The still-evolving Senate Republican replacement for the Affordable Care Act could make health insurance unaffordable for more than 50 million middle-aged Americans by allowing insurers to raise premiums for those with pre-existing conditions. Other provisions would allow carriers to boost insurance costs for even health people aged 50-64.

The bill would give states federal dollars to help subsidize those rate increases, though  it would also slash the federal contribution to Medicaid in most states. Overall the combined federal share of Medicaid and insurance subsidies would be $160 billion lower over the next 10 years than under the ACA, according to the Kaiser Family Foundation.

According to the Centers for Disease Control, in 2012, 25 million people, nearly one-third of those aged 45-64, reported at least one chronic condition, such as high blood pressure, diabetes, heart disease, arthritis, cancer, or lung disease.  Another 15 million, or nearly 20 percent, reported two and 11 million, or about 14 percent, reported three or more. In a separate study, 37 percent of those aged 45-64 who had visited a doctor had at least one chronic condition. Some of those with chronic conditions may be covered by employer insurance or Medicare and thus protected from the new rules. Those covered by Medicaid would be subject to other curbs under the bill.

Unaffordable premiums

The CDC list of chronic conditions is smaller than what many insurers consider pre-existing conditions. Thus the number of people facing higher premiums could be even higher.  The Kaiser Family Foundation calculates that about 27 percent of all adults under age 65 have some pre-existing condition. And the share among those 45-64 is much higher.

Whichever data you prefer, it is fair to say that anyone with one of those conditions would be at risk of paying high, and perhaps unaffordable, insurance premiums under Graham-Cassidy.

The bill would address pre-existing conditions indirectly, which is why its backers insist that it would not block those with chronic conditions from buying insurance. True, carriers could not refuse to sell insurance to those with pre-existing conditions, but they could price them out of the market.

State regulation

By returning regulation of the individual insurance market to the states—where it was before the ACA—the bill would give insurance commissioners authority to allow carriers to raise premiums for those who are sick. And, make no mistake, insurers would ask. And they’d almost certainly accompany their request with a threat to pull out of the individual market in those states that don’t greenlight rate hikes for those with pre-existing conditions.

The law would also allow states to let insurers increase rates for everyone aged 50-64 regardless of their health status. AARP estimates that age-rating alone would boost premiums for 60-year olds by an average of $4,000-year.

These changes would result in big differences in access to insurance, and thus to health care among the   states. In some, regulators would likely limit rate increases. Others might allow higher rate increases but use some federal dollars to soften the blow with extra subsidies. In still other states, high-cost patients may be placed in separate high-risk pools, an idea that has been tried, with little success, in the past.

In a box

Senators Lindsey Graham (R-SC) and Bill Cassidy (R-LA) and their cosponsors are in a box. Any GOP effort to replace the ACA will eliminate its insurance mandate, those tax penalties on people who don’t have coverage and on businesses that don’t make it available to their workers. But that provision, much disliked by the public and despised by Republicans, is critical to the survival of any private individual insurance market.

Here is the problem: The ACA made a bargain with insurers. It makes them cover everyone–without underwriting individual buyers for pre-existing conditions. But if consumers don’t have to buy, they’ll just wait until they get sick to purchase coverage. Thus, people who do buy insurance are much more likely to claim benefits, driving up premiums for everyone.  To help avoid this problem, the ACA created a package of incentives (subsidies for many buyers and penalties for those non-buyers) aimed at encouraging healthy people to purchase coverage before they need it.

Those incentives have been too weak to do the job, which is one reason why ACA premiums have been high. But Graham and Cassidy would eliminate the penalties entirely and give states authority to set subsidies in unknown and unpredictable ways.  In effect, they’d be breaking the ACA’s bargain with insurers.

They’ve tried to finesse the problem by once again allowing insurers to underwrite for pre-existing conditions. That might encourage carriers to stay in the market and could lower costs for young, healthy buyers. But if you are a late Baby Boomer or a Gen Xer, you’d pay a heavy price for this fix.