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The GOP's risky premium pledge

Republicans promise their Obamacare repeal bill will bring down insurance premiums. Now, they have to figure out how to do it.

By JENNIFER HABERKORN

Senate Republicans may be all over the map on an Obamacare repeal plan, but on one fundamental point — reducing insurance premiums — they are in danger of overpromising and underdelivering.

The reality is they have only a few ways to reduce Americans’ premiums: Offer consumers bigger subsidies. Allow insurers to offer skimpier coverage. Or permit insurers to charge more — usually much more — to those with pre-existing illnesses and who are older and tend to rack up the biggest bills.

Since there’s no appetite within the GOP for throwing more taxpayer money at the problem, Republicans will need to make some hard decisions to hit their goal. But the effort to drive down premium prices will inevitably create a new set of winners and losers and complicate leadership’s path to the 50 votes they need to fulfill their seven-year promise to repeal Obamacare.

“Anyone can figure out how to reduce premiums,” said Sen. Chris Murphy (D-Conn.). “You can reduce premiums by kicking everybody that has a pre-existing condition off insurance or dramatically reducing benefits.”

Republicans say that Obamacare’s insurance regulations are responsible for making coverage prohibitively expensive and contend that premiums would fall if those rules are rolled back. They say they have multiple ideas about how to roll those back while also insulating the most vulnerable but have yet to weave those together into actual legislation.

“We can overcomplicate it,” said Sen. Thom Tillis (R-N.C.) said of reducing premiums. “But at the end of the day, does it make sense for a family that’s trying to get health care, trying to pay for their insurance?”

The reality may not be so straightforward: Just ask ex-President Barack Obama, who promised that his health care overhaul would save families $2,500 and that consumers would be able to keep their doctor or insurance plan if they wanted.

In the decades before Obamacare, premiums were also rising nearly every year as a result of the introduction of expensive new drugs and procedures, as well as medical tests. Those factors are likely to continue to push up health care costs in a post-Obamacare world, not to mention that insurers are the ones who actually price the coverage and set rates each year.

Analysts say Republicans might achieve their goal for younger, healthier consumers, but at the cost of wiping out popular consumer safeguards like the ban on insurers charging more for coverage to those with pre-existing conditions. That, in turn, could leave millions unable to afford the hikes associated with heart disease or rheumatoid arthritis or cancer.

The Congressional Budget Office’s report on the House repeal plan also made the task of Senate Republicans more difficult. The analysis concluded that allowing states to opt out of Obamacare’s pre-existing condition requirement would destabilize markets and in some cases, drive premiums upward for older, sicker people. Several Republican sources say the CBO’s assessment would encourage lawmakers to preserve Obamacare’s pre-existing condition policy.

Not everyone is convinced. Sen. Ron Johnson (R-Wis.) said Obamacare’s pre-existing condition policy is the “biggest reason” premiums have gone up.

“A lot of people don’t want to touch that,” Johnson said of his fellow Republicans. “I would like to. Because I think you can handle pre-existing conditions in a different way without collapsing markets.”

Most Republicans do support allowing insurers to sell more basic and, therefore, cheaper policies without, say, maternity coverage, mental health or prescription drug benefits. They argue that consumers should be able to buy more basic — and inexpensive — policies tailored to their specific needs. The problem is, they may not be able to make such changes under the complex rules governing the fast-track process being used to avoid a Democratic filibuster.

Some Republicans also support allowing insurers to charge older people higher premiums despite the likely political blowback, although Republican leaders appear to have been spooked by the storm House Republicans faced when they raised the idea.

Ultimately, the GOP drive to reduce premiums could wind up expanding the number of uninsured Americans. The CBO also estimated that the House repeal bill, which would scrap many insurance regulations, would result in 23 million more uninsured Americans by 2026 than under the Affordable Care Act.

Premiums vary all over the country but have generally been on the rise. This year, benchmark Obamacare policies in 17 major cities rose an average of 9 percent, according to the nonpartisan Kaiser Family Foundation. That’s up from 2 percent in 2016.

There also have been eye-popping rate increases in Obamacare plans — in some places, doubling in one year.

But while lawmakers can tweak market conditions in the hope of making premiums fall, they don’t control how insurers set rates.

“If it were easy, it would have been done last week,” said Sen. Mike Rounds (R-S.D.), who was an insurance executive before he ran for public office. “The real challenge for us is recognizing how you bring the actual cost back down and transfer the cost to a willing business community,” he said, referring to insurance companies.

Rounds said the GOP can drive down premiums by eliminating Obamacare requirements such as mandates on how much of the health care expenses a plan has to cover and age bands that prevent insurers from charging older people more than three times what younger people pay.

“In the end, reducing cost is going to be ultimately the way” the bill is judged, said Sen. John Thune of South Dakota, the Senate’s No. 3 Republican.

When asked whether that’s going to be possible, Thune said, “That is the goal.”

Republicans, mindful of the Democrats' experience when Obamacare was enacted in 2010, have been careful not to put a dollar figure on how much premiums will decline.

“The thing we’ll be judged by is the extent to which we’ve overcome the promises of the Obama administration,” said Sen. Chuck Grassley of Iowa, a top Republican on the Senate Finance Committee, enumerating promises Democrats made about Obamacare that didn’t pan out, including falling premiums and consumers being able to maintain their care arrangements.

“The bottom line,” he said, “is we need to make sure what we can do to make sure that that doesn’t happen again.”