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Op-Ed: Frelinghuysen Moves to Destabilize ACA Marketplace

Frelinghuysen is actively working to undermine the individual market for health insurance while the GOP’s repeal-and-replace legislation hangs fire.

andrew sprung
Andrew Sprung

In early May, U.S. Rep. Rodney Frelinghuysen (R-NJ) voted for a Republican "healthcare" bill that would uninsure 23 million Americans, according to the Congressional Budget Office (CBO), and more than a half million New Jerseyans, according to New Jersey Policy Perspective.  

Now, instead of merely riding the uninsurance train, Mr. Frelinghuysen is helping to drive it. As chair of the House Committee on Appropriations, he is green-lighting sabotage of the existing individual market for health insurance.

The Financial Services Subcommittee of Appropriations, chaired by U.S. Rep. Tom Graves (R-GA) has approved a spending bill with a provision that would bar the IRS from enforcing the ACA's requirement that those who can afford health insurance procure it or pay penalty — the so-called individual mandate.  

‘Burdensome regulations’

In a press release, Mr. Frelinghuysen praises the bill in question for "stopping burdensome regulations before they can damage our economy irreparably." The bill does stop a variety of regulations that Republicans consider harmful — for example, it prohibits the SEC from requiring the disclosure of political contributions in SEC filings and includes a bar on funding to require that entities applying for or conducting work under federal contracts disclose campaign contributions. Whether or not Frelinghuysen's boast is aimed partly or primarily at the ACA's individual mandate, however, the provision has his stamp of approval.  

Repealing the mandate without any kind of replacement will drive premiums up and insurers out. In its assessment of the American Health Care Act (AHCA), the ACA repeal bill that Frelinghuysen first opposed and then voted for, CBO forecast that repeal of the individual mandate would increase premiums by 15 percent to 20 percent  and be a prime driver in uninsuring 14 million people in the year following implementation.  

The mandate makes it possible for insurers to sell plans on equal terms to those with pre-existing conditions — that is, to up to half the U.S. population, according to an estimate by the federal Center for Medicare and Medicaid Services. It pulls healthy people into the market to offset the cost of insuring those with the most expensive healthcare needs. Though it was originally a conservative idea, and famously embraced by Mitt Romney as he worked to pass Massachusetts' ACA precursor bill in 2006, Republicans have demonized it since Democrats adopted it in the ACA. Now the mandate is the ACA's most unpopular provision.  

It's a matter of debate among healthcare experts whether alternative means to induce those who can afford insurance to obtain it might be effective. The partial ACA repeal bill that passed the House on May 4 would allow states to subject those who go uninsured for a period and then seek insurance in the individual market to medical underwriting — that is, to paying more if they are deemed to have a pre-existing condition. A Brookings Institute analysis forecast that such a waiver would undermine protection for people with pre-existing conditions, since healthy applicants would voluntarily subject themselves to medical underwriting, leaving only sicker people in the risk pool where policies were sold regardless of health status.  

Recipe for disaster

Regardless of how that or any other alternative to the individual mandate is assessed, repealing the mandate without effective replacement is a recipe for disaster. As they file their rates for 2018, insurers have cited uncertainty about the mandate — along with uncertainty whether Republicans will pay them for the Cost Sharing Reduction subsidies that the ACA requires them to offer low-income enrollees — as the chief drivers of this year's requested rate increases, which would be moderate if Republicans were not doing their utmost to destabilize the market. The consulting firm Oliver Wyman estimates that uncertainty about those two factors accounts for two-thirds of insurers' requested premium increases so far. The mandate-killing provision approved by Frelinghuysen doesn't need to pass to add to that uncertainty and further drive up costs.  

In the larger picture, Republicans are using genuine matters of concern in the private insurance market as cover to eviscerate long-term funding for Medicaid. The Better Care Reconciliation Act (BCRA) introduced in the Senate last month not only ends the ACA Medicaid expansion, which has insured 15 million Americans and 562,000 New Jerseyans, but caps long-term federal funding for Medicaid in a way that will seriously erode coverage for 75 million Americans, including 40 percent of the nation's children, two-thirds of nursing-home residents, the disabled, and low-income adults. The CBO estimates that the BCRA will reduce federal Medicaid spending by 26 percent over 10 years, compared with current law, and by 35 percent over 20 years as the limits on federal spending keep grinding.  

In rejecting the first iteration of the House bill, Mr. Frelinghuysen wrote on his Facebook page that it "would place significant new costs and barriers to care on my constituents in New Jersey. In addition to the loss of Medicaid coverage for so many people in my Medicaid-dependent state, the denial of essential health benefits in the individual market raise serious coverage and cost issues." Those problems were only exacerbated in the amended bill he voted for, which breached the ACA's protections for people with pre-existing conditions, and in the Senate bill, which clamps down harder on Medicaid as well as allowing states to waive the essential health benefits.    

By working to undermine the existing market while this legislation hangs fire, Mr. Frelinghuysen is proving that his commitments are worth no more than Donald Trump's.

Andrew Sprung is co-chair of the healthcare committee for BlueWaveNJ, a New Jersey-based grassroots organization working to protect and improve the rights, opportunities, and quality of life of all people. He writes about healthcare policy at Xpostfactoid and at healthinsurance.org.

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