- Getty Images/Pool
Senate Republicans on Monday released an updated version of their plan to repeal and replace the Affordable Care Act.
The legislation – called the Better Care Reconciliation Act of 2017 – debuted on June 22. The bill proposes rolling back much of the ACA, the healthcare law better known as Obamacare, including various tax provisions.
The revised version of the bill includes a provision that’s meant to replace the individual mandate by punishing people whose insurance has lapsed, locking them out of coverage for six months.
The revision closes a loophole in the original bill that could have hurt the health insurance market. To avoid adverse selection in the individual insurance market, there needs to be a continuous-coverage provision to keep healthy people buying insurance instead of waiting until they’re sick to do so.
Healthier people paying into the pool helps ensure that costs for everyone stay lower. To make sure the market isn’t full of sick people – resulting in higher costs and financial losses for insurers – there needs to be some reason for healthy people to sign up. The most effective way to do so is by having the carrot of coverage benefits and the stick punishing those who do not have coverage.
Under Obamacare, this stick was the tax penalty for not having coverage. In the House Republicans’ bill, people who did not maintain coverage the year before could have their premiums raised by as much as 30% as a penalty.
According to Larry Levitt, a senior vice president at the Kaiser Family Foundation, a nonpartisan health-policy think tank, the new provision may not work as intended.
“I doubt this encourages many healthy people to sign up,” Levitt tweeted on Monday after the changes were announced. “That requires a lot of foresight among people not very focused on insurance.”
The bill also tweaks some of the language in Section 106, which discusses stability-program funding for states.
What else is in the BCRA
The legislation proposes scaling back funding that goes toward health coverage for low-income Americans and tax credits for middle-income earners who purchase their own health insurance.
The plan would also provide funding designed to help stabilize the Obamacare insurance markets in the near term and funnel money through programs to cut off access to funding for abortion providers.
The Senate legislation contains key differences from the American Health Care Act, the House GOP’s legislation to dismantle Obamacare. The disparities could be sticking points if the two chambers have to compromise on the bill, which they would have to do before it could reach President Donald Trump’s desk.
But first, the legislation faces an uncertain future in the Senate, as it faces some pushback from conservative members who think it may not go far enough in repealing Obamacare and moderates concerned about its slashing of Medicaid spending. Like the House legislation, it could be subject to significant changes to get the needed number of votes.
Senate Majority Leader Mitch McConnell is pushing for a vote by the end of the week, in part to avoid further public scrutiny of the bill over the weeklong July 4 recess. Similar scrutiny periled the original version of the House legislation. McConnell can afford to lose just two members of his conference for the bill to pass.
Here’s a rundown of the key provisions that were already in the bill:
- Tax credits:
- What’s in the bill: To help people pay for insurance, the Senate bill proposes tax credits based on income level, a feature of Obamacare, rather than on age, as the House bill calls for. The bill would make anyone earning up to 350% of the federal poverty level eligible for credits; Obamacare caps that at 400%. It would, however, adjust the credits to be less generous as a person ages. For instance, a 33-year-old making 175% of the federal poverty level would receive enough in credits so they spend 5.3% of their income on premiums. For people over 59, that would increase to 8.3%. Additionally, the credits would be capped at a lower percentage of overall medical costs than those under Obamacare, making them less generous overall. What it means: While the tax credits would be more generous for older Americans than the tax credits in the House bill, fewer middle-income people would get financial support to pay for coverage – and those who did would get less.
- What’s in the bill: Obamacare’s Medicaid expansion, which extended the program to those making 100% to 138% of the federal poverty level, would be phased out over four years – 90% of the current federal funding would be provided in 2020, decreasing by 5% each year until 2023, after which it would be eliminated. People would not be allowed to join the expansion from 2020 onward. The tax credits would be available to people who fell off the expansion. What it means: While this would save the federal government money, it would also mean the millions of people who have gained access to Medicaid would be rolled off. These people would be able to fall back on the less generous tax credits and access coverage through the individual insurance market.
Medicaid spending growth:
- What’s in the bill: The Senate bill retains the House’s per capita cap for federal Medicaid spending. After 2025, however, growth in spending would shift from being tied to the consumer price index for medical care to the CPI for all goods, a lower level of growth. What it means: States would receive less funding each year from the federal government to help cover low-income Americans, and after 2025 the rate of growth would decline, possibly leading to even deeper cuts to the program.
States can institute Medicaid work requirements:
- What’s in the bill: This would allow states to create a provision under which people must maintain employment, as the state defines, for a period, also determined by the state, for a person to receive Medicaid. What it means: This is another longtime wish for Republicans, but it would also give states significant leeway to define what counts as work and how long someone has to hold a job to be eligible. It would not apply to students, pregnant women, or people with disabilities.
- What’s in the bill: The bill would allocate money for cost-sharing subsidies through 2019. These payments offset the costs for insurers to offer low-income Americans plans with smaller out-of-pocket costs. The uncertainty around these payments has led to instability in the individual insurance market. What it means: This should reassure insurers desperate for guidance ahead of the 2018 plan year and could bring down premium increases for the individual insurance market.
State waivers for Obamacare regulations:
- What’s in the bill: The Senate bill would allow states to request a waiver to opt out of Obamacare’s so-called essential health benefits, which mandate that all plans must cover 10 basic types of care. The ability to opt out of providing those benefits was a sticking point in the House legislation, and its inclusion ultimately allowed it to pass. The Senate bill, however, would not allow states to repeal community rating, the provision mandating that all people of the same age in the same area be charged the same amount. That’s a change from the House bill, which drew criticism from health-policy experts who said a repeal of community rating would allow insurers to charge people with preexisting conditions more. What it means: If a state were to receive a waiver for the benefits, it would allow for skimpier coverage offerings on its insurance market that would have cheaper premiums but higher out-of-pocket costs.
Repeal Obamacare’s taxes:
- What’s in the bill: Much like the House version, the Senate bill would do away with things like Obamacare’s 3.8% tax on investment income on people earning more than $200,000 annually. What it means: The taxes in Obamacare fall predominantly on a small percentage of wealthy Americans who would see their tax bills decrease under the Senate bill. For instance, the Republican megadonor and casino magnate Sheldon Adelson could have his 2017 tax bill cut by roughly $44 million.
A fund to provide grants to fight the opioid crisis:
- What’s in the bill: The bill would establish a $2 billion fund for states for programs to “support substance use disorder treatment and recovery support services for individuals with mental or substance use disorders.” What it means: This is a one-time fund for 2018, but it is likely to be favored by senators from states hit hard by the opioid crisis. It was a key ask from Ohio Sen. Rob Portman.
No funds can be used for abortions:
- What’s in the bill: No plan purchased using funding from the bill could cover abortions. Additionally, none of the funds allocated by the bill could be given to healthcare providers that offer abortion services. What it means: In addition to restricting anyone who used the credits or other funds from getting plans that cover abortions, this would effectively defund Planned Parenthood. It is unclear if this provision will pass Senate rules.
Here is the full updated bill: