What’s Changed In The New Senate Obamacare Replacement Bill, And What Happens Next?

Image courtesy of MeneerDijk

After much ado and weeks of waiting, Senate Majority Leader Mitch McConnell today unveiled an updated draft of the Senate’s plan to repeal and replace the Affordable Care Act (ACA).

The full text of the draft bill [PDF] clocks in at a hefty 172 pages. It is, in many ways, the same as the old bill — but as McConnell scrambles to get his party in line, a few key provisions have changed.

Overall, people who are currently — and stay — both healthy and wealthy may be fine, or may even benefit, under the new plan. Lower-income individuals, older individuals, and those who need to seek the most care, however, would be in big trouble.

What’s new?

Although the Cruz-Lee amendment we wrote about earlier this week isn’t wholly in the bill, most of its proposals still found their way in.

The biggest is a plan that would nominally create more lower-premium plans for consumers, by permitting insurers to sell plans that don’t actually cover essential health benefits — and that can exclude anyone with a pre-existing condition — so long as they also sell at least one plan that does meet the current ACA standard.

As Vox’s Sarah Kliff notes, that would have the end effect of creating a two-tiered insurance system, where those with means will have coverage that actually covers them, and those with lower incomes — or who consider themselves healthy and not in need of care — end up with skimpy plans.

That turns anyone with comprehensive plans automatically into an awkward high risk pool, because only people with needs are buying those plans. And it would also lead to people trying to game the system and only buy into comprehensive insurance right before they think they will need it.

The updated bill also permits individuals to use their tax credits to purchase “catastrophic” — high-deductible, low-benefit — healthcare plans, which was not permitted under the ACA. It allows you to use pre-tax money set aside into a Health Savings Account in order to pay your premiums.

READ MORE: What are HSAs, and why are they a big part of Obamacare replacement plans?

The updated bill also has some tweaks to funding. It allocates $45 billion for states to use to deal with the opioid addiction crisis specifically, and also sets aside $132 billion, over eight years, for states to “assist high-cost and low-income individuals to purchase health insurance.”

On the tax side, it keeps in place two taxes on wealthy individuals that were put in place by the ACA: a Medicare payroll tax and a net investment income tax. The first draft killed off those taxes, which apply to individuals with incomes higher than $200,000 per year.

But the draft also keeps in place several tax cuts that did exist in the previous version of the bill, including those that apply to health insurers, medical device makers, and tanning salons.

It still has huge Medicaid cuts

Medicaid not only serves lower-income individuals and families, but also millions of Americans with disabilities as well as senior citizens requiring long-term care. More than half of all spending on nursing homes and health aide for the elderly currently comes from Medicaid

The bill significantly cuts the Medicaid program. It would begin to reverse the ACA’s Medicaid expansion in 2021, fully phasing out the expansion over a three-year period. By 2024, only those meeting the pre-ACA standard will be able to apply for Medicaid.

Likewise, similarly to the House bill, the Senate bill would allow states to choose to receive lump sums of Medicaid funding, rather than continuing the current per-capita reimbursement funding model.

In practice, this kind of funding change leads to service cuts: When the money runs out, it’s gone.

The new bill does permit states to get waivers from Medicaid spending limits to use on home- or community-based elder care. It also permits states to get waivers on the Medicaid limits if they experience a public health emergency — like Zika, which stuck in Sen. Marco Rubio’s home state of Florida. (Rubio particularly agitated for the exemption.)

And try not to have a pre-existing condition

“Pre-existing condition” makes you think of someone who’s had a history of heart attacks, or cancer, or a chronic disease like multiple sclerosis.

But before the ACA, that list of conditions that a person could be excluded over, charged more for, or kicked off insurance for experiencing included things like ever having been pregnant; allergies; acne; experiencing menopause; having had ear infections; asthma; ever having had a joint injury; and more.

