Amended Senate Bill Includes Waiting Period for Those Who Let Coverage Lapse

On June 26, 2017, the Republican Leadership released an amended version of the Senate Better Care Reconciliation Act.  It is very similar to the version they released on June 22, but includes two changes.

First, it amends a couple of provisions of the stability and innovation funds section to allow both short and long-term funds to be used to purchase health insurance benefits.  This was apparently done to align the program more closely with the CHIP program.  The stability and innovation fund is being created through the CHIP program, reportedly so as to incorporate CHIP’s abortion funding restrictions.

Second, it makes a significant change with respect to individual market requirements. The original Senate bill repealed the individual mandate but left nothing in its place to encourage healthy people to enroll in the individual market.  The House bill had included provisions that imposed a premium surcharge for a year on people with a gap in coverage during the preceding year, while the MacArthur amendment would have allowed states to permit insurers to health status underwrite individuals who had a gap in coverage.  The Congressional budget office predicted that the enrollment penalty would discourage healthy people from enrolling and that the health status underwriting option could allow healthy people to opt out of community rating and destabilize insurance markets.

The new Senate amendment would allow an insurer in the individual market to impose a waiting period of six months on an enrollee who had had a gap in coverage of 63 days or more during the preceding 12 months.  An individual who applied for coverage during the annual open enrollment period or during a special enrollment period would have to wait six months from the date of application to enroll in coverage.

Under this provision, an individual who applied on November 1, the first day of the open enrollment period, could not begin coverage until May1 of the following year.  An individual who lost employer coverage on March 31—who would under the ACA be able to get coverage effective April 1 under a special enrollment period for loss of employer-sponsored coverage—would have to wait until October if he or she had experienced a 63- day gap in coverage during the preceding year prior to getting employer coverage.

Individuals who do not qualify for a special enrollment period would be able to apply and be eligible for coverage on either the first day of the next plan year or the date six months after they apply for coverage, whichever is later.  Thus an individual who is ineligible for a special enrollment period but applies on July 1 would be able to get coverage on January 1 of the following year, but a person who applies on October 1 would have to wait until April.

The waiting period does not apply to newborns or to children adopted or placed for adoption before reaching the age of 18 if an application is submitted within 30 days of the date of birth or adoption.  It also does not apply to individuals with coverage in the individual market the day before the effective date of the coverage in which the individual is enrolling.  Thus individuals could transition from one individual market plan to another or reenroll in the same plan, even if they had experienced an earlier gap in coverage.

The waiting period would impose an additional barrier on individuals who want to enroll in coverage and reduce the immediate benefits of getting coverage — and thus, would likely have the effect of discouraging enrollment in the individual market.  This could reduce the cost of the tax credit program, but might also decrease the stability of the market. But most importantly, it would mean that individuals who need health care will have to wait six months longer to get it. Under current rules they have to wait until open enrollment.  Now many will have to wait even longer. Six months may mean the difference between life and death for a person with cancer awaiting treatment.  It will also be a very long time for providers who are not being paid while caring for someone who has no means of paying.

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