The health bill unveiled by Senate Republicans on Thursday keeps the basic structure of the House-passed American Health Care Act but makes significant changes in how the government would help people buy insurance.
It drew immediate and predictable condemnation from Democratic leaders and liberal interest groups, but a muted response from many Senate Republicans. Four Republicans senators declared they could not support it in its current form.
The Congressional Budget Office will analyze the bill in the coming days. Independent experts who were crunching the numbers on Thursday said it is difficult to say how much — if at all — the bill would reduce premiums for customers who buy insurance on the individual market.
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“The short answer is, it’s too early to tell,” said Jonathan Keisling, a health care data analyst at the conservative-leaning American Action Forum. “There’s potential for lowering premiums.”
The Congressional Budget Office projected that under the House bill, premiums would increase faster than under current law in the first few years but then, after 10 years, end up lower than under the Affordable Care Act. It projected even steeper premium reductions in states that obtained waivers to remove regulations on insurance companies.
The Senate bill does not have those waivers. Instead, it would seek to take advantage of a waiver process in current law that enables states to let insurance companies sell cheaper policies that do not cover “essential” services mandated by Obamacare. Unlike the House bill, it would not allow states to let insurance companies take pre-existing health conditions into account when they impose a surcharge on people who let their insurance lapse and then sign back up.
Like the House bill, the Senate bill would eliminate the requirement that larger employers offer insurance to their employees, and it would kill the unpopular mandate requiring people to have insurance or face a tax penalty.
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Like the House bill, the Senate bill also would fundamentally transform Medicaid. Instead of a federal payment to states under a formula based on a state’s wealth, it would give a set amount to states under a block grant or pay a fixed amount for each Medicaid recipient. That amount would rise over time but potentially slower than costs increase.
Tara Hayes, deputy director of health policy for the American Action Forum, said the Senate uses a slightly different formula to determine what those payments are. Based on an analysis she did on the House plan, she said states might have to pay less for elderly and disabled recipients under the Medicaid changes but a little more for low-income recipients. The burden would fall on state governments; Medicaid would remain an entitlement for all who qualify.
“It’s really likely these cuts are not going to make that big a difference,” she said.
The Senate bill also changes the way the law would treat the Medicaid expansion under Obamacare. Under the House plan, states would not get higher reimbursements — currently 90 percent — from the federal government for new recipients who earn too much to qualify for Medicaid under pre-Obamacare rules. But those changes would not apply to current Medicaid recipients unless they left the program and then signed back up again.
The Senate bill replaces that with a three-year phaseout beginning in 2021. The federal reimbursement rate for the expansion population would drop to 85 percent, 80 percent, and 75 percent each of the following three years. After that, the expansion population would be treated like all other Medicaid recipients and there would be no provision grandfathering existing patients.
The plan relies on lower Medicaid cuts in the early years and steeper reductions in the out years, compared to the House plan. Hayes said that could be a way to kick the can down the road.
“The reality is that’s always a possibility,” she said. “You never know what a future Congress is going to do.”
Much of the early reporting on the Senate plan has characterized it from switching from age-based tax credits favored by the House to income-based subsidies more similar to Obamacare. Christopher Holt, director of health policy at the American Action Forum, said his reading of the bill suggests it’s a blend of both approaches.
Holt said it more closely resembles a transition period in the House plan.
“It looks a lot like the transition credits in the House bill,” he said. “They just adjusted more for income than in the House transition.”