Obamacare repeal bill offers flexibility and uncertainty

The latest Republican proposal to undo the Affordable Care Act would grant states much greater flexibility and all but guarantee much greater uncertainty for tens of millions of people.

The legislation, proposed by two Senate Republicans, Lindsey Graham of South Carolina and Bill Cassidy of Louisiana, would not only reduce the amount of federal funding for coverage over the next decade, but would also give states wide leeway to determine whom to cover and how. The result is a law that would be as disruptive as many of the Republicans’ previous proposals, but whose precise impact is the hardest to predict.

The bill would initially preserve nearly all the funding currently provided to Americans through Obamacare’s state insurance marketplace subsidies and expansion of Medicaid. But starting in 2020, that funding would be reallocated to state governments as block grants. Over time, the division of money would shift among the states based on a complex formula, and the total pot would grow according to a set rate, not based on the number of people nationwide who sign up for coverage.

States could use the money to replicate Obamacare’s programs, or to pursue completely different health policy strategies. The bill lays out some standards for program goals, but gives states broad discretion to use the funds in a variety of ways.

“There will be clear differences between states about how they implement,” said Deep Banerjee, an analyst with Standard & Poor’s. “It will create quite a bit of uncertainty over the next few years.”

The bill is structured as a sort of slow-motion repeal of Obamacare’s main coverage programs. Though the bill establishes the new state block grant program for a decade, all of the program’s money expires after 2026. That makes it different from the Obamacare overhaul bill passed by the House and a previous bill considered by the Senate, which would have made modifications and cuts to those programs, but preserved them in perpetuity. The expiration of the Obamacare programs alone would probably mean that about 23 million fewer Americans would have health coverage, if compared with current law, according to an estimate the Congressional Budget Office made in regard to a previous repeal bill.

In the meantime, analysts say, the individual insurance markets could face enormous changes. The legislation rolls back popular consumer protections in Obamacare, leaving each state to decide what minimum benefits must be covered or if customers with pre-existing illnesses should be protected from higher prices. Not every state would drop these provisions, but several might. One of the few Obamacare requirements that would remain is to allow children to stay on their parents’ insurance policies until age 26.

The legislation also does little to stabilize the individual market from now until when the states would have to administer new health programs in 2020. Insurers are sharply raising their prices for 2018 because lawmakers have not committed to funding the so-called cost-sharing subsidies that help insurers lower deductibles and co-payments for low-income customers. The bill does not fix this problem.

The legislation also eliminates the tax penalty that people who refuse coverage face — the individual mandate — which could discourage insurance enrollment among healthier people, who are critical to making the program work. Insurance companies, some of whom are only reluctantly staying in the market, may think twice about whether they need to remain while the alternatives are being worked out.

This mix of policies during the two-year transition period is similar to that imagined in earlier Republican bills. The budget office said that such an environment would cause insurance prices to spike by 20 percent, and about 15 million fewer Americans to have health coverage in 2019.

The budget office has said it does not have time to analyze the full effects of the bill before the Senate hopes to consider it, though it will provide some overall estimates of its effects on the federal deficit.

President Donald Trump said Wednesday that the repeal effort remains two or three votes short. Majority Leader Mitch McConnell is trying to round up 50 votes to pass the legislation before Sept. 30, when special rules preventing a Democratic filibuster will expire.

“We think this has a very good chance, Obamacare is only getting worse,” Trump told reporters covering the U.N. General Assembly meeting in New York. “At some point the Senate is going to be forced to make a deal.”

By his reckoning, “we’re at 47 or 48 already, senators, and a lot of others are looking at it very positively.”

Trump’s comments came several hours after McConnell’s office announced that the majority leader’s “intention” is to bring the legislation to the Senate floor next week, a question McConnell was noncommittal on a day earlier. After the embarrassing defeat of an earlier repeal bill in July, some Republicans believe McConnell would bring a bill to the floor only with the votes in hand.

Like several earlier Republican health bills, this one would also change the structure of the 52-year-old Medicaid program, which even before Obamacare’s expansion to poor adults in many states, covered tens of millions of vulnerable Americans, including poor children, older Americans in nursing homes, adults with disabilities, and many pregnant women. The program currently pays for 49 percent of all births and 64 percent of all nursing home residents’ bills.

The Graham-Cassidy bill moves funding for the Medicaid expansion population into the state block grant. It would also convert the rest of the program from an open-ended commitment of paying a share of those people’s medical bills to a capped allotment for each person every year, set to grow by a fixed amount. Independent analysts have said that the change would cause substantial shifts in financial responsibility to states, ultimately leading to reductions in benefits or in the number of Americans covered by Medicaid over time.

Information from the Associated Press was used in this report.

Obamacare repeal bill offers flexibility and uncertainty 09/20/17

[Last modified: Wednesday, September 20, 2017 9:26pm]

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