Editor’s note: This post is part of ongoing Health Affairs Blog coverage by Tim Jost of the Senate debate over repealing and replacing—or maybe just repealing, or maybe just minimally repealing, or maybe retaining—the Affordable Care Act. See Tim’s earlier post and updates for more coverage.
As debate begins on July 27, 2017, the third and possibly final day of the 2017 Affordable Care Act repeal debate, the endgame is starting to come into focus. The latest version of the Senate Leaderships Better Care Reconciliation Act, with amendments from Senators Cruz and Portman, was rejected by a vote of 57 to 43, and Senator Paul’s Obamacare Repeal Reconciliation Act was rejected with a 55 to 45 vote. Thus, there is no officially endorsed version of repeal on the floor.
The currently pending bill is apparently Amendment 267, another version of the ORRA, which would amend the House’s American Health Care Act. But the ORRA has already been rejected, so if Senate leadership wants to enact something, it will have to start over. It could offer an earlier version of the BCRA, without the Cruz and Portman amendments; however, the Senate Parliamentarian, Elizabeth MacDonough, has reportedly concluded that a number of provisions of the bill—including key provisions such as the six month waiting period, the age rating changes, the small business association plan provisions, the Planned Parenthood defunding, and several Medicaid provisions—violate the Byrd rule and cannot be included in a reconciliation measure. Therefore, if the leadership brought the bill back to the floor it would have several major holes in it and earlier Congressional Budget Office scores might need to be reconsidered.
What Would The Effects Of A ‘Skinny’ Repeal Plan Be?
The talk now has turned to a “skinny plan,” which would repeal the individual and employer mandates and the medical device tax, and possibly include a few other provisions such as defunding Planned Parenthood and eliminating the Prevention and Public Health Fund. The individual mandate repeal would eliminate the ACA provision conservatives hate most and the medical device tax repeal would end the ACA tax that has the greatest bipartisan opposition—there are medical device manufacturers in the districts of the most liberal Democrats. (Update: There are now reports that a skinny bill might not include a repeal of the medical device tax, but might include some version of an expedited 1332 waiver process such as was included in the BCRA, which would allow states to cut essential health benefits and other ACA provisions. There are also reports that the Senate Parliamentarian has ruled that the 1332 waiver provision would violate the Byrd Rule and thus be subject to being stricken under a point of order.)
If a skinny plan is approved, the bill can go to conference with the House where a more comprehensive bill could be worked out, although the conference bill would have to be approved by the Senate and pass Byrd rule scrutiny. At least the adoption of a skinny bill would end the Senate Republicans’ current agony and let them get on to other business for a little while, until it came back.
The CBO released a score on the night of July 26, not on a real skinny bill, but on a skinny bill mock-up proposed by Democrats. The mock-up, however, appears to include the provisions of a real skinny bill which might be proposed.
A first problem the CBO report reveals is that if the skinny plan only includes the provisions specified by the Democrats, it will be subject to a point of order because it only reduces the deficit on-budget by $78.4 billion. The House bill reduced the deficit by $133 billion and under budget reconciliation rules the Senate bill must achieve at least this goal. An attempt to repeal any more taxes would make this worse.
Second, the CBO report estimates that the skinny plan would leave 15 million more people uninsured by 2018, and eventually 16 million more. The individual mandate is the ACA’s primary tool for encouraging healthy uninsured people to get covered, and without it, the CBO projects, 6 million would drop individual market coverage, 6 million would drop employer-based coverage, and Medicaid coverage would drop by 3 million (probably not because people would disenroll, but rather because they would not seek out coverage or complete redeterminations).
The CBO estimates are probably too high. The individual mandate penalty was never high enough and was phased in too slowly, and many consumers have likely not been attentive to it. There is some evidence that many people believe that it is not being enforced and are already dropping coverage. But millions would likely drop coverage if the mandate were expressly repealed. And as healthy people dropped coverage, the risk pool would become steadily less healthy and more costly, and insurers would leave markets or raise their rates accordingly. This would in turn drive more healthy people from the market.
Consumers with incomes below 400 percent of the federal poverty level would by and large not experience the higher premiums as they would be covered by the premium tax credits. But individuals with incomes above 400 percent of poverty, whose stories GOP Senators have been telling repeatedly for two days of debate, would face dramatically higher premiums. Democrats report that the CBO has told them premiums would increase by 20 percent and the Center for American Progress has released state-by-state premium increase estimates.
This does not mean that all 15 million would be completely uninsured. The market for “excepted benefit” plans—cancer policies and fixed-indemnity policies—and for short term coverage, would explode. These are low-premium, low-value policies that are not subject to the ACA and can exclude preexisting conditions, impose dollar limits, exclude benefits, and health status underwrite. They are legal now, but do not satisfy the individual mandate so their market is limited. But with the mandate gone, people would buy them so they have some form of coverage—and they will be disappointed if they experience high-cost claims and find their coverage is inadequate.
The repeal of the employer mandate penalty would have less effect. Because employers can now offer minimum essential coverage and minimum value policies and still avoid penalties, the mandate does not seem to have had that great an effect on expanding real health insurance coverage, which most of the large employers subject to the mandate offered anyway. But the real impact of the mandate has not been on expanding coverage, but rather on creating a tremendous load of paperwork on employers, who must track hours for variable hour employees; count full-time equivalent employees to determine if they are covered; and send reports to the IRS and to employees on coverage. None of the reporting obligations would be repealed by a skinny bill, although some of them would become meaningless.
A Better Way Forward
If the Senate is serious about restoring stability to the individual market and reducing premiums the path forward is clear: Clarify funding for the cost-sharing reduction payments; provide funding for reinsurance; enforce the individual mandate until a better approach to promoting continuous coverage is found. The nation’s insurers have reminded the Senate of this again.
A “skinny bill” would not solve the problems of the individual market; it would make them much worse.
The Skinny On The Senate ACA Debate, Day Three posted first on http://ift.tt/2lsdBiI
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