The Republican healthcare bill would bring 'close to unprecedented' chaos in the health system
Experts say the so-called Graham-Cassidy healthcare 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."
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."