Senate Healthcare Plan Has Few Surprises

Although Republicans have promised sweeping change that will culminate in their own rendition of a healthcare bill, the most recent legislation proposed by the Senate and revealed in its draft form on Thursday was nothing to get excited about. It looked oddly similar to the House version, passed in May, which in turn looked oddly similar to Obamacare, which just so happens to have been in a death-spiral since its inception. Below is a broad overview of the Senate AHCA (American Health Care Act)  proposal, as well as how costs and coverage might be affected.

What This Bill Does:

-Removes all but one of the taxes (the “Cadillac tax” on premium healthcare plans, which has yet to actually be enacted anyway) associated with the Affordable Care Act.

-Phases out the Medicaid expansion that 31 states took advantage of under Obamacare. This expansion made Medicaid benefits available to all of those earning up to 138% of the Federal Poverty Level (increased from 100% of the FPL). The federal government paid 90% of the states’ costs for this expansion; AHCA will phase out this federal government subsidy for states, with a decrease in  funding beginning in 2021.

-Allows states to, if they choose, require Medicaid recipients to work or pursue career training.

-Will keep intact the current subsidies meant to help low-income individuals and families purchase insurance, but will lower the threshold from 400% of the FPL to 350%. This means a family of four with a net income of $84,000 would still qualify for federal subsidies to purchase healthcare.

-Completely eliminates the mandates for individuals and companies with 50 or more employees.

-Planned Parenthood will be defunded for one year.

-Insurers will still have to accept all patients, even those with pre-existing conditions, and charge the same rates, with some few exceptions

-Young adults can still stay on their parents’ insurance through the month of their 26th birthdays.

–Restricts coverage for abortions (don’t get too worked up, this impacts coverage minimally and will likely be removed anyway).

-States would be allowed to reduce some coverage options for pre-existing conditions, but would have to ask permission

Costs and Coverage

After 10 years it is expected that about 41 million individuals will be uninsured under this plan, in comparison to an estimated 28 million under Obamacare. Keep in mind that this number for the AHCA includes those willingly not choosing to have health insurance, since they will no longer have to. 10-year cost projects put this bill right around the House bill passed in May at about 1.63 trillion, with the 10-year forecast for Obamacare being 1.75 trillion. The most likely rise in healthcare costs will be felt by 59-64-year-olds, who may end up paying about 16% of their income for healthcare.

The CBO estimated a $119 billion reduction in the federal deficit for the House bill; this bill is expected to be similar, but CBO’s report will not be released until next week. From CBO’s report on the House bill, premiums would be expected to drop as much as 20% starting in 2020

Definitely a First Draft

This bill fails to address many of the major problems of Obamacare and actually exacerbates the issue in some regards. By eliminating all mandates for healthcare and any penalties for a lapse in coverage (as was seen in the House bill), this bill practically eliminates all sources of revenue. Granted, the federal government will still have a lower bill as it slowly rolls back the Medicaid expansion and its costs associated with that, but the pittance that was collected from the individual and employer mandates will no longer be available as a source of revenue.

Aside from the fact that this socialized medicine will have no immediate funding source, it also has no teeth to punish those that may game the system. In the House version of the bill, individuals were also not required to have insurance, but if their coverage lapsed, they would end up paying a higher rate when they did then enroll in health insurance. Makes sense. With the Senate bill, there are no repercussions for shirking health insurance coverage all of your life, and then quickly enrolling in a plan when you think you may have cancer, diabetes, a broken bone, etc. This will not be a viable option for health plans.

This Senate bill is not much of a repeal of Obamacare, but rather a slight amendment to the Affordable Care Act. Republicans will have a tough time selling this to the public, as well as to their peers. Numerous Republican Senators have already expressed serious doubts and concerns over the bill, including Senators Ted Cruz and Rand Paul. Although Republicans are hoping to get a  vote on the bill before July 4th, they have some serious heavy lifting to do before this bill has a chance of passing.

The attempts by both houses to propose a bill that repeals and replaces Obamacare have been disappointing for lovers of the free market, yet encouraging for those seeking socialized medicine. This bill is expected to be changed significantly in order to garner the needed votes. Nonetheless, the Republicans can stop with the empty rhetoric of wanting to “repeal and replace” Obamacare when they truly have all of the power to do just that, yet continue to fall short.

Click here for a highlight of the most informative articles on this subject, as well as a side-by-side comparison of the Senate and House bills vs. Obamacare.

 

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