A Cheat Sheet For The Senate GOP’s Healthcare Bill

The nuts and bolts of the new healthcare bill, without the political spin

Senate Majority Leader Mitch McConnell (Aaron P. Bernstein /Reuters)

Senate Majority Leader Mitch McConnell (Aaron P. Bernstein /Reuters)

The long-awaited Senate healthcare bill was released this past Thursday. And while there is no shortage of opinion-based articles on the subject, it has been quite difficult to find a de-politicized review of the actual legislation.

Below is my best effort to provide such a review. I have taken quotes directly from the bill, and supplied a layperson interpretation below each excerpt. Although every issue discussed in the legislation is not covered, the main ideas are all included.

Changes to Tax Credits, Subsidies and Age-Banding

the following: ‘‘or, for plan years beginning on or after January 1, 2019, 5 to 1 for adults (consistent with section 2707(c)) or such other ratio for adults (consistent with section 2707(c)) as the State may determine’’

Allow insurers to change the rating rules. And potentially, charge older clients more than five times what a younger person would pay for the same plan. Currently the ACA limits insurers to charging a maximum of three times as much.

such sums as may be necessary for payments for cost-sharing reductions authorized by the Patient Protection and Affordable Care Act (including adjustments to any prior obligations for such payments) for the period beginning on the date of enactment of this Act and ending on December 31, 2019

End cost-sharing reduction payments to insurers, which reduce out of pocket expenses like deductibles, coinsurance and copayments for lower income individuals in 2020.

by striking ‘‘equals or exceeds 100 percent but does not exceed 400 percent’’ in subparagraph and inserting ‘‘does not exceed 350 percent’’

Under the ACA, households with incomes up to 400% of the federal poverty level ($47,550 for an individual or $97,200 for a family of four) qualify for an advanced premium tax credit.

However, with the BCRA the maximum eligibility amount would be reduced to 350% of the federal poverty level ($42,210 for an individual or $86,100 for a family of four).

To learn more about the tax credit changes proposed, see the article below.

The Better Care Reconciliation Act ‘s Subtle but Important Tax Credit Changes

Ending the Individual and Employer Mandates

by striking ‘‘2.5 percent’’ and inserting ‘‘Zero percent’’, and in paragraph (3) — (A) by striking ‘‘$695’’ in subparagraph 13 and inserting ‘‘$0’’

The penalty for individuals who do not purchase health insurance is removed. But unlike the House bill, there is no continuous coverage requirement to replace it.

Paragraph (1) of section 4980H(b) of the Internal Revenue Code of 1986 is amended by inserting ‘‘($0 in the case of months beginning after December 31, 2015)’’

The ACA tax penalty assessed against large employers (over 50 employees) who do not offer coverage to their employees is ended.

In fairness though, it is unlikely that this change would cause large employers to drop health insurance for their workers, as the majority of them provided employee benefits before they were ever mandated to do so.

And the employers that did purchase coverage explicitly because of the mandate, typically offered plans that met the ACA requirements “in name only.”

Insurance Company Related Items

SEC. 205. MEDICAL LOSS RATIO DETERMINED BY THE STATE.

The ACA’s medical loss ratio provision forces insurers to spend 80–85% of the premium dollars they collect on medical care for their policyholders. As opposed to CEO bonuses, advertising, administration, etc. And if insurers fall short of these numbers, they have to return the excess premium to the policyholders.

The Better Care Reconciliation Act would end the federal government’s enforcement of this rule. And instead allow each state to determine its own guidelines with regard to insurance company profits.

This may be a dangerous step, as states that allow more insurance company profits will attract more insurers. And states that attempt to keep insurers’ returns in check, may end-up with fewer coverage options for their residents.

provide for alternative means of, and requirements for, increasing access to comprehensive coverage, reducing average premiums, and increasing enrollment

The Affordable Care Act mandates that all health insurance policies include coverage for certain medical benefits, that it deems essential. For example:

The Better Care Reconciliation Act would allow individual states to pick and choose which benefits would be mandated for their residents through a waiver system. This may be a slippery slope.

