that premium, you can’t afford that premium.”

This KHN story also ran on NPR. It can be republished for free (details).
Others stop paying premiums when they lose a job or are hit with unexpected costs in other areas, such as major home or car repairs. “If you have to pay rent or health insurance, you are probably not going to choose health insurance,” said Bruce Jugan, a health insurance broker in Montebello, Calif.

Some people try to game the system, taking the calculated risk of going without insurance until they get sick or know they need expensive medical care, such as for maternity or an elective surgery.

Both the Affordable Care Act and the GOP proposal include a deterrent by limiting people from enrolling anytime they want. People must wait for annual enrollment periods, usually in the final weeks of the year, meaning that some people might have to wait months before getting coverage. (People still can get insurance during special enrollment periods if they lose a job, get divorced or have another specified major life change.)

How tough is the GOP penalty compared with the individual mandate?

Under the ACA, the average individual mandate penalty in 2015 was $442, according to the Internal Revenue Service.  The GOP penalty would vary based on cost of premiums but generally would be more expensive than paying the mandate’s penalty. A 40-year-old with annual premiums of $4,328 would pay an extra $1,298 because of the GOP surcharge.

“It’s got teeth,” said Cheryl Damberg, a Rand Corp. economist. “In some ways, it’s a more punishing penalty, and it’s going to hit people who are least capable of financially affording it.”

Seth Chandler, a law professor at the University of Houston Law Center who has been critical of the Affordable Care Act’s insurance markets, said he is skeptical the GOP surcharge is high enough to make people enroll. “I am concerned that the Republicans are succumbing to the same softness of heart as the Democrats succumbed too when they set the individual mandate [fine],” he said. “If you start to see insurance companies object or drop out of the markets, that’s a sign this thing is miscalculated.”

Two conservative economists at the American Enterprise Institute, Joseph Antos and James Capretta, argue the penalty is “far too small” to be effective. “Healthy consumers are likely to take their chances,” they wrote. “With the repeal of the individual mandate, and the retention of the ACA’s insurance rules, the overall effect would be significant market turbulence, starting immediately in 2017.”

The CBO predicts that there would be a brief increase in the number of people holding insurance in 2018, as roughly 1 million people buy coverage to avoid the surcharge. In most years afterward, however, about 2 million fewer people would buy policies, either because of the surcharge or because of the requirement they provide documentation proving they had been insured. The CBO said healthy people in particular would be more likely to avoid buying policies.

The plan has some parallels to Medicare’s late enrollment penalty, which is applied to premiums for people who did not sign up upon turning 65. But Christopher Koller, a former Rhode Island health insurance commissioner, doubts the GOP penalty would be as effective. “Medicare is an entitlement with the force of government behind it,” said Koller, now president of the Milbank Memorial Fund, a foundation in New York that focuses on healthy populations. “You get lots of notices about what your obligations are as you approach that age.”

What about people who can’t afford premiums?

The GOP surcharge contains no hardship exemptions, unlike the individual mandate, which allowed people to escape paying a penalty if premiums would have eaten up too much of their income (8.16 percent in 2017).

In 2015, 5.6 million people paid the individual mandate penalty, but another 11 million claimed a hardship exemption, according to the IRS.

Lower-income people are going to have even more trouble buying — and keeping — coverage under the GOP plan, experts said. The ACA’s premium subsidies are based on income, and millions of people on the poorer end of the spectrum do not have to pay anything for premiums if they choose the cheapest plan. The GOP plan would offer a flat tax credit that adjusts only for age. The penalties would make some even more reluctant to buy insurance — especially if they are relatively healthy.

“I think we would just end up with a lot more uninsured people, and they would clearly be the type of people who are less able to navigate and less able to afford insurance,” said Geoffrey Joyce, director of health policy for the University of Southern California Schaeffer Center for Health Policy & Economics.

Republican lawmakers say their plan rightly places the responsibility on individuals. It is a view shared by some health insurance brokers like Helena Ruffin, a broker in Playa Vista, Calif. She said that a continuous coverage requirement would “limit those people who are not playing by the rules.”

“I am favor of the penalties,” she said. “Whether or not people are going to pay attention is another story.”

Photo: YinYang, Getty Images