The Senate GOP's Better Care Reconciliation Act draft, released June 22, could spark mixed credit implications for health insurers, according to Fitch Ratings.
Here are six things to know.
1. While the BCRA will have similar broad implications for insurers as the House-passed American Health Care Act, Fitch Ratings says notable differences exist.
2. Relative to the AHCA, the BCRA proposes greater tax credits for individuals purchasing coverage on the exchange, a one-year extension of a proposed Medicaid funding phase out, alternative Medicaid inflation adjusters and no clause allowing individual states to waive community rating regulations. Community rating regulations prohibit payers from charging higher premiums based on pre-existing conditions or gender.
3. Fitch Ratings estimates BCRA's increased tax credits would be a credit positive for health insurers. Compared to the AHCA's age-based tax credits, the Senate bill's tax credits would resemble those under the ACA and reduce consumers' out-of-pocket costs.
4. However, BCRA's retention of the ACA requirement that payers charge the same rates for health plans regardless of health status is credit negative for health insurers. Fitch Ratings says this will block payers from the "enhanced risk-based pricing differentiation" possible under the AHCA.
5. The Senate bill's one-year extension of a Medicaid phase out would be modestly positive for insurers, as it would give them more time to prepare.
6. Large, diversified health insurers are unlikely to see their credit profiles significantly affected by either the BCRA or AHCA. Smaller, less diverse payers — especially insurers with a large presence in the Medicaid or individual market — may be materially affected in the long term by some of the bills' proposals.