The GOP's Obamacare Replacement Plan: 12 Quick Points
A primary goal of Donald Trump and the GOP Congress was to repeal and replace “Obamacare,” the Affordable Care Act of 2010 (“ACA”). The new president had promised “insurance for everybody.” The new Secretary of Department of Health and Human Services, as a Congressman, had offered a proposal that fell well short of this goal. In January, I addressed possible consequences of "repeal," but admitted we did not know what "replacement" Congress would propose. Yesterday, they rolled it out. I’ve reviewed the “Patient Access to Public Health Programs” Act, and have these 12 initial observations.
1. It is not “insurance for everybody.” It would replace the ACA’s subsidies with tax credits which will cover less of the cost of insurance, will benefit some but hurt others (see this excellent Kaiser interactive map for details), and roll back Medicaid expansion beginning in 2021.
2. The tax penalty for not getting coverage would go away. But if you let coverage lapse and don’t sign up again within 62 days, your premiums may be increased by 30% for up to a year.
3. The “Large Employer” insurance coverage mandate would also go away, meaning businesses with 100 or more full time employees no longer need to provide a health insurance benefit.
4. Older people would pay higher premiums. The ACA allowed individual and small employer (100 or fewer employees) health insurers to base premiums only on family structure, geography (where you live), value of benefits, age (but limited to a 3 to 1 ratio) and tobacco use (limited to 1.5 to 1 ratio). The GOP proposal allows health insurers to charge older people 5 times as much premium rather than 3 times as much.
5. Most other insurance mandates would survive. Health plans still would not be allowed to deny coverage or adjust premiums based on pre-existing conditions or disability, or limit lifetime coverage payments. Dependents may still continue to stay on their parents’ policies until age 26. Health plans must still cover preventive care and write clear policy descriptions.
6. To my initial surprise (see comment 9 below), the “Medical Loss Ratio” provision apparently remains intact. This is the requirement that all commercial insured health plans spend at least 80% (for individual and small group) or 85% (for large group) of premiums on medical care costs.
7. Will the Exchanges live? Maybe I missed it, but I was equally surprised that the once notorious Health Insurance Exchanges were not killed outright. Instead, the proposed law permits those who buy “off-exchange” to qualify for the new tax credit—a sensible proposal in my view.
8. President Trump’s proposal to allow sale of insurance across state lines is nowhere to be seen, though he says it will come later.
9. The explanation for items 5, 6, 7 and 8 above may be that budget resolutions cannot be filibustered in the Senate, but other bills can. Senate Democrats could easily filibuster repeal of the mandates, MLR provision and Exchanges, or Trump’s cross-state policies; but not the expense and tax provisions.
10. Medicare reforms survive! I saw nothing altering the ACA’s numerous Medicare reforms, such as the “Shared Saving” and “Accountable Care Organization” provisions.
11. It would inexplicably gut the Prevention and Public Health Fund. Per Vox “The goal of the fund was simple: Boost public-health money, much of it for the US Centers for Disease Control and Prevention (CDC), to support activities that keep people from becoming sick with preventable chronic ailments like diabetes, heart disease, and cancer and infectious diseases that can be staved off with vaccines.” Doesn’t sound like a very good idea to me!
12. The bill has not been “scored” by the Congressional Budget Office, so we don’t know if it will cost more or less than the ACA. But because the proposed law eliminates almost all the taxes used to fund the ACA, while keeping spending high, I’d presume the former. As per Timothy Jost’s Health Affairs Blog, “It is hard to see in the absence of a CBO report how the repeal bill makes up for this lost revenue.”
In addition to Timothy Jost's excellent summary, linked above, I also recommend these helpful reports and opinions on the proposed law: Health Affairs, Sarah Kliff's Vox piece; Avik Roy's balanced assessment in Forbes; Washington Examiner's conservative take; and a simple, but useful New York Times comparison chart.