UPDATED WITH DRAFT BILL: Introducing the Deplorable Care Act!
2019 OPEN ENROLLMENT ENDS (most states)
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The Center for American Progress has apparently sneaked a peek at the CBO's initial analysis of Paul Ryan and the House GOP's replacement plan for the ACA, and it's not pretty:
Last week, the House majority released an outline for repealing the Affordable Care Act, or ACA. Although the document provides no new details, it does provide enough information to evaluate the adequacy of financing, the likely policies needed to pay for new tax credits for health insurance, the likely effects on tax credit levels, and the political hurdles to such an approach. This analysis is based exclusively on numbers from the nonpartisan Congressional Budget Office, or CBO.
Here's CAP's main findings; in short, Ryan's repeal bill would....
- cut Medicaid expansion by $277 billion over 10 years.
- cut (traditional) Medicaid—including funding for nursing homes for the middle class—by an additional $370 billion over 10 years.
- it would still fall $171 billion short of the funding needed to fully replace the ACA’s exchange subsidies (26% shortfall), dropping the average tax credit from $6,314 to $2,703 (57% reduction)
- it would increase taxes on tens of millions of workers in the middle class (by starting to tax ESI coverage...far beyond the "Cadillac tax" which everyone already hated under the ACA)
- it would include a $346 billion (over 10 years) tax cut for the extremely wealthy
- some of the new tax credits would go to higher-income folks, meaning the average would still be 42% lower than now.
- millions of people would lose their health care coverage.
Originally, the ACA was set up to be funded (over 10 years) via the following:
- Over $700 billion in savings from no longer overpaying private carriers for Medicare Advantage programs (which was also included in Paul Ryan's budget a few years back, I should note)
- About $55 billion from individuals paying the Individual Mandate penalty
- About $106 billion from employers paying the Employer Mandate penalty
- About $318 billion from a 3.8% tax on investment income on those earning over $200,000 per year
- About $28 billion from a 0.9% Medicare payroll tax on high earners
- About $111 billion from a 40% so-called "Cadillac tax" on high-end employer sponsored plans.
- About $216 billion in savings from not having to reimburse hospitals/clinics for uncompensated care, and...
- About $87 billion from other assorted taxes/fees (medical devices, tanning salons (!) and so forth.
The replacement plan would apparently keep the $700 billion in Medicare savings...but would wipe out most of the other revenue, especially the 3.8% investment tax on the wealthy (which is among the main reasons the GOP is still gunning for repealing the ACA in the first place).
Instead, it would replace some (not all) of the other $900 billion with:
- a "Cadillac tax on sterioids" which would hit 38 million employees with what appears to be roughly a $700 tax on their group policy premiums (CAP projects $274 billion over 10 years, divided among roughly 25% of the ESI-covered workforce, or 38 million people).
- wiping out Medicaid expansion for up to 15 million people and using the money saved to help pay for the new tax credits
Another way of looking at this: Currently, the ACA charges a $695/person tax penalty for not being insured, which around 7 million people paid last year. The replacement plan would apparently charge a $700 tax on 38 million people for being insured.
Just about everything about this replacement plan is designed to screw the poor (Medicaid expansion) low income (lower subsidies) and working/middle class class (taxing ESI benefits), for what appears to be the sole purpose of providing a big fat tax cut for the very wealthy.
Which, of course, is the main reason they're pushing for it.
MAJOR UPDATE: Over at Politico, Paul Demko has a nice scoop...an actual copy of the draft language which Paul Ryan and the House Republicans are actually planning on trying to push through:
A draft House Republican repeal bill would dismantle Obamacare subsidies and scrap its Medicaid expansion, according to a copy of the proposal obtained by POLITICO.
The legislation would take down the foundation of Obamacare, including the unpopular individual mandate, subsidies based on people’s income, and all of the law’s taxes. It would significantly roll back Medicaid spending and give states money to create high-risk pools for some people with pre-existing conditions. Some elements would be effective right away; others not until 2020.
For the most part it seems to line up with the Center for American Progress's analysis above, although there are some differences:
According to the document, there’s only one single revenue generator to pay for the new tax credits and grants. Republicans are proposing to cap the tax exemption for employer sponsored insurance at the 90th percentile of current premiums. That means benefits beyond that level would be taxed.
The CAP analysis assumed ESI coverage would be capped at the 75th percentile, so it sounds like the actual GOP tax would hit fewer people...but also generate less revenue.
In place of the Obamacare subsidies, the House bill starting in 2020 would give tax credits — based on age instead of income. For a person under age 30, the credit would be $2,000. That amount would double for beneficiaries older than 60, according to the proposal. A related document notes that HHS Secretary Tom Price wants the subsidies to be slightly less generous for most age groups.
A flat $2,000 per person under 30. A flat $4,000 per person over 60...regardless of their income, and presumably not connected to premium rate hikes.
