How the new 'Trumpcare' proposal could affect consumers

Certain Obamacare requirements could be weakened under new plan.

ByABC News
April 21, 2017, 4:32 PM

— -- Weeks after Republicans' proposed health care bill failed before coming to a vote, representatives are floating new proposals in the hopes of salvaging their original plan to "repeal and replace" Obamacare.

The latest fix comes in the form of an amendment to the original bill from Rep. Tom MacArthur (R-NJ). MacArthur worked with House Freedom Caucus Chairman Mark Meadows to craft the amendment, which would give states the option to apply for waivers that exempt them from certain federal standards for health insurance coverage.

If passed, the amendment could affect two key areas of people's health insurance coverage: their essential health benefits and their ability to get affordable insurance if they have pre-existing conditions. In order to qualify for these waivers, states would need to prove they could either lower the cost of healthcare for people or increase the number of people covered by insurance. Here's what you need to know about those two important components.

Essential Health Benefits

Under this amendment, there would still be a federal standard requiring insurance companies to cover essential health benefits. These benefits include maternity care, mental health coverage, and prescription drugs. But states could apply for a limited number of waivers that exempt insurers from providing all of those benefits.

Health experts say that if this amendment is passed, the costs for people in need of specific essential health benefits will likely face higher premiums.

"If somebody needs maternity care, it will be much more expensive," Christine Eibner, senior economist and professor at the Pardee RAND Graduate School, told ABC News.

She explained that insurance companies will likely assume that if someone chooses coverage that includes mental health treatment or prescription drug treatment, they are doing so because they will need those services. As a result, insurance companies would charge far higher amounts for plans that include those benefits.

Eibner also pointed out that should the amendment allow insurance sales across state lines, the waivers could affect states that decide to keep the ACA mandate on essential health benefits.

"If sales [are] across the state would be challenging for states who want to maintain those benefits," she said.

For example, if an insurance company doesn't want to provide coverage in a state that requires more benefits, they could pull out of their local marketplace and sell insurance in states where the requirements are less strict, Eibner said. As a result, it could mean fewer options for health insurance in states who do decide to keep essential health benefits coverage intact.

Pre-Existing Conditions

The second aspect of the proposed amendment could affect coverage for people with pre-existing conditions. While insurance companies couldn't outright deny coverage, they may be able to charge far higher rates in states that apply for waivers.

The waivers would exempt them from the community rating provision of the ACA. The community rating provision is a way of setting premiums and is designed to ensure risk is spread evenly across a larger community. This means that people are charged the same rate regardless of different factors like health status. Under the ACA, insurance companies could only change rates for different plans based on a person's age, geographic location, the number of people on a plan and their tobacco use, according to the Kaiser Family Foundation.

If this provision changes under the new amendment, it would mean that people with pre-existing conditions may be charged far higher premiums than others. To be considered for a waiver, states would have to create and fund a high-risk pool for people who have difficulty getting insurance.

"If you waive community rating, then that's basically the same as [saying] people can be denied insurance by the insurer" due to the cost, Gary Claxton, vice-president of the Kaiser Family Foundation told ABC News.

While it's not clear exactly how the proposed high-risk pools would work, prior to the ACA, 35 states had high-risk pools to cover residents who otherwise would not be insured because of pre-existing conditions. The Kaiser Family Foundation found that state high-risk pools often had significantly higher premiums and likely included just a small fraction of people who needed coverage.

While the proposed change -- and the larger health care bill -- would likely need to drastically change in order to pass the Senate, Claxton said Republicans with likely continue to struggle to come to a consensus on health care legislation.

"Fundamentally, they want to take money out of the system. Part of the problem and part of the issues with health insurance is that good health insurance is expensive," he explained. "If you want to make it cheaper, you have to do the kinds of things we were just talking about and those aren't popular."

ABC News' Benjamin Siegel contributed to this report.

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