Obamacare Repeal and Replacement Plans

What a Congressional Plan to Repeal Obamacare Would Look Like

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Republican congressional leaders tried to pass several plans to replace Obamacare in 2017. If they try again in 2018, the plan would have some of these components.

March-May 2017: The first attempt was the American Health Care Act. The House passed it on May 4, 2017. It included many elements not part of any Senate bills. It provided a flat tax credit based on age, not income. This subsidy is not based on the cost of plans, so it would raise costs for many.

The plan included a Patient and State Stability Fund that would help lower premiums by 20 percent after 2026. It would have cost the federal government $100 billion over 10 years. States had the option to use the fund to create high-risk poolsThis would mean higher costs for people with pre-existing conditions.

The House bill would have allowed states to waive several rules of the ACA under certain conditions. In the states that chose waiver rules, chronic disease sufferers would pay much higher rates.

It funded Medicare through a fixed block grant. This is a strategy Speaker Paul Ryan has advocated for years. It cut funding for Planned Parenthood and Obamacare taxes. The loss of Obamacare funding would add $460 billion to the debt over 10 years.

The plan’s backers never explained how their plan wouldn’t add to the debt. That was one reason many conservatives were opposed to it. It passed the House but has yet to result in a successful Senate bill.

June-July 2017: Based on the House’s American Health Care Act, House Majority Leader Mitch McConnell championed the first Senate version of Trumpcare. The Better Care Reconciliation Act allowed states to decide whether to keep all 10 essential health benefits. That would have allowed companies to charge more for those with pre-existing conditions.

The plan penalized those who dropped their insurance then reapplied for coverage within 63 days. It saves insurance companies some money by discouraging people from only getting insurance when sick. But it wouldn’t stop healthy people from letting their coverage lapse, increasing costs for everyone and especially the sick. 

This plan would have cut Medicaid spending starting in 2020. It would have reduced Obamacare tax credits and subsidies. The CBO estimated that the cuts to the subsidies and Medicaid would prevent 22 million people from getting insurance. That would reduce the debt by $321 billion over 10 years. 

The Senate plan would allow companies to charge seniors five times as much as younger Americans, up from three times as much. The plan would strip Medicaid and Title X reimbursement for Planned Parenthood health care services for a year. Even though these federal funds are never used for abortions, Republicans are concerned the organization uses the funds for research they oppose. This action would increase Medicaid costs. It could increase the number of women seeking abortions because they never received the prenatal care offered by Planned Parenthood.

The plan would eliminate the tax on those who don't buy insurance. The CBO estimated that premiums would be 15 to 20 percent higher in 2018 and 2019. It would also remove the tax on companies that don't provide health insurance. Many employees will lose coverage once employers aren’t forced to provide it.

The Senate bill increased maximum allowable contributions to Health Savings Accounts. HSAs are only available for those with high-deductible insurance plans. This doesn't help people who can't afford to set aside income in the HSA. It would allow everyone to purchase catastrophic health insurance. The ACA only allowed people to buy these plans up to age 30. They don’t cover preventative services but are inexpensive.

Trump had asked Congress to replace the ACA before September 30, 2017. That's the last day Senate Republicans could pass the bill with just a 51-vote majority. They attempted to pass four bills, but they never got the votes.

The Senate needed a 60-vote majority to completely repeal the ACA. Democrats would never repeal an act they created. Instead, Senate Republicans had to use a budget reconciliation bill to dismantle the spending and revenue portions of the ACA. They could only use it on a bill that didn't add to the debt over the next 10 years.

On July 18, 2017, McConnell realized he couldn't get enough Republican votes to pass the Better Care Act. But President Trump put pressure on Republican holdouts. They agreed to at least allow the bill to move forward for discussion. 

July 2017: The Senate’s "skinny repeal" would have repealed ACA's mandate that individuals must buy insurance. It would have stopped requiring companies to provide insurance benefits. It would have repealed the tax on medical device manufacturers. It would have defunded Planned Parenthood, the Prevention and Public Health Fund, and the Community Health Center Fund.

