Early returns show the Republican’s proposal is popular with members of Congress but not too many other people.
Unlike the Affordable Care Act, none of the lobbies critical to passage have lined up behind the bill. The America Hospital Association and American Medical Association are not supporting this version of the Republican plan. Even conservative organizations.
Called the American Health Care Act, the Republican bill would retain some popular pieces of the Affordable Care Act (no exclusions for pre-existing conditions, young people can stay on parents’ plans until age 26) but alter other major pieces while instituting a sea change in Medicaid. Other longstanding Republican healthcare idea, such as high annual contribution limits for health savings accounts, would also be enacted.
One difference from the Affordable Care Act debate is the pace. Republican leadership seeks to pass the ACA replacement in a matter of months. The ACA took more than a year of compromises and arm-twisting to win Democratic votes, and its central ideas had been brewing for years.
This comes on the heels of multiple proposals from the moderate (Sens. Susan Collins and Bill Kassidy would allow states to keep the ACA model or move to the new one) to the full repeal espoused by members of the Congressional Freedom Caucus.
Here are some of the key changes in the bill, aside from the provision for what happens to Medicaid members who win the lottery (pages 10-20 in the 123-page bill).
- Premium assistance
The House legislation would not jettison the premium relief entirely, but would drastically alter those subsidies. The sliding scale of Obamacare would be eliminated in favor of tax credits that increase with age, although at lower levels than Obamacare for most enrollees. People under 30 would receive $2,000 a year, with the amount increasing up to $4,000 a year for those ages 60 and older.
One major change is the threshold for tax credits would increase. Under Obamacare, subsidies were available to people earning up to 400 percent of the federal poverty level. The House bill would expand the full tax credit to those earning up to $75,000 ($150,000 for families). Those earning up to $115,000 would still be eligible for some tax credit. That would place more burden on low-wage enrollees.
Tax credits would not adjust for geographic pricing disparities as they do now – whether you live in high-cost state like Wyoming or less-expensive states like Minnesota or Ohio. Additional subsidies for people earning 100-250 percent FPL would disappear, although the bill would establish a nine-year, $100 billion stability fund that states could use to lower residents’ premiums. However, states would have to match federal funds to receive those dollars.
The legislation would not eliminate the Obamacare exchanges, but the tax credits would be available outside the exchanges, which would certainly lower exchange enrollment and potentially marginalize their roll in healthcare.
Changing the tax credits does nothing to alleviate the worry of a “death spiral.” The tax penalty on people who did not buy coverage would be eliminated immediately. Despite more money for younger, healthier enrollees, the lack of penalty could lead them to continue to avoid coverage.
- Continuous coverage and premiums
While the plan would not restore exclusions on people with pre-existing conditions, it would impose stiff penalties for people who do not maintain continuous coverage. If coverage lapsed for more than 63 consecutive days, the person would be subject to surcharge equal to 30 percent of the total premium for their new plan, which could dissuade people from buying coverage until they absolutely need it.
Older enrollees would be subject to higher premiums, since the GOP bill would change the age-rating bands. Under the ACA, older enrollees could only be charged three times the premium of younger enrollees. The new bill would raise that amount to five times the rate paid by younger enrollees. States could institute different age rating bands.
- High-risk pools
Risk pools might be greeted as saviors if pre-ACA risk pools were remembered fondly. Those pools only covered a select group of otherwise uninsurable people. Premiums were exorbitant, coverage was limited and state funding always ran short due to high utilization.
- Medicaid expansion
Medicaid expansion would stay intact until 2020, at which point the program’s expansion would end, as would Medicaid as we know it. The program convert to a block grant with a per-capita limit in each state. Enrollment for the expansion population would freeze although current enrollees could stay in the programs until 2020. For some conservatives, the extension until 2020 is too long.
Block grant conversion is a key method to funding the proposal. By eliminating taxes on high earners that funding the ACA, the bill makes up ground through drastic cuts in Medicaid funding.
The impact would be swift. At least seven states would end Medicaid expansion if the enhanced federal match disappear – many legislators made the enhanced funding a condition for expansion for fear of getting hit with millions in new Medicaid spending. GOP governors who expanded Medicaid have been vocal about keeping the expansion.
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This blog is part of a series of posts from DRG regarding the impact of the 2016 election on US healthcare. See our other blogs as they are added here (https://decisionresourcesgroup.com/tag/election2016/).