After weeks of much-criticized secret negotiations, the Senate released on Thursday a “discussion draft” of its Affordable Care Act repeal bill, the “Better Care Reconciliation Act of 2017.” While policy wonks are still dissecting the legislation, here are the big changes this bill makes to the American Health Care Act that the House of Representatives passed last month:
Premium Subsidies
The AHCA eliminated Obamacare’s premium subsidies, which were tied to both income and the cost of insurance in a geographic area (low-income people in areas with expensive insurance received higher subsidies), and replaced them with flat credits that increased only with age. The structure of the subsidies in the Senate bill is more similar to those of the ACA credits in that they’re tied to income and local insurance costs, but the Senate bill cuts off premium assistance at 350 percent of the poverty line (as opposed to 400 percent of the poverty line under the ACA), and uses a less-generous plan as a benchmark for the premium subsidies. The subsidies, however, would now be available to people in non-Medicaid expansion states who fell into the ACA’s coverage gap. The Senate bill also changes the ACA’s affordability thresholds to shift premium assistance to younger people, which will likely increase the number of young, healthy people with insurance but will drive up costs for older people.
Overall, these changes make the subsidies less generous in general. (Larry Levitt of the Kaiser Family Foundation calculates that changing the benchmark plan results in about a 15 percent cut.) The changes are good news for people in the Medicaid coverage gap (who currently receive no assistance), but they’re bad news for older people and for those earning between 350 and 400 percent of the poverty line (who would lose their premium subsides under this plan), particularly those in high-premium insurance areas. A 61-year-old in Anchorage, Alaska, earning 351 percent of the poverty line, for example, will be in trouble:
In Anchorage, a 60 year-old at 351% of poverty currently gets a premium subsidy of $17,990 per year.https://t.co/UFdeECWUaC
— Larry Levitt (@larry_levitt) June 21, 2017
Cost-Sharing Subsidies
The Senate bill funds the cost-sharing subsidies, which have emerged as a major issue in the non-group insurance markets, through 2019, but eliminates them beginning in 2020.
The Waivers
The Senate bill makes some major changes to the waivers that states can apply for with respect to their insurance programs. It appears that these changes would not allow states to opt out of the ACA’s community rating provision—this particular component of the House bill was extremely controversial and unpopular. The Senate bill would, however, allow states to opt out of the requirement that insurance plans cover 10 essential health benefits, a change that could make it extremely difficult for people in the non-group market to purchase comprehensive insurance plans.
The Medicaid Expansions
Both the Senate and House bills effectively end Obamacare’s Medicaid expansions. Under the Senate bill, the enhanced federal funding match for the Medicaid expansion populations would be phased out from 2020–24 (as opposed to abruptly in 2020, as in the AHCA). As with the House bill, however, the Senate bill also calls for converting Medicaid from an entitlement to one in which the federal government pays states a capped, per-capita allotment and, as expected, indexes the growth of those payments to the CPI-U instead of the Medical CPI after 2025, a change that will result in much deeper cuts to Medicaid over time than those in the House bill.
Individual Mandate and ACA Taxes
Just like the House bill, the Senate bill repeals the individual mandate penalties and most of the ACA’s taxes.
In addition to the changes above, the bill includes funds for stabilizing insurance markets (which seem likely to be insufficient and also end after 2026) and $2 billion in 2018 for opioid treatment (moderates reportedly wanted $45 billion over 10 years). The fate of the bill is uncertain—three GOP senators are reportedly already planning to announce their opposition to the bill, but it could, of course, be changed to accommodate their concerns. The Congressional Budget Office is expected to release a score of the bill early next week, and Senate Majority Leader Mitch McConnell is reportedly still planning to hold a vote next Thursday. If it passes the Senate, it will need to once again win approval in the House.