The CBO found it would leave 16 million people without insurance. It also warned that the bill would have increased premiums by 20 percent per year. That's because health insurance companies would lose revenue. 

On July 28, 2017, Senator John McCain, R-Ariz., cast the deciding vote against the "skinny bill." He disapproved of the process and urged a return to bipartisan lawmaking. 

September 2017: Senators Lindsey Graham, R-S.C., and Bill Cassidy, R-La., championed the most recent failed bill. The Graham-Cassidy bill would have converted Obamacare's federal Medicaid funding and insurance subsidies to state block grants. It left it up to the states to design their own health care programs with the funds.

The fixed block grants wouldn't have paid for as many Americans as the ACA's percentage federal coverage. It would benefit some states while disadvantaging others.

The bill allowed states to require that Medicaid recipients have a job unless they were seniors, children, disabled, or pregnant. It cut off Medicaid funding by 2027.

The bill delighted states’ rights advocates. It could have lowered health care costs, as insurance companies would only have to comply with state regulations. Trump believes block grants would make state funding more efficient. It also means that Medicaid would compete with other state priorities. That's what led to the failure of community mental health centers under deinstitutionalization.

But many states’ Medicaid directors warned that they are not equipped to create a program in the bill’s two-year time frame with the block grants’ insufficient funds.

Graham-Cassidy eliminated the tax on those who don't buy insurance retroactive to 2016. The CBO estimates that 14 million people will drop their insurance coverage.

On September 22, 2017, Senator McCain blocked the Graham-Cassidy bill. He said there wasn’t enough information about how the bill would affect people because it was rushed through to meet the deadline. 

How an Obamacare Repeal Would Affect You

Republicans may relaunch efforts to repeal and replace Obamacare plans in 2018. If so, they need to submit their proposals to the states by May for any changes to occur by January 2019. The states have the final approval since they are responsible for implementation.

If a repeal occurred, the cost of individual plans would increase for most people. A Commonwealth Fund and Rand Corporation study found that an average policy would rise from $3,200 to $4,700. 

These Congressional plans would lower your costs if:

  • You own a small business. You’d no longer have to pay the penalty if you don’t provide insurance.
  • You own a medical devices company or a tanning salon. You’d no longer have to pay Obamacare taxes.
  • A repeal would affect you even more if you are in one of the states that reduce the 10 essential benefits. It would lower your costs if you are healthy or young.

They would increase your costs if:

  • You have a chronic disease.
  • You are older. The Congressional plans allow insurance companies to charge seniors five times what they charge younger people. Obamacare limited that to three times. Your costs would skyrocket if you are a senior who loses Medicaid coverage under the plan. Many seniors need Medicaid to cover the out-of-pocket Medicare costs.
  • You become pregnant. Many states would drop this from the essential benefits.
  • You need an abortion. The plans prohibit insurance companies sold on the exchanges from covering abortion services.
  • Your company only provided coverage because the ACA mandated it.
  • You are one of the 22 million people who received subsidies or the Medicaid expansion.
  • You use mental and behavioral health services, including drug rehab. The House plan includes $2 billion to pay states for drug treatment. That's not enough to offset the cuts to Medicaid and insurance companies who drop coverage for these services.
  • You decide to reapply for health insurance after a lapse of 63 days. You'd have to pay a 30 percent premium increase.
  • You are a Planned Parenthood patient. The Senate plan defunds the organization for just one year.

Background

Major hospital groups oppose the Republicans' plans. They know their emergency room costs will increase if preventive care under expanded Medicaid is withdrawn. The health insurance lobby, America's Health Insurance Plans, opposes any reductions to Medicaid financing. The ACA's expansion brought them many new customers. 

The health insurance industry will file lawsuits against any plan they don't support. The industry played a significant role in forming Obamacare. For example, it was responsible for the individual mandate. The insurance companies wouldn't insure those who are sick unless the government mandated that the healthy are also covered.

To understand the ACA better, see my book, "The Ultimate Obamacare Handbook."