What If You Could Take It With You? Health Insurance, That Is
Many Republican leaders have promoted the idea that consumers should have a "
health care backpack," which would make it possible to take insurance from job to job or when moving, starting a business or retiring.
The concept — often referred to as "portability" — is appealing. Why should a health plan be tied to where you work or live? The answer, of course, is "it's complicated." As Republicans debate ideas for repealing and replacing the Affordable Care Act, portability might play a central role in their plan. So how would that work?
Portability Is Hard To Define
The notion of "portability" in the purest sense means that consumers can stick with the same insurer, the same benefits and the same coverage limits, even if they move or change jobs. In the current policy discussion, though, portability is more likely to be viewed as a means for consumers to get access — possibly with the help of a tax credit — to a variety of health plans.
If keeping the same plan is the goal, that would be very tricky. The health care system is just not built that way.
Among the health plans 156 million of us get from our jobs, only a few insurers offer national networks of participating doctors and hospitals. And most of the plans available to people who buy their own insurance through the individual or small group market are local and limited by specific geographic areas. Policyholders who move away generally must change carriers. And insurers sometimes pull out of markets, meaning stranded consumers would also have to pick new plans.
Such factors could create a predicament for Republicans similar to the "if-you-like-your-health-plan-you-can-keep-it" problem that bedeviled President Barack Obama when tens of thousands of consumers had to change their coverage after the ACA took effect.
Take A Tax Credit Instead
Because of these hurdles, some advocates suggest a portable tax credit. The proposals vary, but here's how it could work: If a consumer moves or quits a job to start a business or go back to school or take an early retirement, they would get a tax credit they could apply to pay for their new insurance.
"To get to true portability, you have to be able to choose a plan and have the same subsidy ... and take [the subsidy] it with you when you leave," says Stuart Butler, a senior fellow at the Brookings Institution, a D.C.-based think tank. That's how the ACA subsidy works. It uses an advance tax credit calculated by income.
In contrast, several of the GOP proposals would link the subsidy to age instead of income, with older consumers who likely have higher health costs and premiums getting a bigger credit, although the amounts debated are generally less than what consumers now receive under the health law. Also, the proposals generally do not link the credits to the cost of insurance, potentially creating unhappy consumers in high-premium regions.
Current Portable Coverage Poses Political Problems
Portable coverage already existed before Obamacare. The Federal Employees Health Benefit Program, the military's TriCare and Medicare all offer such coverage. But enrollment in those programs is limited to specific groups: federal workers, military members and their families, certain qualifying people with disabilities and those older than 65.
When running for president, Sen. Bernie Sanders, I-Vermont, suggested a Medicare-for-All plan, an idea popular among the left. But the current GOP-controlled Congress is unlikely to adopt this approach or to call for opening the federal employee program or the military plan to the general public.
Covering everyone through a single-payer system — common in Europe — where the government pays the bills but private providers or government agencies offer the medical care, also would fall into this category but is currently a political nonstarter in the U.S.
A Risk To Job-Based Insurance
Employers who provide work-based coverage fear that if Congress makes health plans too portable, meaning everyone has access to the tax credits, the youngest and healthiest might peel away from their employer plans' risk pools to buy insurance. This would drive up premiums for those who remain. To prevent that, several GOP plans — including House Speaker Paul Ryan's — would bar people with job-based coverage from getting a credit. But others, including the plan put forward last year by now-Health and Human Services Secretary Tom Price, don't include that prohibition.
Pre-Existing Conditions? Separate Rules
To be truly portable, consumers must be offered plans regardless of their health status, age or other considerations. Before the health law was enacted, insurers could reject people with medical conditions. But the ACA prohibits insurers from redlining sick people or charging them higher premiums. Although popular in opinion polls, those Obamacare provisions may face some changes under the GOP plans.
Ryan's plan would allow a one-time open enrollment during which uninsured people could sign up no matter their health status. Waiting would result in higher premiums.
Price's plan would require insurers to accept all comers during enrollment periods every two years. His plan would also require consumers to maintain continuous coverage, or risk having preexisting conditions excluded from future coverage.
Kentucky Sen. Rand Paul's plan would do away with the "guarantee issue" requirement altogether and allow insurers to exclude medical conditions from coverage.
Cheaper Plans, Less Coverage
Cost is essential to portability because if consumers can't afford insurance, it doesn't matter that it can move with them. To bring premiums down, some Republicans suggest easing the health law's essential benefits requirements. More flexibility for these rules could spark competition and open the market to added options, from low-cost, "bare-bones" plans to high-premium comprehensive coverage, proponents say.
"From a consumer perspective, it's important to have wide choice," says Butler.
But the less expensive plans would likely be more restrictive and exclude coverage for some services, such as prescription drugs.
Some experts warn that without some benefit rules, plans could end up in a "race to the bottom," with few insurers wanting to offer broad benefits at the risk of attracting the sickest enrollees.
"If their answer is to make it affordable by stripping down the benefits, then you leave families exposed to a lot of financial risk if something happens to them," says Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University.
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