Did anyone really think the Senate bill would be better? It’s not. In many ways, it’s very similar to the House bill, but it also manages to find new creative ways to be horrible.
It is possible to have an intelligent debate on how to fix the health care system and to differ on methods. However, to do so, you must agree on the goals of the reform. My goal is for everyone to receive appropriate care they find affordable given their circumstances. Unfortunately, that is not the goal of this bill.
There is already a myriad of analyses out about the bill (some of the best are from the
NY Times,
Vox and
Kaiser). I’m not going to duplicate those efforts. Instead, I want to provide a look at the process from here and shine a spotlight on a few of the bill’s provisions that are most problematic.
Process
The bill released Thursday is a discussion draft. That’s right, even though they hope to vote in less than a week, this is far from the final text.
We’ve already seen some conservative Republican Senators say that can’t vote for the bill “as written.” Don’t be lulled into complacency – the best word to describe what they are doing is theater. There is a distinct possibility this was pre-arranged so that already drafted amendments could be added the objecting Senators could claim to have scored a victory. More important will be what we hear from the moderate Senators in the coming days. (You can find a current scorecard
here.)
Next, we’ll see a CBO score on Monday or Tuesday. This will provide some new information and probably lead to more “new” amendments. Important to note here that the amendments will NOT be scored by the CBO before the bill goes to a vote.
Once there is a CBO score, the Senate Parliamentarian needs to rule on the bill’s compliance with the reconciliation rules (the Byrd bath). Remember, to pass this bill with only 51 votes (or 50 plus the tie-breaking vote of Pence) it has to follow certain rules. Although, it is also possible for the Republicans to override the Parliamentarian and proceed anyway. While that has never been done, much about this bills process has already been precedent shattering.
If the schedule holds, we’ll then see a vote in the Senate on Thursday. Reports are that they will bring this to a vote regardless of if they think it will pass or not. There have been some reports that Senate leadership wants this over one way or another so they can move on to tax reform and other matters – while I’d like to believe this is true and they will let a defeat stand, I remain skeptical.
If it does pass the Senate, it goes back to the House where the question will be: Does it go to a conference committee or does the House just vote on the Senate version?
So, while the next few days are as critical as any so far, it’s not the end of the story.
Content
Like the House bill, the Senate version impacts both Medicaid and the private insurance market.
Medicaid
But the shift to per-capita caps is made even worse than in the House bill by the use of general inflation instead of medical inflation for the annual adjustments. That will mean States will be continuously faced with the dilemma of increasing their budgets or cutting services. Read more about that
here.
The Senate version also ends Medicaid expansion with the enhanced match phasing out over three years beginning in 2020. Note that no new expansion states are allowed; this would impact the expansion referendum efforts currently underway here in Maine. It’s also worth noting that for the seven states that have a trigger provision in their expansion legislation, ending their expansion as soon as the match rate changes.
The Senate version also includes the option of states adding work requirements to their Medicaid programs.
Private Insurance
The most prevalent complaint about the ACA is that premiums are too high and individuals pay too much out-of-pocket. On an apples-to-apples basis, the Senate bill makes both problems worse. Some will argue that premiums will go down – but that will only be if a state changes the definition of essential health benefits leading to cheaper less comprehensive plans.
As briefly as possible (really, I’m trying) let’s review some of the changes.
Starting with subsidies: The current subsidies are based on silver plans with a 70% AV plan, the new subsidies are based on bronze plans with a 58% AV plan. That means that the plans purchase will only cover on average 58% of an individual’s medical expenses, driving up their out-of-pocket costs. Changing the basis of the subsidies is about a 15% across-the-board cut.
The bill changes the range of individuals who can receive a subsidy from 100% - 400% of the Federal Poverty Level (FPL) to 0-350% of FPL. On the positive side, that means that those earning less than 100% FPL who are not eligible for Medicaid will receive some help, however, those earning 351% of FPL and now receiving assistance will no longer get help.
In Portland Maine, a 60-year-old at 351% of FPL not gets a subsidy of $4,651 a year – under the Senate plan, that goes to $0. In Anchorage Alaska, a 64-year-old making about $43,000 a year goes from getting a $20,000 subsidy under the current law to receiving $0.
So much for lowering expenses.
The bill also changes the amount of the subsidy relative to income. A 60-year old with income between 300 and 350 percent of the FPL would have to spend 16.2 percent of household income on premiums before becoming eligible for a subsidy, while a 28-year-old would only have to pay 4.3 percent. Under the ACA, both would have had to pay 9.5 percent. So yes, some younger people would get greater percentage help, but remember, that is for a less generous plan than under current law.
Additional factors driving up costs for those most at risk:
- The cost-sharing reduction provision of the ACA is eliminated
after 2020
- Individuals eligible for employer coverage would be
ineligible for premium tax credits regardless of the affordability of the
employer coverage
- States can change rating bands from 3:1 to 5:1. As you may
recall, that means premiums for older people will go up.
Again, so much for lowering costs for individuals.
But it gets even worse for the individual market. The Senate bill eliminates the penalty for not having coverage but does not eliminate guaranteed issue of community rating. These changes will inevitably lead to the dreaded death-spiral. If an insurer has to offer coverage to everyone, but healthy people can skip buying coverage, only those who need care will end up buying insurance, driving up premiums, causing even more people to leave the market.
Pretty bad. But as they say, wait, there’s more.
The Senate bill alters the ACA's 1332 waivers. I’ll let
Tim Jost explain:
“The provisions of the ACA subject to 1332 waivers (and not otherwise repealed by the Senate bill) include the essential health benefits, actuarial value, out-of-pocket limits (for individual plans), and other qualified health plan requirements, as well as the ACA’s exchange provisions (which are not otherwise repealed by the Senate bill) and its premium tax credit provisions. Under the Senate bill, these can be waived if a state describes how it would “provide for alternative means of, and requirements for, increasing access to comprehensive coverage, reducing average premiums, and increasing enrollment.””
This change means states can do away with EHB requirements. The elimination of EHB requirements makes any pre-existing condition protections meaningless. An insurer could offer plans without certain care covered, attracting healthy people thus driving up costs in the old plans that did cover the treatments (since only those needing the treatments would stay enrolled).
Taken all together, under the bill as drafted, the individual market would not be viable, except for offering certain bare-bones plans with huge out-of-pocket costs.
On the employer side, the Senate bill removes the penalty for not offering coverage. While most large employers will continue to do so, there will be some mid-size firms who take this as an opportunity to drop coverage.
The bill also eliminates the small business tax credit. There is also a provision in the bill that allows for Association Health Plans. These plans would be exempt from state insurance regulation and would lead to cherry-picking by insurers damaging the risk pool for small business plans still subject to state regulation.
Bottom line, this bill does nothing to improve health care and in many demonstrable ways makes the situation worse.
Before we go, a few final links covering some additional low-lights to the bill:
