07.13.17

Cantwell Speaks Out on New Junk Insurance Provision of Latest Trumpcare Bill

Cantwell: “So it turns out that these junk plans… don't even count as insurance, and everybody that's in the real insurance market would then end up having to pay more.”

WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA) delivered a speech on the floor of the U.S. Senate to oppose the latest version of Senate Republicans’ Trumpcare bill, released earlier this afternoon.

The Senator called out a new provision added to the bill allowing insurers to sell “junk” plans that would not cover essential health benefits, which must be covered under current law. She noted a similar strategy was attempted in Washington state in the 1990s.

“The state of Washington tried this… a group of state legislators allowed these junk plans to be sold along with compliant plans. Guess what happened? Nearly all of the insurers in our state pulled out of the individual insurance market and a death spiral ensued. Why? Because the cost then of that individual market was so high and so great, they couldn't service it,” said Cantwell in her remarks.

A transcript of the senator’s remarks can be found below:

Sen. Cantwell: Thank you, Mr. President. I know my Republican colleagues are working on a version of the health care bill that they have been talking about today, and I know my colleagues are going to try to say they are protecting the sickest of Americans, and they are saying that they do want to insure people with preexisting conditions so that they don't have to pay through the nose. But I think the president called the House version of this attempt a very mean bill. I think the original Senate bill was just as mean if not meaner, and the number of people that were cut off of Medicaid over a period of time can be left without access to care.

Today's bill now also includes an amendment, or a package of ideas, by my colleagues from Texas and Utah, a provision that allows insurers to sell junk insurance on the individual market as long as they offer at least one plan that is real insurance. Then insurers could also offer a bunch of plans that, as CBO called them, aren't really insurance. That is, they could just cover one or two things, and, yes, they would be cheaper, but if CBO doesn't even consider them insurance, how are they insurance? So I think the whole notion of junk insurance being invested into this bill is very problematic.

Under junk insurance plans, you could limit or deny coverage of essential benefits, including hospitalization, maternity care, preventative care, prescription drugs, laboratory care, and substance abuse treatment. So that's what you could limit, and we wouldn't want those limited. This is why CBO says if you can't go to the hospital and get care, then it's not really insurance, and I have to agree with them on that. These plans could charge people more, or simply deny them, based on preexisting conditions, and these plans could offer policies that pay out less than 60% of the health care expenses, leaving beneficiaries with these insurmountable deductibles that would make it hard for them to pay.

And these plans would also impose a lifetime cap on insurance. I just had a young woman come to my office today who has been treated at Seattle Children's Hospital in my state. They live in a neighboring state but Seattle Children's Hospital is such a regional entity in the state of Washington, in Seattle, and we're so proud of that, but they told me about the debilitating disease that this young child was born with and how many surgeries she had. Literally, the brain treatments that she has had to receive, she told me and her mother told me, if there had ever been any type of lifetime caps, ‘we would have exhausted them in the first few years.’ I'm so proud that she came to see us today and is continuing to talk about why capping health care plans would be so devastating to somebody like her.

We don't want to create two markets of insurance. We don't want one that is the real plan that is real insurance. I think in the last couple of days of discussion, people said we'll put in a bunch of money so that will help the market that's the real market. I talked to my insurance commissioner from the state of Washington, and he said, ‘listen, when you don't spread out risk, you're not really going to have a market and you're going to create problems.’ And so the notion that you think that catastrophic out-of-pocket costs be borne by these individual patients I think is wrong or that these higher premiums and deductibles could be covered.

So it turns out that these junk plans, as I said, don't even count as insurance, and everybody that's in the real insurance market would then end up having to pay more. So the bill explicitly states that noncompliant plans will not count as credible coverage for the purpose of individuals demonstrating that they have insurance. I'm checking with my staff. That's right. That's what's in the proposal. Okay. The bill explicitly states that noncompliant plans will not count as creditable coverage for the purposes of individuals demonstrating they have insurance. So under this bill, if someone gets one of those junk plans, if somehow you see that marketed and you buy into it because you think it's cheap and you think this is the greatest thing ever and then you try to enroll in a comprehensive plan, there's a good chance you will get a lockout period of six months before you can get coverage.

Now, why am I here talking about this? Because Washington, the state of Washington tried this. We tried this approach in the 1990's. After our state had passed a major health care reform bill in the 1990s, a group of state legislators allowed these junk plans to be sold along with compliant plans. Guess what happened? Guess what happened? Nearly all of the insurers in our state pulled out of the individual insurance market and a death spiral ensued. Why? Because the cost then of that individual market was so high and so great, they couldn't service it. So they said oh, my gosh, if I have to offer a compliant plan along with this junk insurance, I can't make the compliant plan work because it costs so much. We're not staying.

So this very important experience for us taught us that that's not the way for us to spread risk. And I'm concerned and I've heard from a number of advocacy groups, not just the young woman from Children's Hospital who came to see me today, but patient advocacy groups, consumer groups, and health insurers themselves like the American Health Insurance Organization, Blue Cross Blue Shield, AARP, the American Cancer Society, American Action Network, American Diabetes Association, American Heart and Lung Association, Cystic Fibrosis Foundation, March of Dimes, National MS Society, National Health Council, National Coalition of Women and Heart Disease, all of these individuals do not like this idea of junk insurance, of saying you can have a compliant plan that's real insurance and a marketplace where there are things that aren't really insurance. Because then people are going to go buy a bunch of things that aren't really insurance and not have the ability to get cost and care and run up uncompensated care and then you're going to make the real market unsustainable and unsupportive. And the rates are going to go so high, people are just going to pull out.

