The Wonk Room

GOP Health Bill: Insurers Can Ignore ‘All Of the Consumer Protection Laws’ & ‘Restricitons On Rate Changes’

The new Republican health care plan expands “coverage” and “choice” by permitting health insurers to sell policies across state lines. Under the Republican proposal, the insurer can choose a ‘primary state’ “whose covered laws shall govern the health insurance issuer” and can change states “upon renewal of the policy.”

Page 129 requires a “health insurance issuer” to “provide the following notice” informing consumers in so-called ’secondary states’ that the policy is “not subject to all of the consumer protection laws or restrictions on rate changes of the state.”

Here is the notice, as it is described in the legislation:

The GOP is conceding the progressive argument. It is admitting that insurance companies would have little incentive to continue doing business under certain state rules which “require that companies issue coverage to all new customers and not set higher rates for people who are already sick.” Instead, companies could chose a state with scarce regulations and sell policies that don’t provide mental health parity, cancer screenings, or abide by regulations that limit the rates that can be charged to higher-cost consumers. This way, plans can attract the healthiest applicants and detract the sick.

After an insurer issues a policy to an individual, the GOP bill does prohibit the issuer from increasing the premiums assessed on the individual “based on a health status-related factor or change of a health status-related factor or the past or prospective claim experience of the insured individual.” However, the bill goes on to say that “Nothing in paragraph (1) shall be construed to prohibit a health insurance issuer from terminating or discontinuing coverage” or “from raising premium rates for all policy holders within a class based on claims experience.”