For comparison, right now, around 10 million people below 400% of the federal poverty line are receiving an average of around $386/month in APTC assistance ($4,600/year), and around 7 million of them are also receiving CSR assistance (I'm not entirely sure how much that averages out to, but the CAP analysis indicates that it averages around $6,300 overall for APTC/CSR combined, so that would suggest roughly $2,400 apiece for those folks).
Demko has a better initial write-up, so I'd recommend checking it out, but it sure looks ugly to me.
HOWEVER, if you feel like reading through 109 pages of Congressional text, someone has kindly provided the actual draft document itself (see link below). Happy reading!
UPDATE 3:45pm: OK, a few more details courtesy of Sarah Kliff of Vox (many of these details are also covered in Demko's piece but I'm trying not to pluck too much from any one analysis...and getting a variety of takes is helpful anyway):
The leaked Republican draft, like Obamacare, requires insurance plans to offer coverage to all patients regardless of how sick they are. But the leaked plan, unlike Obamacare, would let insurers charge sick people more if they did not maintain “continuous coverage.”
Here’s how it works: If a cancer patient goes straight from insurance at work to her own policy, her insurer has to charge her a standard rate — it can’t take the cost of her condition into account.
But if she had a lapse in coverage — perhaps she couldn’t afford a new plan between jobs — and went to the individual market later, insurers could charge her up to 130 percent of the standard rate for her first year of coverage. She would have to pay that higher rate for a full year before getting access to the normal rate.
This is basically the replacement for the Individual Mandate, which currently charges you $695 or 2.5% of your income if you aren't covered by qualifying coverage (and don't have an exemption). This means that if you decide to take a gamble and not get covered, you can do so without any penalty...but the moment you actually do try to sign up, you're gonna get hit with a 30% extra premium charge. If a policy normally costs $500/month, you'll have to pay $650/month for a full year.
In other words, the moment you get sick/injured and need insurance, you'll be hit with a 30% hike on top of whatever the policy normally would cost. This looming threat, of course, is supposed to goad you into staying covered 24/7/365, just as the individual mandate + limited open enrollment window are supposed to do now. How effective would it be? Hard to say. My suspicion is that the same people who are only grudgingly signing up for coverage now due to the penalty (or who are choosing to eat the $695 rather than sign up for a policy which might cost several thousands of dollars) are probably no more likely to actually stay covered regularly under this plan either, thus driving up rates for those who do.
What about the dreaded High Risk Pools?
The leaked draft does have a safety net for people who can’t afford to buy this more expensive coverage. It would invest $100 billion over 10 years into funding state efforts to cover “high-risk individuals” or to “help stabilize premiums for health insurance coverage in the individual market.”
States could presumably put this money toward high-risk pools, an idea that shows up in many other conservative proposals, although in the leaked draft they wouldn’t necessary have to.
On the one hand, this is better than either Paul Ryan's "$25 billion over 10 years" proposal or Tom Price's even more insulting "$3 billion over 3 years only".
On the other hand, as I noted weeks ago, it would still be far less than necessary to properly fund High Risk Pools, even if there weren't other reasons they suck:
Still, it’s unclear whether this would actually meet the needs of Americans with especially costly conditions. I’ve had some conservative health policy experts suggest to me that it would take about $25 billion per year to make high-risk pools function properly. And again, the funds in this leaked bill are not earmarked just for high-risk pools, and could be spent in other ways — meaning the funding could be much lower than the numbers outlined here.
Let's assume that half the money went to HRPs, and the other half went to..."stabilizing premiums for indy market coverage" (which sounds like it could refer to funding reinsurance programs like the ones recently enacted by Alaska and Minnesota, which actually wouldn't be a terrible idea).
$100B over 10 years averages $10 billion per year. Half of that would be about $5 billion per year...or 20% of what "conservative health policy experts" say such a program would require.
Again, that's still far better than the 4% - 10% ($1 billion - $2.5 billion) that Ryan and Price's earlier proposals included, but it's still far short of what would be necessary. Even if 100% of the money went towards the HRPs, that's still only 40% of what's needed.
Then we get into the "...to some degree or another" part of the replacement plan:
A second major cause of premium/deductible hikes is that the ACA requires qualifying policies to cover 10 essential benefits...
