House GOP Announces Breakthrough on Health Care

House Republican leaders on Thursday unveiled an amendment they described as a major step in resurrecting their efforts to repeal Obamacare.

Developed by Reps. Gary Palmer (R-Ala.) and David Schweikert (R-Ariz.), the proposal would create a risk-sharing program to stabilize the market for the costliest patients. The federal government would run the program for three years before handing off management to the states.

“We want to do something that brings down premiums and makes sure that we take care of people with pre-existing conditions. And I believe we do this.”

Palmer and Schweikert said at a Capitol Hill news conference that they modeled the proposal after a program in Maine that has succeeded in reducing premiums for insurance customers.

“We want to do something that brings down premiums and makes sure that we take care of people with pre-existing conditions,” Palmer said. “And I believe we do this.”

Schweikert said one of the biggest challenges in the health care debate arises from the “hockey-stick curve” created by the fact that 5 percent of Americans incur 50 percent of health care costs. He said the amendment he and Palmer have proposed would address that.

“It actually has a certain elegance to it, both from a budgetary mechanic to grabbing that top piece of risk,” he said.

House Speaker Paul Ryan (R-Wis.) has fully endorsed the idea and sent the proposal to the House Rules Committee. He told reporters Thursday that it is an idea that unifies the often-fractious caucus.

“This brings us closer to the final agreement that we all want to achieve,” he said. “This idea was offered by two of our most conservative members, Gary Palmer and Dave Scheikert. But it has been embraced by a broad spectrum of our conference, people representing all corners of our conference, as you can see by just a few of the members who are here today.”

Ryan stopped far short of saying that American Health Care Act is ready to go. But he expressed optimism.

“That divide is narrowing quickly,” he said. “We’re gonna keep working in the days and weeks ahead.”

Ed Haislmaier, a health care expert at the conservative Heritage Foundation, said the new proposal is not actually a high-risk pool in the traditional sense where people with expensive, chronic conditions are moved into a separate insurance plan. Instead, he said, it represents an attempt to balance costs across the insurance market. Nor does it involve an infusion of taxpayer dollars.

Instead, it allows for transfers of money among insurance companies to prevent any firm from getting stuck with a disproportionate share of costly claims, said Haislmaier. He offered the example of insurance company A with a high number of diabetes claims and insurance company B with a lower number.

In that scenario, insurance company B would pay some of the premiums it collects to insurance company A.

Based on some work he did for a similar program in Utah years ago, Haislmaier said he believes the disparities largely even out.

“The reality of insurance companies’ ending up with a disproportionate share of sick people is nowhere near as big as the fear,” he said.

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Still, Haislmaier said, a properly run program along the lines of what Republicans are talking about could have a beneficial effect on premiums. If insurance companies are confident that there is a backstop to protect them against an imbalanced customer mix, he said, there will be less of a need to build an extra cushion in premiums — “defensive rating,” in the parlance of insurance companies.

“What we’re dealing with on some of this is you have to account for perceptions even if you think the reality would be different,” he said. “It gives them another tool for managing uncertainty.”