When Donald Trump was elected president in November, and Republicans held their majority in both houses of Congress, it was widely expected that the Affordable Care Act, known best as Obamacare, would be repealed and replaced relatively quickly. After all, Republicans managed to pass a repeal measure during the Obama presidency, which the now-former president vetoed.
But to quote the words of President Trump, "Nobody knew that healthcare could be so complicated."
The evolution of the Republican healthcare bill
A House Republican healthcare bill, known as the American Health Care Act (AHCA), was introduced in March to lukewarm support within the GOP. In fact, the bill never even went to vote because it failed to garner enough support. However, a second version of the AHCA, which included two new Amendments (the Upton Amendment and MacArthur Amendment), had just enough momentum and support to pass the House by the narrowest of margins in early May. That moved the Republican repeal-and-replace effort to the Senate.
But as you might have rightly expected, the Senate GOP has a markedly different view of where healthcare in America should head next than House Republicans. do The Better Care Reconciliation Act (BCRA), as the Senate healthcare bill is known, kept some components of the AHCA in place but rewrote a number of key points.
Here's what you need to know about the initial version of the BCRA:
- Income-based subsidies: Like Obamacare, it doles out subsidies based on income. This is a marked break from the AHCA, which introduced age-based tax credits. However, unlike Obamacare, the subsidies would end at 350% of the federal poverty level as opposed to 400%. Older adults would also be charged more as a percentage of their income under the BCRA.
- Medicaid expansion extension: Medicaid expansion would be extended through 2020, but thereafter the funding provided to participating states would drop by 5% annually, until Medicaid expansion is eliminated in 2023. The AHCA would have eliminated Medicaid expansion much sooner.
- Cost-sharing reductions extension: Cost-sharing reductions, which help to lower the costs of copays, coinsurance, and deductibles, for low-income consumers, will stick around through 2019, and then disappear. The AHCA would also have cut out cost-sharing reductions much sooner.
- Essential health benefits waiver, with an exception: The BCRA allows states the opportunity to apply for a waiver from Obamacare's 10 minimum essential health benefits, which mirrors the AHCA. But the BCRA denies the ability for states to repeal the community rating, which is the provision that mandates all people of the same age and location be charged the same premium.
- Shared Responsibility Payment: Both GOP proposals eliminate the penalty associated with not purchasing health insurance.
Yet in spite of these changes, the Senate GOP was unable to vote on the BCRA ahead of the Independence Day recess because (drum roll) it again lacked the sufficient support for a vote. But rather than work with Democrats on healthcare reform, Senate Republicans have vowed to make changes to appease GOP dissenters.
Surprise! Senate Republicans may introduce new amendments to their healthcare bill.
There are essentially two factions of Republicans who've said or implied that they won't vote for the current bill. On one side are more moderate Republicans who believe the BCRA takes away too much from low-income individuals and families, as well as those with pre-existing conditions. On the other side are more conservative GOP Senators who believe the BCRA doesn't go far enough in distancing itself from Obamacare. The GOP has been using the July 4 recess as a means to toss around ideas and provisions that could help appease these factions and pass the BCRA.
Currently, there are three new amendments on the table -- two of which have already been added -- that could change the face of this bill, and its ultimate impact.
1. $45 billion in funding for opioid abuse prevention
In late June, various news outlets confirmed that a provision had been added to the BCRA to include $45 billion to fight the opioid epidemic in America. This money is expected to be granted out to states on a fairly even basis -- i.e., $4.5 billion annually over the next decade. In 2015, prescription opioid overdose-related deaths totaled 20,101, according to the American Society of Addiction Medicine.
On one hand, it's great to see lawmakers making an effort to slow or end a growing problem in the United States. Then again, $45 billion could prove to be nowhere near enough to counter opioid abuse in America. The question at this point is, will this added funding be enough to sway more moderate Republicans who lobbied for this provision? My guess at this point would be yes.
The next big question is how Senate Republicans plan to pay for this extra funding. One option would be to leave in place the net investment income tax (NIIT), which adds a 3.8% surcharge to investment income on those earning more than $200,000 in modified adjusted gross income. The NIIT is a widely disliked tax among the GOP, so leaving it in place could ruffle some feathers.
The GOP could also choose not to boost revenue elsewhere, considering that the BCRA would reduce the deficit nearly three times as much as the AHCA over the next decade. In other words, the BCRA is in good enough shape from a financial perspective that the GOP can afford to fund a program to end opioid abuse without boosting revenue elsewhere.
2. Health savings accounts that can be used for insurance premiums
Another new amendment to the BCRA that the American public may very well get behind is the addition of new language that allows people with a health savings account (HSA) to use their funds to pay for insurance premiums.
For those who may not recall, the AHCA proposed to dramatically lift the amount a person could contribute annually to an HSA. In 2017, per the IRS, HSA contributions are capped at $3,400 for an individual and $6,750 for families. Under the AHCA and now BCRA, these limits would rise to at least $6,550 for individuals and $13,100 for family coverage this year, and $6,650 and $13,300, respectively, next year.
HSAs offer a number of advantages for consumers. In particular, they allow money earned within the account to grow on a tax-free basis until age 65, and funds within an HSA can be used to help pay for eligible medical expenses on a completely tax-free basis. But HSAs have always had one drawback: You can't use the funds to pay for your health insurance premiums. New language in the BCRA concerning health savings accounts would change that, giving even more power to an attractive tax-advantaged tool.
3. New health plan options for participating insurers (the Cruz Amendment)
Last, but not least, Senate Republicans are taking a serious look at a newly introduced proposal from Sen. Ted Cruz (R-Texas) as a means to appease more conservative members of the party.
Cruz's proposal would allow insurance companies to offer plans created of their own choosing, with an exception: They would be able to do so only if they also offered a plan that complies with the essential health benefit and community rating mandates. The assumption here is that more plans should increase competition and help drive down premium prices.
In one context, Cruz's plan would do exactly that. Younger, healthier adults who are critical to the success of any healthcare bill would probably be all for Cruz's proposal, since it would allow insurers to offer plans with fewer essential health benefits and thus lower premiums. Additionally, healthy adults would doubly benefit from insurers that didn't have to follow the community rating.
The flip side is that Cruz's plan could make life very difficult for people with pre-existing conditions. There's the possibility that allowing non-compliant plans on the marketplace could price those with pre-existing conditions out of the marketplace, or significantly reduce plan options for those with such conditions.
This provision is still very much up for debate, but it has the potential to win over at least a few conservative GOP senators.
Ultimately, what's next for healthcare in America remains anyone's guess at this point. Senate Majority Leader Mitch McConnell has suggested that a vote on the newly amended BCRA could come next week, meaning we should have a pretty good bead on favorability toward the bill by then. However, we'll need to see the official scoring from the Congressional Budget Office (CBO) before any vote takes place. This upcoming CBO report, and any potential progress made from the CBO's initial forecast that the BCRA could lead to 22 million more uninsured people in a decade, should set the tone.
Now we watch and wait.