5 highlights from the Senate's ACA replacement bill
After weeks of closed-door discussions, Senate Republicans released their version of the American Health Care Act on Thursday morning. The 142-page bill has many of the same provisions as the version that the House passed last month, but it comes with some key differences as well.
The next step is a Congressional Budget Office score, which is expected early next week. It’s still unclear whether the bill will ultimately pass the Senate — or how the House and Senate might resolve the differences in the two versions.
Here are the key aspects of the Senate bill to keep in mind.
1. The bill fundamentally changes Medicaid — with harsher cuts than the House bill
The House’s AHCA bill as well as the Senate version both make major changes to Medicaid. The House bill includes cuts of more than $800 billion and immediately begins a process to end Medicaid expansion. The Senate version, however, delays the phase-out to 2020 and provides a timeline of four years. While that gives a little more breathing room for expansion states to adjust, it still means large cuts from state Medicaid rolls eventually.
The Senate bill goes a step further in cutting the program with how it implements a block granting or per capita cap for Medicaid. The bill limits growth to standard inflation rather than the typically much higher medical inflation. Many health policy experts are wary of per capita caps, saying they would mean less support for vulnerable rural and safety net hospitals.
The Medicaid changes would increase bad debt and uncompensated care costs for hospitals, Moody's Senior Vice President Jessica Gladstone said in an email. "Under the proposed Senate bill, both for-profit and not-for-profit hospitals would face weaker demand for services and higher rates of uncompensated care expense, with the most significant impact on the sector occurring after 2020 when the changes to federal Medicaid funding are phased in," she said.
The bill also opens the door for controversial requirements mandating that Medicaid beneficiaries have a job in order to be eligible.
Slashing Medicaid funding would lead to lower reimbursement rates for providers, who will be more likely to stop accepting Medicaid patients. One in five Americans are covered by Medicaid, including vulnerable groups like children, the elderly, the disabled and people with low incomes.
2. The bill will change as the GOP haggles for votes
The bill is officially labeled a “draft discussion” and represents a foundation Senate leaders can tweak to get enough support for its passage. The opposing wings of the party — the more moderate Tuesday Group and the hard-right Freedom Caucus — are the most likely to be on the fence.
To appease moderates, the bill could further soften the end of Medicaid expansion and reduce overall cuts to the program. The far-right conservatives are looking for even harsher cuts to premium subsidies (or their outright elimination) and more efforts to reduce premium costs.
Throughout that process, senators will also need to keep their eye on the Senate parliamentarian, who will make sure all of the language directly involves budget issues. Republicans need to use the budget reconciliation process in order to pass the bill with only 51 votes.
The current #healthcarebill does not repeal Obamacare. It does not keep our promises to the American people.— Senator Rand Paul (@RandPaul) June 22, 2017
The bill in general isn’t popular. The latest polling from NBC News and the Wall Street Journal shows a mere 16% of voters think the AHCA is a good idea. The secretive dealings senators have used to draft their bill has alienated Democrats and advocates more than usual. Industry groups like the American Hospital Association and the American Medical Association, as well as heavyweight lobbying organizations like AARP, have come out strongly against the legislation.
Senate Majority Leader Mitch McConnell (R-Ky.) isn’t giving his members much time to analyze the bill or hear from constituents. He continues to say he will call for a vote before Congress leaves for the July 4 holiday.
In the end, it will come down to a handful of votes, just as it did in the House. Some moderates in the GOP have expressed concerns, particularly about the Medicaid cuts, but they face intense pressure to hold to the party’s longtime promise of repealing the Affordable Care Act (ACA). Vice President Mike Pence will no doubt be on hand in case he has to break a 50-50 tie.
3. The bill calculates subsidies differently
One hallmark of the ACA was premium subsidy payments that help people afford the coverage they are required to get. There have always been differing ideas on how those should be determined. The House bill went with relying solely on age, but like the ACA, the Senate version also considers a person’s income and geography. The bill would, however, change the income requirements for receiving a subsidy from 400% of the federal poverty level to 350%.
That would ease costs for younger people, but increase them for the older people on fixed incomes. Payers would be able to charge older beneficiaries five times more than younger ones, instead of three times more as currently allowed.
Changing the benchmark for premium subsidies from the equivalent of a silver plan to a bronze plan is about a 15% across-the-board cut.— Larry Levitt (@larry_levitt) June 22, 2017
The subsidies would also be calculated based on premium costs for less comprehensive plans. Under the ACA, they are tied to silver-level plans that cover 70% of expected costs. The Senate bill would tie them to bronze-level plans that cover 58%. The result would be a substantial hike in out-of-pocket costs for patients.
4. The bill doesn't provide the protections for pre-existing conditions that it claims to
Senators took a lesson from House Republicans, who faced major backlash from voters because their bill did not offer protections for people with pre-existing conditions. But while the Senate bill states that payers must cover people with pre-existing conditions, there is a significant loophole.
With states still able to avoid the essential health benefits requirement, there would be nothing stopping insurers from eliminating annual and lifetime coverage caps or not covering high-cost drugs like those that treat cancer. This means people with expensive conditions could have nearly nonexistent coverage and debilitating out-of-pocket costs.
5. Most of the bill isn’t surprising, but it is impactful
Among the provisions the House and Senate bills agree on are big changes to what insurance is required to cover. The Senate version makes it even easier for states to get waivers that allow them to eschew the mandate to cover essential health benefits like preventive care, contraception, maternity care and addiction treatment.
Both bills repeal nearly all of the ACA’s taxes, like the health insurance tax, the medical device tax and the net investment income tax. They also throw out the individual mandate, which is meant to ensure healthy risk pools. The Senate bill repeals the Cadillac tax on high-end plans, but brings it back in 2026.
Finally, the bills would both defund Planned Parenthood and ban federal subsidies from helping pay for insurance plans that cover abortion services.
The Senate’s proposal is built on patient-centered reforms that put the American people back in charge of their own healthcare decisions.— Tom Price, M.D. (@SecPriceMD) June 22, 2017
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