Eventually, in one way or another, the pool of “people who need care” includes nearly all of us, and the line between “well” and “unwell” is a dotted and narrow one that can you can cross in the blink of an eye.

The Kaiser Family Foundation has estimated that roughly 52 million adults under 65 in the U.S. right now have at least one condition that would have made them uninsurable prior to the ACA. That’s 27% of us old enough to have graduated high school and too young to retire.

Vox explains in depth how the bill will affect, basically, anyone who actually needs healthcare.

In short, it will turn the entire population of those who buy ACA-compliant plans on the marketplace into one giant high-risk pool, increasing costs all around.

“What will happen here is clear,” Vox writes: “The plans that have to offer decent coverage to anyone who wants it, no matter their health care history, will become a magnet for the old and the sick or the soon-to-be-sick, as they can’t afford, or perhaps can’t even buy, the other plans. That will drive premiums in those plans up, pulling younger, healthier people into the non-compliant plans.”

As plans become de-standardized and revert to their pre-ACA types, anyone who needs health insurance that actually includes full coverage, then, will pay significantly more — or be functionally barred from accessing care altogether.

Additionally, the low-cost catastrophic and non-complaint plans may not count as “continuous creditable coverage” when it comes to the six-month exclusion window the bill imposes on anyone whose coverage has lapsed.

What happens now? ¯\_(ツ)_/¯

It is, at this point, anyone’s guess whether the votes necessary for this bill to pass will materialize or not.

In order to pass it, McConnell needs to line up 50 Republican Senators who will vote for it. (A tie-breaking 51st vote can be cast by Vice President Mike Pence.)

There are currently 52 Republicans in the Senate, so for it to pass, no more than two can oppose it.

Senator Susan Collins (ME) has repeatedly voiced disapproval with the bill, particularly over its Medicaid cuts, and is widely considered to be a “no.”

Senators Shelley Moore Capito (WV), Dean Heller (NV), John Hoeven (ND), Lisa Murkowski (AK), and Rob Portman (OH) have also all expressed concern with the Medicaid cuts in the bill. However, none have said explicitly yet whether they intend to vote for or against it.

As Axios notes, the bill appears to include a concession that would specifically benefit Alaska, and could sway Murkowski to support it.

On the other end of things, none of the conservative bloc that opposed the last draft — Sens. Ted Cruz (TX), Ron Johnson (WI), Mike Lee (UT), and Rand Paul (KY) — has outright endorsed the new version yet either.

While Cruz called it “a very positive development,” Paul has reiterated his opposition.

With Collins and Paul both likely not to support the bill, that means McConnell can only afford to lose one additional vote if he wants it to pass.

But wait! There’s more.

Meanwhile, however, another, competing plan has emerged.

Sens. Lindsey Graham (SC) and Bill Cassidy (LA) today unveiled their own healthcare proposal, which takes a different tactic toward unspooling the ACA.

“We’re going to support Mitch’s effort with his new plan, but we want an alternative and we’re going to see which one can get 50 votes,” Graham said to CNN. “We’re not undercutting Mitch, he’s not undercutting us.”

It will be a few days before the Congressional Budget Office (CBO) is able to analyze and score this version of the bill.

The CBO estimated that the previous version of the bill would leave an additional 22 million Americans without health insurance — that’s on top of those who already don’t have coverage, estimated to be about 28 million people back in 2015.

Our colleagues down the hall at Consumers Union (the policy and mobilization arm of our parent company, Consumer Reports) strongly urged Senators to oppose the bill.

“Senators have made some tweaks and adjustments to this bill, but the essential problems for consumers are still there,” Betsy Imholz, Special Projects Director for Consumers Union, said, in a statement.

“If the goal is to improve healthcare coverage, this bill takes us further away from that goal — much further, not closer,” Imholz added. “Senators on both sides of the political aisle opposed the last version of this bill. This latest version is not a solution. You can’t simply put a bandage on this bill to make it better for consumers, because the approach is fundamentally flawed.”

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