Much as I worried about in an extended piece from yesterday on the problems with Republicans’ replacement ideas, their new bill to replace the Affordable Care Act will lead to less coverage and more cost shifting from government to moderate and low-income families.
I’m crunched for time this AM, so I’ll be adding to this post throughout the day, but here are a few initial impressions:
–The bill will lead to millions losing coverage, due to the repeal of the Medicaid expansion and to lowering the subsidies available to moderate- and low-income households.
–The key disconnect here is that their tax credits are no longer tied to the cost of coverage, so paying for health coverage will mean more out-of-pocket costs than under Obamacare. Once the CBO scores this aspect of the plan, along with the Medicaid part I note next, I suspect we’ll see large coverage losses, possibly unwinding up to 20 million in coverage gains from the ACA.
–As I wrote yesterday, Republicans turn Medicaid financing into a “per capita cap,” a type of block grant. Instead of receiving the federal financing they need to pay for anyone eligible for Medicaid, the per person cap is a fixed allotment that grows at the rate of inflation plus 1 percent. To their credit, House Republicans index the per-capita cap to medical inflation (plus 1), which grows faster than overall inflation. But the key question is: how much less will states get relative to their current allotments? Since Republicans are clearly counting on savings from this switch, the answer can’t be zero (otherwise, why make the switch?). According to a new analysis by Edwin Park, the amount of federal Medicaid support that states will lose under the proposed plan is $370 billion. Under the assumption that states will be very unlikely to replace losses of that magnitude, the result will be diminished coverage for low-income families.
–The bill ends employer and individual mandates and, in their place–because health insurance doesn’t work if people can just seek coverage when they’re sick–allows insurers to impose a 30 percent surcharge on those with gaps in coverage. As I noted in my piece yesterday, low-income persons and those with pre-existing conditions are the most likely to face coverage gaps.
–The plan targets Planned Parenthood by disallowing Medicaid reimbursements. To state the obvious, that has nothing to do with health care reform and is a pure sap to the anti-choice right.
–It’s not all about cutting coverage – the bill is also about cutting taxes for the rich. It repeals two very progressive taxes implemented under the ACA, a Medicare payroll tax on high earners and a tax on the investment income of high-income people. My colleagues previously estimated that the average millionaire household would receive a tax cut of around $50,000 from getting rid of these provisions, and that the 400 richest households would receive an average tax cut of $7 million.
Like I said, I’ll be getting deeper into the weeds on this later in the day–running out now to talk about it on CNBC ~ 11am EST–but this looks very much like what I wrote about yesterday. By significantly ramping up cost sharing, the incentives in the House R’s plan will lead healthy people to leave the risk pool, setting off the adverse selection problem that the ACA was built to avoid. Combine that with the whacking of the Medicaid expansion (turning the problem into a block-grant variant) and you get the predicted result: health care that’s a lot less affordable, thus triggering the loss of the ACA coverage gains, all served up with a huge,wasteful tax cut for the wealthy.
UPDATE: I’ve nothing to add to the above for now but a word on the politics. I don’t understand what R House leader Paul Ryan is up to here. Key groups in the House are ranting that this plan is nothing like the repeal they seek. They want to kill Obamacare and their leadership just delivered unto them “Obamacare lite.” As Ryan Grim pointed out “…so far the Heritage Foundation, Americans for Prosperity, the Koch brothers, the Republican Study Committee and Club for Growth have all come out and slammed Paul Ryan’s version of Obamacare repeal. In other words, everybody.” Meanwhile, from the moderate side, four R senators from states that took the Medicaid expansion object to the bill’s repeal of this part of Obamacare, as they understandably don’t want to see “a reduction in access to life-saving health care services.”
Under the safe assumption that no Senate D’s will help the R’s, if those four hold their position, this can’t pass the Senate. It probably can’t pass the House either. Other than that, it’s in great shape.
So what’s Ryan’s play here (the Congressman, not the HuffPo dude)? I’ve got too much to do to sit around and speculate, but typically, you don’t put out a bill on something this important until you’ve taken the temperature on it from within your party. Perhaps he can say he tried to go with something reasonable (not how I’d characterize this bill, of course), turn things over to the hard right, pass something Draconian over to the Senate where it surely dies, and then blame it on them.
Sadly, that sounds more like the Washington I’ve come to know. Gladly, otoh, the ACA seems a lot more intact for now than you might have thought late at night on Nov. 8th.