The Senate’s Better Care Reconciliation Act (BCRA) eases some of the cuts of the House’s Obamacare repeal bill, but it doesn’t change much of the equation when it comes to winners and losers.
Like the House plan, the BCRA repeals individual and employer taxes, which funded expansion of insurance coverage under the Affordable Care Act (ACA). That benefits those with higher incomes. While the Senate bill leaves many of the ACA’s provisions in place, it does so with less generous funding.
President Donald Trump may have summed it up best, when he said in a Fox News interview: “It’s a very complicated situation, from the standpoint, you do something that’s good for one group but bad for another. It’s a very, very narrow path.”
Here is a look at the winners and losers of the Senate GOP’s health-care proposal:
The biggest losers in the Senate plans are many of those who gained the most from Obamacare:
- Adults covered under Medicaid expansion: The Senate bill would maintain funding through 2020, but then make states pick up more of the tab, before cutting subsidies for the Obamacare expansion of the safety net program completely.
- Middle-income Obamacare enrollees: The Senate plans would cap tax credits for earnings making above 350 percent of the federal poverty level, or about $41,000 for an individual this year. After 2020, those middle-income earners would no longer get help with their premiums.
- Older adults: The Senate plan would roll back many of the advantages for older, sicker enrollees under Obamacare.
Insurers would be allowed to charge older adults up to five times more than younger people. Under the ACA, rates were capped at three times more.
The insurance industry has fought for the wider age band rating as a way to improve the risk pool and bring down premiums for market, overall.
“We think that’s important for encouraging younger and more healthy people into the risk pool. So, as you start to balance it out it will bring the cost down for everyone,” said Kristine Grow, spokeswoman for America’s Health Insurance Plans.
But even if premiums were to come down, the Senate bill could still shift more of the cost to enrollees. The plan would raise the limits on how much older people have to chip in for premiums before tax credits kick in, from 9.5 percent of their annual income to as much as 16 percent.
And for all enrollees the tax credits would likely be lower, because they’d be indexed to the lowest-tiered bronze plans, rather than more generous mid-tiered silver plans under the ACA.
The Senate plan rolls back some of the gains higher-income people would see through tax credits under the House plan, while preserving one of the ACA’s key protections:
- People with pre-existing conditions: The Senate plan takes out the House provision that would impose a premium surcharge on those who lapse in coverage.
- The working poor: The Senate plan fills in the gap left by Obamacare, extending tack credits for people earning less than federal poverty level ($11,700 this year) who have been shut out of the exchange market.
“Right now there are 2.6 million uninsured poor adults in states that haven’t expanded Medicaid. They get nothing under the ACA,” said Larry Levitt, of the Kaiser Health Foundation.
Access would start in 2020, and presumably, adults who lose Medicaid expansion coverage could also get tax credits on health plans. The question is whether they can afford to make premium payments.
Young adults: The Senate plan, like the House bill, would give insurers greater flexibility to charge younger enrollees much lower premiums and to offer skinnier plans in states that opt out of ACA’s essential health benefit requirements.
HSA savers: The Senate bill boosts the tax break for people in high-deductible plans in both the individual market and employer plans, by allowing them to put enough into their health savings accounts to cover much more of their out-of-pocket costs.
“A lot of employers (now) have plans that are actually priced above the maximum HSA contribution,” so people end up paying for out-of-pocket expenses with after-tax funds, said Eric Dowley, a senior vice president with Fidelity’s HSA business. “This would allow them to be able to pay for those benefits on a tax-advantaged basis.”
The Senate plan raises the contribution limits $100 more than the House bill. For individuals, the limit would rise to $6,650 from $3,400 currently. For families, the limit goes to $13,300 from $6,750.
The GOP plan would restore the ability to use HSA funds to pay for non-prescription health costs such as over-the-counter drugs. But some employers had hoped the Senate would have made changes when it came to drugs that treat chronic diseases.
“Preventive care is excluded from the deductible. … Employers would love to see drugs associated with chronic conditions, like meds for diabetes or high blood pressure, excluded,” said Tracy Watts, a senior partner at benefits firm Mercer.
“They’re not real expensive drugs, but it’s the kind of thing that you don’t want the cost of them to be a barrier,” for lower income workers, she said.
Will it stabilize the market?
Critics say if the changes result in lower premiums for some, it will likely not be enough to change the overall dynamic or pricing in the individual market.
“You’re going to get a lot more people in these plans, but they’re going be a lot sicker … and you’re going to have a lot fewer healthy people in the plans, so there’ll be no balance,” said former Medtronic CEO Bill George, who now teaches at Harvard Business School. “So you’ll see very rapid (premium) increases.”
The Congressional Budget Office estimated that the House plan would result in 23 million fewer people being insured by 2026 , and that while premiums would likely go down, subsidy cuts could destabilize the individual market.