The Senate unveiled a new penalty in its Obamacare repeal bill that would punish people who lapsed in health coverage for more than two months in any given year, by making them wait to be eligible to enroll for a new plan.
The new language released by the Senate Budget Committee on Monday would require insurers to lock out people with lapsed coverage starting in 2019. The insurers in the individual market "shall impose a 6 month waiting period" for anyone who "cannot demonstrate 12 months of continuous creditable coverage."
"This new provision would certainly encourage people to purchase insurance, and is an improvement over the base bill filed last week — which lacked any provisions discouraging people from waiting until they were sick before they purchased insurance," said Dan Mendelson, CEO of health-care consultancy Avalere Health.
Insurers have been concerned that the repeal of the individual mandate to buy insurance under the Affordable Care Act would mean that fewer healthy people would feel compelled to buy coverage, if there were no financial incentive.
The House bill imposes a 30-percent premium penalty for one year when someone re-enrolls, which critics say would create a high bar for those who are sick to regain coverage.
The Senate's six-month lockout period appears to be modeled on similar provisions in Medicaid programs in Republican-led states like Indiana, Arizona and Kentucky.
"We are glad senators see the importance of improving the risk pool through broad participation," said Ceci Connolly, president and CEO of the industry group Alliance of Community Health Plans, but she did not endorse a full lockout period.
"In the absence of a mandate, a better option might be limiting individuals who delay enrollment to a lower level of coverage. In that way, they would be in the system and be protected in case of serious illness or injury," she said.