A lot of Americans, including all but literally a handful of our elected representatives, have been sitting on pins and needles, waiting for the Senate to divulge its version of the House healthcare bill. Perhaps not the entire nation. But legions of healthcare wonks have, and Thursday (June 22, 2017), they were finally allowed to actually see it. The Senate finally releases their version of the House #healthcare bill Click To Tweet
Here’s how the bill would work, compliments of Bloomberg:
- Reduces the number of people eligible for subsidies. Currently, eligibility goes up to 400% of the federal poverty line, including households that earn slightly less than $100,000 a year for a family of four. The Senate bill reduced this threshold to 350% of the poverty line, or about $86,000.
- Reduces the values of the premium subsidies. The Senate bill’s formula lowers the benchmark plan (which determines the subsidy level) from the second-lowest cost “silver” plan–which should cover about 70% of anticipated health expenses–to one with an actuarial value of 58%. This will make the subsidies considerably less generous, and means people are apt to prefer plans with higher deductibles. In order to offset the severe effects this would have on elderly customers, the Senate bill tweaks the subsidy formula a bit to account for age.
- Lowers the cap on total subsidy expenditure. Under Obamacare, subsidy growth was capped once total outlay on premium subsidies hit 0.504% of GDP. The Senate bill lowers this cap to 0.4% of GDP, which means that the program is more likely to hit the cap, and have to start cutting subsidies to some groups.
- Eliminates the individual and employer mandates. This will score political points and will also probably destabilize the Obamacare exchanges and subsidies. But they’re already shaky.
- Restricts coverage for abortion.
- Ends the cost-sharing reductions–but not before paying insurers back for the money they’ve already laid out. Obamacare included a provision that lowered out-of-pocket expenditures for people making less than 250% of the federal poverty line, a subsidy known as “cost sharing reductions.” This became a political football because the bill didn’t actually provide funding for those subsidies–and when Republicans took over Congress, they refused to appropriate the money. After the insurers are paid the money they’ve been owed, the bill ends the program.
- Gives states much more flexibility in the waiver program. The Senate bill expedites the process for getting a waiver, and allows states a lot more liberty to design the program without interference from federal regulators.
- Cuts taxes significantly. In order to fund the new spending, Obamacare enacted taxes on everything from tanning to high earners. The Senate bill repeals most of those taxes, and delays the “Cadillac tax” on pricey employer-sponsored insurance until 2026. Presumably, senators are keeping the tax after 2025 to reduce the apparent cost of a full repeal.
- Establishes market stabilization funds. The bill sets up a program to try to keep the dreaded “death spiral” from happening by dealing with the major problem driving costs on the exchanges: very sick people. The details on this are vague, because states are expected to design programs to meet the goal.
- Sunsets the Medicaid expansion funding…but not as fast as the House bill. However, it also makes people below the poverty threshold eligible to buy exchange policies with subsidies. This coverage is not as generous as Medicaid; it will probably involve substantial deductibles and copayments.
- Converts Medicaid to a per-capita allotment rather than an open-ended entitlement. Like the House bill, the Senate bill changes the program to a per-beneficiary grant based on previous spending levels. It’s not quite the “block-granting” of supply-sider dreams. But it should give states heavy incentives to keep program growth in check–incentives increased by the fact that future payment growth will be indexed to general inflation, rather than medical inflation, which is significantly higher. States can also apply to switch to a block grant formula, or to implement a work requirement for Medicaid recipients.
Call it mean, even meaner, Trumpcare, Obamacare 2.0, whatever you like. The biggest impact of the Republican repeal effort is on Medicaid. The House bill would cut $834 billion in spending on the program, according to the Congressional Budget Office, by ending ACA’s expansion of it and changing it from an open-ended entitlement to one with caps on spending.
The Senate version contains even larger Medicaid cuts. Only they’re delayed a few years. Just how big the cuts will be won’t be knowable until the CBO shares its score of the new bill next week. But they’ll be huge and have a profound effect on American health care and the overall economy.
Some suggest the GOP Senate bill is no longer a repeal of Obamacare but just a massive cut in Medicaid. Is that all it is?
Paul Krugman said this a while ago and it applies more to the Senate bill than the house bill:
“This is just Obamacare version 0.5.”
The bill literally makes Obamacare worse in every conceivable aspect. If you didn’t like the subsidies to poor people, it just cuts them in half. If you didn’t like the fact that there was discrimination against the sick, well, it will allow some discrimination against the sick. But not too much.
It’s really a shrinking of Obamacare to save money to pay for tax cuts for the wealthy, says Jonathan Gruber, an MIT economics professor. And it’s hard for him to see how anyone would favor this law except the 1% of the wealthiest Americans who benefit from it and, viewed in such context, the law is an amazingly bad piece of healthcare legislation, affecting one sixth of the economy.
Critics say that Obamacare provided benefits at a cost that is clearly unsustainable, and that without major adjustments, would add to the deficit significantly. They ask how can that be reconciled.
And viewed in that context, those who say the GOP Senate bill fails on every level are hard-pressed to deny that that something needed to be done with Obamacare in terms of its spiraling costs.
Yet this GOP bill fails to address the cost issue. For example, it would just barely reduce the deficit in the first decade. And some guess that it won’t reduce the deficit after that, although CBO will have to give us the answer to that.
So if you’re worried about the unsustainability of our current healthcare spending, firstly, Obamacare is puny compared to Medicare. But as far as the unsustainability of healthcare is concerned, certainly, we need to address that.
Ironically, after all this time, the GOP bill doesn’t address the sustainability question. Instead, it scales it way back, kicks it out of the US government’s Medicaid program, and gives it to the wealthiest taxpayers. Just how this represents fiscal responsibility, I haven’t a clue.
But don’t say Obamacare “threw costs out the window,” as though its framers had a choice and turned it down. Cost control is politically hazardous. Gruber notes that what Obamacare did for the first time was say let’s take care of the coverage issue first and then start down the road toward cost control.Steve's Take: #Trumpcare doesn't provide universal #health coverage at a sustainable cost Click To Tweet
Since Obamacare passed, US healthcare costs have grown at the slowest rate in modern history. Should Obamacare get credit for that? No, not all of it, a small part, certainly. Re-admissions penalties were set up by Obamacare and we’ve seen more fraud reduction than ever before. In other words, Obamacare started us down the road toward solving the cost issue and yes, there’s a long way to go.
There’s simply nothing in the GOP bill that basically gets us anywhere near solving our nation’s problem of providing universal coverage at a sustainable cost. And that’s what a clear majority of Americans want.
Senate Republicans made only one big change in a new version (pdf)of their Senate health bill released Monday (June 26, 2017): They added a penalty for Americans who let their insurance lapse for 63 days or more.
Under the new provision, those who go without insurance will be locked out of getting coverage for at least six months after they sign up.
The idea is to placate insurers who were alarmed when the bill was released on Thursday without any means to nudge people into the market. This “lockout period” would, in theory, create an incentive for people to have insurance all the time, instead of waiting to sign up when they become ill. But it’s not clear how effective this will really be.
“I’m not sure it encourages people to enroll sooner,” said Cori Uccello, a senior health fellow at the American Academy of Actuaries.
This is the sort of policy that actuaries think about a lot because they need to determine how policy changes will affect the cost of providing insurance coverage. (Source: The New York Times)