Senate Unveils Bill to Repeal and Replace ACA

Disclosures

June 22, 2017

A Senate Republican bill to repeal and replace the Affordable Care Act (ACA) that debuted today is a gentler version of what the House passed last month in many respects and a harsher version in others.

Both bills would end funding for Medicaid expansion in 31 states and Washington, DC, but while the House bill cuts it off entirely in 2020, the Senate bill would phase it out over 3 years, beginning in 2021. That's meant to ease the financial pain for states and beneficiaries.

When it comes to premium subsidies for individual and family health plans sold on the ACA marketplaces, or exchanges, the Senate bill would base them on income and age, as the ACA does. The House bill, which links the subsidies solely to age, translates into far less assistance for older, low-income Americans than what they now receive under the ACA.

And in another concession to Republican moderates who want to preserve ACA benefits, the Senate bill, called the Better Care Reconciliation Act (BCRA), authorizes cost-sharing subsidies for low-income families covered through the exchanges through 2019. Insurers, who receive this money for reducing beneficiaries' out-of-pocket expenses, such as deductibles, consider this provision a must if they are to continue offering health plans under the ACA. The House bill would end these payments entirely, which insurers say would further destabilize the exchanges.

However, what Republican leaders in the Senate crafted behind closed doors is less generous in some ways than the House bill, titled the American Health Care Act (AHCA). For example, both bills slow down the growth of spending on Medicaid — apart from expansion — by limiting once-open-ended federal contributions to state programs on a per-capita basis. States also can apply for Medicaid block grants — fixed amounts like per-capita caps — for "targeted health assistance" for select groups of beneficiaries. However, the Senate bill sets a lower rate of growth for per-capita cap payments in the long term than the AHCA. Beyond 2021, the House bill indexes them to either the medical consumer price index (CPI) or the medical CPI plus 1%, depending on the type of beneficiary. The Senate uses the regular CPI for urban consumers, which is lower.

In overarching terms, though, the Senate bill largely hews to the approach taken by House Republicans. It essentially eliminates the ACA's individual and employer mandates for insurance coverage by junking the tax penalties used to enforce them. The measure repeals a variety of ACA taxes, but leaves in place the law's system of insurance exchanges and premium subsidies for individuals who buy health plans there. And it also retains two major ACA insurance reforms — no one can be denied coverage on the basis of preexisting conditions, and adult children can remain on their parents’ policy through 26 years of age. States can define the essential benefits that exchange plans must offer, allowing insurers to drop coverage for maternity care, mental healthcare, and other services that the ACA says they must pay for.

Although the BRCA subsidizes premiums for insurance buyers on the exchanges, the assistance is less generous than it is under the ACA. In Barack Obama's signature legislation, the subsidies are based on premiums for the second-least-expensive silver plan, which pays for 70% of covered healthcare costs. For its premium benchmark, the Senate bill uses the rough equivalent of a less expensive bronze plan — less expensive because the insurance picks up only 60% of costs, with the enrollee owing the rest.

Also, fewer middle-class Americans may qualify for premium subsidies under the Senate bill than under the ACA. With the ACA, anyone earning between 100% and 400% of the federal poverty level (FPL) qualifies for the assistance, but the Senate bill lowers the upper threshold to 350%. However, it also makes the subsidies available to individuals below 100% of FPL if they don't qualify for Medicaid where they live, a departure from the ACA.

The Senate bill is labeled a discussion draft, suggesting the likelihood of amendments to placate GOP conservatives who want a sweeping repeal of the ACA and moderates who want to limit the hurt to Americans who gained coverage under the law.

How the Senate bill would change the numbers on health insurance coverage and affordability is a question that the nonpartisan Congressional Budget Office (CBO) will attempt to answer before there's any vote. The CBO reported in its latest analysis of the AHCA that the House bill would leave 23 million more Americans uninsured by 2026, increase out-of-pocket spending for many individuals and families, and reduce federal contributions to Medicaid by more than $800 billion over 10 years. Both House Republicans and the White House dismissed that assessment as inaccurate. Economists at the Centers for Medicare & Medicaid Services forecast less damage, estimating that the ranks of the uninsured would grow by only 13 million through 2026.

The CBO said today that it planned to release its analysis of the Senate bill early next week, the same week that Senate Majority Leader Mitch McConnell (R-KY) would like to hold a vote. Republicans designed the bill under Senate rules to be filibuster-proof, meaning that it requires only a simple majority to pass (60 votes are needed to overcome a filibuster). Republicans control 52 seats in the Senate, but they need only 50 to pass the ACA repeal-and-replace legislation because Vice President Mike Pence would break the tie in their favor.

Fifty votes for the GOP may be elusive. Already four Senate Republicans — Ted Cruz (R-TX), Ron Johnson (R-WI), Mike Lee (R-UT), and Rand Paul (R-KY) — have announced they're not ready to support the BCRA as written.

Bad Reviews From Medical Societies

Major medical societies and much of the rest of the healthcare industry lambasted the House bill upon its release, saying it weakens instead of strengthens insurance coverage and access to care. The Senate's BCRA triggered more such reviews today.

"Disappointed is not strong enough of a word," said John Meigs Jr, MD, president of the American Academy of Family Physicians, in an interview with Medscape Medical News. "The Senate bill has the same or similar flawed concepts as the AHCA, and it may pose even a greater threat."

Dr Meigs said the plan to cap federal contributions to Medicaid and index their growth to the regular CPI as opposed to the higher medical CPI would "starve" state programs, which are the main payers for long-term care. "Are people willing to bring their mother-in-law home to live with them when the nursing home closes?" he asked.

Similarly, the American Academy of Pediatricians, the American Congress of Obstetricians and Gynecologists, the American College of Physicians, the American Psychiatric Association, and the American Osteopathic Association went on record today in denouncing the BCRA. The American Medical Association (AMA), which said it was still reviewing the bill, confined its criticism to the proposed overhaul of Medicaid.

"The AMA strongly opposes Medicaid spending caps," said AMA President David Barbe, MD, "and we have grave concern with a formula that will not cover needed care for vulnerable patients."

Also weighing in today with statements of opposition were the American Nurses Association and the Association of American Medical Colleges (AAMC).

"Despite promises to the contrary, [the BCRA] will leave millions of people without health coverage, and others with only bare bone plans that will be insufficient to properly address their needs," said AAMC President Darrell Kirch, MD, in a news release. "We urge members of the Senate to reject this bill and return to the drawing board."

A number of healthcare organizations criticizing the bill noted that Republican senators drafted it without consulting them.

Follow Robert Lowes on Twitter @LowesRobert

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