The Republican health care bill would bring 'close to unprecedented' chaos in the health system

Republicans are taking one last stab at repealing and replacing the Affordable Care Act, but experts say their latest attempt runs the risk of bringing chaos to the US health care system.

Experts say the so-called Graham-Cassidy health care bill, whose legislative fate became more uncertain Friday, would set up a deadline for states that could cause massive upheaval and sow uncertainty in insurance markets.

The legislation would keep intact several provisions of the law known as Obamacare for 2018 and 2019. But it would force states to set up an entirely new individual insurance market — for people who don't get coverage through an employer —  and Medicaid by 2020.

The bill's authors have presented the two-year window as a cushion to ensure no disruption for people in those insurance markets. But Larry Levitt, a senior vice president at the Kaiser Family Foundation, said the transition isn't nearly long enough.

"This would be a really heavy lift for states," Levitt told Business Insider in an email. "They’d have two years to figure out what kind of health insurance system they want to create, starting essentially from scratch, and then implement it. This is close to unprecedented."

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Graham-Cassidy: What you need to know about the new GOP health care bill
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Graham-Cassidy: What you need to know about the new GOP health care bill

The legislation was initially proposed by Senators Lindsay Graham (center) and Bill Cassidy. Cassidy (right of Graham) is a physician in addition to being a lawmaker.

(Photo By Tom Williams/CQ Roll Call)

Many health experts say that waivers in the bill could allow states to remove one of the more popular aspects of Obamacare -- the protection of people with preexisting conditions from being charged more for insurance -- if the deregulation would lower overall health costs.

The legislation also requires states to prove that any new health care system "intends to maintain access to adequate and affordable health insurance coverage for individuals with preexisting conditions."

(Photo: Getty Images)

The bill's current text complies with the conservative-favorite Hyde Amendment, which states that no taxpayer funds shall pay for abortions except in the case of rape, incest or if the mother's life is at risk.

Because of specific Congressional rules, the Senate parliamentarian will have to agree on the structure of the legislative language in blocking federally subsidized programs from including abortion coverage.

Even if the language is blocked, though, the Graham-Cassidy bill would funnel funding through the Children's Health Insurance Program beginning in 2021 -- which is compliant with the Hyde Amendment. 

(Photo: REUTERS/Rebecca Cook)

A study by the Commonwealth Fund estimates that around 15 million to 18 million more Americans would be without coverage by 2020 under the plan.

(Photo: Getty) 

The Brookings Institution estimates the number of people with insurance coverage would drop by around 21 million between 2020 and 2026.

(Getty Images)

The bill would also eliminate the mandate enforcing that everyone either have insurance or pay a penalty.

The Brookings Institution estimates the number of people with insurance coverage would drop by 32 million by 2027.

Beginning in 2020, the bill as law would eliminate Obamacare's Medicaid expansion and ends its marketplace subsidies.

(Photo: Getty)

Under the bill, CNN reports 34 states would receive less federal dollars for health care than they currently do under Obamacare.

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The Graham-Cassidy bill would give states a chunk of money, known as block grants, every year based on a formula around the number of enrollees in certain programs. The states would be allowed to determine how people in the individual market received care.

The legislation's proponents argue it would give states new flexibility. But it would also force states to pass legislation to create a formula for dividing up subsidies that help people buy insurance — as well as to create state-level enforcement and regulatory schemes.

Matthew Fiedler and Loren Adler, health policy analysts at the Brookings Institution, said the challenges for states would be even more daunting than amid the implementation of the Affordable Care Act.

"States would have only around 15 months to get new policies in place to do so before insurers would need to begin developing products for 2020 and only about 27 months before the new rules would have to be in effect," Alder and Fiedler wrote as part of an analysis Friday. "For comparison, the process of drafting and implementing the ACA began close to five years before the new rules would be in effect. It seems likely that many states would simply fail to meet this timeline or meet the timeline only by deploying ineffective policies."

The researchers said the challenges would lead to an increase in the number of people uninsured due in part to the heightened uncertainty for insurers and beneficiaries.

"Transitions are difficult even under the best of circumstances. Government agencies need to gain experience administering their states’ new regulatory regimes and subsidy programs," their analysis said. "Private insurers need to learn to set premiums for a new market, while individuals need to learn how to access new coverage arrangements."

Levitt pointed to the rapidly changing market and possibility of market disruption as consequences that would likely scare off insurers, which like to set prices and participation areas in advance to get a sense of their bottom line.

"I think it’s quite unpredictable how insurers might react to passage of Graham-Cassidy," he said. "Insurers are not going to know what states will do, and some may exit the market now to wait and see how things shake out."

And Adler and Fiedler wrote that insurers may enter the new markets with higher premiums to counteract the uncertainty.

"As with the years leading up to 2020, uncertainty about what rules will govern the individual market in the future may put downward pressure on individual market participation, increasing premiums and reducing coverage," the analysis said.

That could also be a reaction to the lessons learned from Obamacare. Insurers underpriced many of their Obamacare plans in the first few years of the exchanges, leading to significant financial losses and rapidly rising premiums over the past few years.

So even with the two-year window, the massive upheaval would lead to a mad dash by states, insurer chaos, and potentially higher costs for insurers.

Or as Jon Kingsdale, a public health professor at Boston University, told the New Times Times: "That’s not enough time for most states to figure it out."

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