- Ambulatory patient services (outpatient care you get without being admitted to a hospital)
- Emergency services
- Hospitalization (like surgery and overnight stays)
- Pregnancy, maternity, and newborn care (both before and after birth)
- Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
- Prescription drugs
- Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care (but adult dental and vision coverage aren’t essential health benefits)
- Birth control coverage
- Breastfeeding coverage
...as well as a whole mess of preventative care services at no additional charge:
- Abdominal aortic aneurysm one-time screening for men of specified ages who have ever smoked
- Alcohol misuse screening and counseling
- Aspirin use to prevent cardiovascular disease for men and women of certain ages
- Blood pressure screening
- Cholesterol screening for adults of certain ages or at higher risk
- Colorectal cancer screening for adults over 50
- Depression screening
- Diabetes (Type 2) screening for adults with high blood pressure
- Diet counseling for adults at higher risk for chronic disease
- Hepatitis B screening for people at high risk, including people from countries with 2% or more Hepatitis B prevalence, and U.S.-born people not vaccinated as infants and with at least one parent born in a region with 8% or more Hepatitis B prevalence.
- Hepatitis C screening for adults at increased risk, and one time for everyone born 1945 – 1965
- HIV screening for everyone ages 15 to 65, and other ages at increased risk
- Immunization vaccines for adults — doses, recommended ages, and recommended populations vary:
- Hepatitis A
- Hepatitis B
- Herpes Zoster
- Human Papillomavirus (HPV)
- Influenza (flu shot)
- Varicella (Chickenpox)
- Lung cancer screening for adults 55 - 80 at high risk for lung cancer because they’re heavy smokers or have quit in the past 15 years
- Obesity screening and counseling
- Sexually transmitted infection (STI) prevention counseling for adults at higher risk
- Syphilis screening for adults at higher risk
- Tobacco Use screening for all adults and cessation interventions for tobacco users
All of the above procedures/services/treatments must be covered by every Qualified Health Plan.
Under the GOP's replacement plan?
The leaked draft makes the individual market more advantageous for healthier people. It eliminates the essential health benefits package, which mandated that all insurers cover a set of 10 different types of care, including maternity services and pediatric care. The leaked draft would allow states to decide which benefits are “essential.”
Some states might choose skimpier benefit packages that would allow insurers to cut certain benefits they no longer want to cover — they could stop covering maternity benefits, for example, to make their plans less attractive to women who plan to become pregnant. This would likely benefit healthy people, who generally want less robust coverage at a cheaper price. But it’ll send the cost of more comprehensive plans — the plans sicker people need — skyrocketing. And it could leave someone who wants, say, health insurance to cover her maternity costs completely out of luck.
If you want to see what a "healthcare policy" could look like under the GOP's plan, take a look at McDonald's "McCrew Care" policies before the ACA was passed:
For example, McDonald’s”McCrew Care” benefits...requires employees to pay $56 per month for basic coverage that provides up to $2,000 in benefits in a year and $97 per months for a Mid 5 plan that provides up to $5,000 in benefits. Ruby Tuesday charges workers $18.43 per week (going down to $7 after six months of service) for coverage that provides up to $1,250 in outpatient care per year and $3,000 in inpatient hospital care. Denny’s basic plan for hourly employees in 2010 provided no coverage for inpatient hospital care and capped coverage for doctor office visits at $300 per year.
Wow, $2,000 in benefits per year? Awesome! That's enough to cover...um...one day in the hospital per year, and absolutely nothing else whatsoever!
Kliff is more specific about the GOP's version of tax credits as well. Again, right now, the ACA provides tax credits on a sliding scale based on your income, which makes quite a bit of sense...the lower your income, the higher your financial assistance.
Under the GOP's version, these would be age-based instead of income based. The sole upside of doing it this way is that it would be a lot easier to document (your birth date never changes, while your income could change year to year, month to month or even day to day).
The downside is:
The leaked draft’s tax credits would only be based on age, giving more help to those who are older (and who will presumably be charged higher premiums). The tax credits outlined in the bill are as follows:
- $2,000 for those under 30
- $2,500 for those between 30 and 40
- $3,000 for those between 40 and 50
- $3,500 for those between 50 and 60
- $4,000 for those over 60
This means that Bill Gates would qualify for the largest tax credit simply because he is 61 years old. Under the Empowering Patients bill, Gates’s net worth of $83 billion — presumably enough to purchase health coverage — would do nothing to disqualify him. Under Obamacare, he gets no help.
Conversely, a 23-year-old with little income who has health problems gets minimal help under Price’s plan — despite the fact that she needs support much more than Gates does.
I'm not going to pick apart the rest of the GOP's replacement plan, partly because I'm swamped with other stuff today, but mostly because it's an ever-changing thing; even Sarah Kliff has noted that the Medicaid section has already changed just since this draft version was leaked a few hours ago:
This speaks to my earlier tweet - looks like the Medicaid plans in the leaked draft already out of date. https://t.co/aCnFTPqwXL
— Sarah Kliff (@sarahkliff) February 24, 2017
Anyway, the bottom line is that while this version of the GOP's plan is slightly less insulting/damaging than earlier versions thrown around, it'd still be devastating to tens of millions of people...all just so they can a) give a fat tax cut to people who don't need one and b) say that they kept their promise to repeal Obamacare.