SHORT-TERM ASSISTANCE TO ADDRESS COVERAGE AND ACCESS DISRUPTION AND PROVIDE SUPPORT FOR STATES — $15,000,000,000 for each of calendar years 2018 and 2019, and $10,000,000,000 for each of calendar years 2020 and 2021, to the Administrator of the Centers for Medicare & Medicaid Services (in this subsection and subsection (i) referred to as the ‘Administrator’) to fund arrangements with health insurance issuers to address coverage and access disruption and respond to urgent health care needs within States.

Health insurers can request to receive the above funds to address coverage access disruptions and respond to urgent, short-term health care needs.

While CMS would be the administrator of this program, the language is quite broad. And therefore it is hard to determine the appropriate (or inappropriate) way in which the money would be used by insurers.

Repealing Taxes

The BCRA repeals or reduces approximately ten different ACA taxes, including taxes on: OTC medications, Tanning and Medical Devices. But the biggest ones are:

Medicaid

Beginning October 1, 2017, subject to paragraph (3), a State may elect to 19 condition medical assistance to a non disabled, non elderly, non pregnant individual under this title upon such an individual’s satisfaction of a work requirement

Ability for individual states to add work requirement to “able-bodied” Medicaid recipients.

for fiscal years after 2024, for all 1903A enrollee categories, the percentage increase in the consumer price index for all urban consumers (U.S. city average) from September of the previous fiscal year to September of the fiscal year involved.

Starting in 2025, federal reimbursements to states for Medicaid will increase by the U.S. general rate of inflation as opposed to the medical rate of inflation.

Due to the fact that the U.S. medical inflation rate is substantially greater than the general rate of inflation, this means Medicaid funding will not keep up with the cost of medical services after 2024.

at the option of the State, the State plan may provide that the individual’s eligibility shall be redetermined every 6 months (or such shorter number of months as the State may elect)

States can impose more frequent eligibility audits on Medicaid recipients. Currently, such checks are only allowed to be performed once per year.

SEC. 1903A. PER CAPITA-BASED CAP ON PAYMENTS FOR MEDICAL ASSISTANCE.

Changing the funding of Medicaid. Instead of the government directly paying for all of its enrollees medical bills, states would receive a fixed dollar amount for each Medicaid recipient, regardless of their individual medical costs.

SEC. 126. MEDICAID EXPANSION — in clause (i)(VIII), by inserting ‘‘and ending December 31, 2019

Prevent new ACA Medicaid expansion enrollments starting in 2020. New applicants that qualify under the pre-expansion rules, would still be eligible to enroll in the program even after that point.

Enhanced HSAs

SEC. 121. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAVINGS ACCOUNT INCREASED TO AMOUNT OF DEDUCTIBLE AND OUT-OF-POCKET LIMITATION.

HSA contribution limits increased to:

Current (2017) limits are set at $3,400 for self only coverage. And $6,750 for family coverage.

There is also a provision that would allow HSA funds to be used for expenses incurred up to 60 days prior to the establishment of HSA accountant.

Wrapping Up

“In this present crisis, government is not the solution to our problem, government IS the problem.” — President Ronald Reagan

The main focus of this new legislation seems to be diminishing the federal government’s health care involvement and expenditures. Especially with regard to Medicaid, as 81 of the 142 pages in the bill address this subject almost exclusively.

The legislation also heavily reduces (or eliminates) the ACA healthcare taxes assessed against businesses and individuals. Which is a requirement for any bill to pass the litmus test of the ultra-conservative wing of the Republican party.

However, as usual the devil is in the details. And with important items like the Medical Loss Ratio alterations buried on page 134, it’s likely that the potential danger of such changes will be missed by the majority of news outlets, and therefore average people.

Editor’s Note: The Congressional Budget Office’s score of the bill has arrived, and it has found that 22 million more would be left uninsured by 2026, 15 million of which would be left uninsured by 2018

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