The Healthcare Policy Debate: Part III--Inside the Senate Bill

This is the third in a series analyzing the political and policy aspects of the current healthcare debate. Part I was a political analysis of the first House bill. Part II evaluated the second House bill, HR 1628. In Part III, we will take up the Senate bill. Called the Better Care Reconciliation Act, it was initially released on June 22, 2017, and updated four days later.

The Senate's health care bill was not assembled from the ground up. Rather, it is a modification of the House's bill. As such, they will be presented together, in the same format, and with their similarities and differences highlighted.

A COMPARISON OF THE HEALTH CARE BILLS FROM THE U.S. HOUSE AND SENATE

Effects on INDIVIDUALS

The House bill maintains the mandate to be insured but removes the tax penalty for not doing so. 
The Senate bill repeals the mandate and, by definition, the penalty.

Moreover, in the House bill, subsidies for individual policy purchasers (the amount of which depends on the purchasers' income and the price of their premiums) would be supplanted by age-dependent tax credits that must be utilized for premium payments.
The Senate bill also repeals these subsidies but substitutes a tax credit eligibility formula based on the Federal Poverty Line. Subsidies amount to 58% of the actuarial value of a cheaper benchmark plan. 

HR 1628 prohibits these tax credits from being applied to any policy that covers abortion. 

The Senate bill does not change this provision.

Further, taxes on high earners, designated to help defray the costs of the Patient Protection and Affordable Care Act (also known as the A.C.A. and Obamacare), would be eliminated by the House. But, Medicare premiums increase for them.
Similarly, the Senate bill removes the A.C.A. taxes on high earners and increases their Medicare premiums.

Lastly, premium subsidies can be applied to policies not purchased on the exchanges in 1628.
The Senate bill restricts subsidy use to premium payment for policies offered on the exchange, but allows states to apply to waive this restriction.

Effects on EMPLOYERS

The requirement for employers--with over 50 full time employees--to offer health insurance would be dropped in the House bill.

The Senate bill keeps this provision.

In the House and Senate bills, the tax on high-end, employer-sponsored health plans is repealed.

Tax deductions for employers who receive subsidies to provide Medicare Part D are reinstated in HR 1628.
Such is the case in the Senate's bill, as well. 

Effects on INDUSTRY

Taxes imposed by the A.C.A. on insurers, pharmaceutical companies, medical device

companies, and tanning salons, would be repealed by 1628.

The Senate bill maintains this provision. 

Insurers are obliged to surcharge policy purchasers (by 30 percent) who were uninsured for more than 63 days before requesting coverage by a non-group policy.
In the Senate's bill, the 63 day grace period is kept but the penalty for a longer coverage lapse is a waiting period, as opposed to a surcharge.

Insurers must also continue covering dependents until they are 26 years of age.

This is unchanged in the Senate bill. 

The requirement to include abortion coverage is removed in both H.R.1628 and the Better Care Reconciliation Act (BCRA).

Effects on STATES

Most of the language in H.R.1628 impacts the states. The whopper is the cessation of federal payments for the A.C.A.'s Medicaid expansion. Further, the disbursement methodology is fundamentally altered. Specifically, the Medicaid program would no longer use a fee-for-service model, substituting an annual block grant approach.

The Senate bill also ends funding for Medicaid expansion and adopts a similar block-grant approach to state funding.

States would also receive subsidies to help the newly insured afford coverage, splitting $13 billion a year for ten years. An additional $8 billion over five years is allocated to support state funded high-risk pools. Finally, $15 billion is allotted for certain types of specialty care, and another $15 billion for reinsurance costs. Total cost, $153 billion.

BCRA starts with a total cost of $112 billion, $41 billion less than the AHCA. $50 billion of this is allocated for three years of reinsurance (2018-2021). The remaining $62 billion would be used for reinsurance, high risk pools, cost sharing, and provider payments, all between 2021 and 2026.

One group of provisions in the House bill allows states to request waivers of certain federal insurance regulations. Specifically, states would be permitted to apply for waivers of regulations that:

• require insurers to offer a defined minimum benefit package with no annual dollar or lifetime limits: The Senate bill does the same.
• limit the amount that insurance companies can charge older policy holders, relative to younger ones, to a ration of 3:1. [Without a waiver request, this defaults to 5:1.] BCRA mirrors this provision, except for moving its start date to 2019. 
• prohibit insurers from charging higher premiums for policies issued to people with preexisting conditions. [Additionally, to qualify for the waiver, the state must have a high-risk pool or equivalent, and only allow this benefit to be applied to individuals who have not have been continuously insured.] BCRA's position on this is unclear.

In both bills, states may require able-bodied Medicaid recipients to work in order to maintain their eligibility.

Health insurance marketplaces are maintained, and the use of health savings accounts (HSA) is incentivized primarily by increasing contribution limits, in HR 1628. 

The Senate's bill maintains insurance marketplaces and incentivizes HSA use, as well.

The Prevention and Public Health Fund is defunded by the House bill.

BCRA does not include this provision.

Planned Parenthood clinics are defunded for one year by the AHCA.

The Senate bill calls for a year of defundng, as well. 

Neither plan provides for selling health insurance products across state lines. 

Finally, BCRA allows for the creation of association health plans for small businesses.

The bill failed, in dramatic style,  because five Republican Senators voted against it. (There was only room to loose two and still pass the legislation.) They are: Ted Cruz of Texas, Ron Johnson of Wisconsin, Rand Paul of Kentucky, Dean Heller of Nevada and Susan Collins of Maine.

Special thanks to the Kaiser Family Foundation