A group of the ten of the leading patient advocacy groups also wrote about this when it was proposed as an amendment. People were saying, quote, “under the amendment, insurance companies would be allowed to charge higher premiums to people based on their health status in addition to opting out of patient protections in the current law, such as a guarantee of essential health benefits,” those things I was going over a few minutes ago. “And that prohibition would mean an annual or lifetime coverage caps,” end quote. So they go on to say that “separating health enrollees from their preexisting conditions will also lead to severe instability of insurance markets and this is unacceptable for our patients,” end quote.

Yesterday the American Health Insurance Plans wrote, quote, “allowing health insurance products governed by different sizes and standards would further destabilize the individual market and increase costs for those with preexisting conditions,” end quote. So that is the largest health insurance group in the country, and they are saying this. So if they're telling us in advance, this is going to really, really, really destabilize the market and cause problems, we should listen because right now what we've had is an expansion of Medicaid and covering more people, raising the GDP and helping areas of our states and counties, creating more stability.

We've had some challenges in the individual market. We should fix that. We should definitely drive down the cost of the delivery system by continuing to improve it. But the notion that this is the fix for the individual market when the providers are telling us it is going to destabilize the market and drive us out, we should understand what the result of that is going to be. Yesterday the Blue Cross organization wrote, quote, “the result of the Cruz-Lee would be higher premiums, increased federal tax credit costs covering those available on the exchange and ensures exiting the marketplace for coverage is out of reach of consumers,” end quote.

Now, I believe that our goal should be trying to drive down the cost of insurance, and we have lots of ideas about that and want to work with our colleagues about that. But I'm very concerned that this approach to try to get people supporting a senate proposal is the wrong approach and will drive people out of the market. Now, the bill still is the war on Medicaid, I think. The bill still permanently cuts and caps the Medicaid program. I've said numerous times we save $2 billion in the state of Washington by rebalancing people on to community care. It's a great concept. We have a lot of people who are going to live longer. We have baby boomers reaching retirement. The amount of people who are going to demand services, whether in Medicaid or Medicare, is going to be an increase just because of the population bubble. We should be doing things to drive down the cost of care.

There are great ideas. I got some of those in the bill [ACA]. We ended up passing those things, and some states are actually working on that. About 10 to 15 states are actually working on that concept of rebalancing to community-based care and making long-term care more affordable. I guarantee you we have to do that. But if you permanently cap or cut Medicaid, you are going to have veterans who use access to Medicaid for care, who aren't going to get care. You're going to get people who need opioid treatment. I find it interesting, you know, we have this program over here. I see my colleague from Michigan on the floor. We call it the Saginaw Health Clinic. And you'd say, okay, Saginaw Health Clinic, there's a bunch of money in this bill. Apply for opioid help. They say okay, we're going to get ten million. The first thing when you walk in the door of the opioid Saginaw clinic, they're going to say “are you on Medicaid or not.” If you're not on Medicaid, you are not going to get any opioid help. The notion we would cut people off Medicaid, but put more money in the opioid problem is not what we need to do to solve our challenge here.

What we need to do is make sure that we are delivering the most cost effective care as possible and to make sure that people are getting access to care, and that is why I have been all over the state of Washington. I have met so many people. I've met people at health care facilities who have told me some of their highest costs were a patient that continually came to see them in the emergency room maybe 30 times a year because they didn't have coverage, and they drove up the cost of everybody. And then they said they finally got this person on the Medicaid Expansion and guess what? They don't have those costs anymore in their hospital and facilities and have driven down the cost. So I don't want to see people kicked off of Medicaid. I don't want us to see it cut in a declining budget. I want us to seek to improve Medicaid, make it more cost effective, more utilized and supported.

Estimates by CBO on this proposal, the colleagues on the other side of the aisle, a Medicaid cut would be $772 billion for Medicaid over the next decade, and the federal investment would be cut by 35% in the next two decades relative to current law projections. So that's a lot of consequence for the Medicaid population, and I think that's why we have so many groups and organizations here anxious about this proposal and where we go. We definitely want to talk to our colleagues. As one former CBO director said the junk insurance idea is “a recipe for a meltdown.” This is someone who served in the past Republican administrations, and I take their word seriously.

I think what we need to do is work together to make sure that we get a program that addresses our most fundamental issues.  The challenges in the individual market, keep addressing how we keep and stabilize a population on the most affordable rates there are, and keep the things that we know have worked very, very well like the Medicaid Expansion. It has worked. It has supported people and it's helped us stabilize the market.

I will remind my colleagues, too, that the state of New York took one provision of the bill [ACA] and has 650,000 people in New York on a very, very affordable insurance plan. And we think that those are the kinds of things -- we think if you're an individual in the individual market, you should be able to get the same clout as somebody who works for a large employer. You should be able to go in and buy in bulk as a class, as a group of people, and when you buy in bulk, you should get a discount. And that's what we think will help us in the individual market drive down these costs for what has been 7% of the marketplace.

So I urge my colleagues to reject this latest proposal. Let's get serious about fixing the things that we know we can fix and improve upon, but let's keep for the American people, for the over 22 million Americans who are very nervous about this proposal because they know they're going to get cut off of care, let's not do that to them. Let's improve where we need to go in affordability in the health care arena, and not think that a junk insurance program or cutting people off is the solution for the future. I thank the President, and I yield the floor.

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