One of the Republican party’s biggest complaints about the Affordable Care Act is that it requires most individuals to have some sort of health insurance or pay a penalty. The draft Senate bill released last week gets rid of that financial penalty, but a newly released revised version of that bill replaces it with a waiting period of up to six months for people who are uninsured or let their coverage lapse.
Under the latest version of the Better Care Resolution Act [PDF], anyone who is buying insurance on the individual market (as oppose to employer-sponsored group coverage or Medicaid) but has gone more than 63 days without coverage would not be covered under a new plan until either six months have elapsed or the insurer’s new “plan year” has begun.
Why has this been added? For the same reason that the Affordable Care Act has the individual insurance mandate: To minimize the likelihood of people only signing up for insurance when they are sick. The idea is that it incentivizes people to keep their plans by penalizing them if they let coverage lapse. Insurance companies need a large number of healthy, paying customers who make minimal claims to make up for the costs associated with chronically ill patients and other high-risk policyholders.
The House repeal-and-replace bill sought to allow insurers to charge a higher premium to individuals with lapsed coverage, in the hope that people would maintain their insurance plan rather than risk having to pay more money when they restarted with a new plan months later.
The question is whether a six-month delay will actually keep enrollment high. A Congressional Budget Office score of the House version estimated that it would leave an additional 23 million people without coverage after ten years, with around one-third of those coming from people who allowed their coverage to lapse.
The CBO is expected to release its score on the Senate’s first draft of the BCRA later today. That score will not include this waiting period penalty.