Debate is now raging in Washington over healthcare reform. Republicans are hoping to use the 2017 budget reconciliation process, reducing the required number of yes votes from 60 to 50, to pass this bill. However, there is a September 30 deadline that looms heavily over the Senate Chamber if reconciliation is to be used. Without reconciliation, the dynamic would shift since luring 8 or more Democrats to vote yes for the new bill would raise the tradeoff issues to a new level. The Senate’s Better Care Reconciliation Act (BCRA) is significantly different than the House’s American Health Care Act (AHCA), so passage of a compromise bill won’t be very easy with such tight time constraints.
Some details of the Senate version:
Subsidies are replaced with tax credits; however, they would stop at 350% of the federal poverty level instead of 400% under the Affordable Care Act (ACA). And the maximum income percentage that Americans are expected to pay for healthcare would be increased from 9.7% to 16.2% for a plan that pays for 58% of the average cost of healthcare as opposed to 70% under ACA. Age-rating band variation would be increased from a 3:1 ratio to a 5:1 ratio, which means that older Americans would pay more for care, yet coverage for those younger would be reduced to encourage that segment to purchase coverage.
The employer and individual mandate penalties would be repealed as would most of the new taxes levied under ACA. The Cadillac tax would be delayed until 2026 and, surprisingly to me, there was no limit placed on deductibility of employer-paid premiums or the tax-exclusion by employees with healthcare benefits.
The states will be given a lot of maneuvering room under this bill but would also shoulder more costs for indigent care. ACA waiver rules will be loosened so that states can decide, among other things, whether to opt out of exchanges entirely. States can also modify their definition of the essential health benefits, which were mandated under ACA.
The Senate bill earmarks a modest $112 billion to stabilize coverage: $50 billion for large claim reinsurance available through 2021 and $62 billion over 8 years for broader state-based subsidies. Medicaid expansion would phase out beginning in 2021 and the federal government would change the current reimbursement system to either per capita caps or block grants with increases tied to the Consumer Price Index (CPI) and not medical cost inflation, which typically rises more quickly than the CPI.
Republicans are pushing for this to go very quickly but a critical piece of missing information is the Congressional Budget Office (CBO) scoring, which should be released this week.