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Tracking Reports About the Emerging Senate Bill to Repeal the Affordable Care Act

June 22, 2017

The House-passed bill to repeal the Affordable Care Act (ACA) — the American Health Care Act (AHCA) — would cause 23 million people to lose coverage and make coverage worse or less affordable for millions more. A number of Republican senators initially rejected the House bill and promised to start from scratch in crafting their own version.

But the discussion draft from Senate Majority Leader Mitch McConnell more closely reflects what Senate Majority Whip John Cornyn promised: “the practical matter is that 80 percent of what the House did we’re likely to do.” In particular, the Senate would retain the House bill’s most harmful structural features. As a result, the Senate bill would do much the same damage to health care coverage, affordability, and quality. In the coming days, Senate leaders will likely make additional tweaks to their bill and claim that these changes solve its problems. But unless they alter the features below, that claim will be false.

Major Provisions What the House Bill Does Senate Discussion Draft Changes Long-Run Impact of Senate Bill
Medicaid expansion Effectively ends expansion, which extended coverage to 11 million low-income adults Ends expansion a little more slowly: ACA expansion funding phases out over 3 years starting in 2021 Still effectively ends expansion, in both near term and long term
Medicaid per capita cap Caps and cuts Medicaid for seniors, people with disabilities, and families with children Cuts Medicaid even more deeply starting in 2025; also makes it harder for states to finance their Medicaid programs Eventually, this would mean reduced services for seniors in nursing homes, people with disabilities, and families with children
Marketplace premiums and financial assistance Replaces ACA subsidies with flat tax credits; increases premiums by eliminating the individual mandate Maintains ACA subsidy structure, but eliminates financial help for some middle-income people and increases deductibles by thousands of dollars Still makes coverage much less affordable, especially for lower-income people and middle-income older people; still raises premiums by 20 percent next year; likely increases deductibles by even more
Consumer protections Lets states waive the ACA’s standards for what services plans have to cover and its prohibition on charging people with pre-existing conditions higher premiums Lets states waive only benefit standards, which the Congressional Budget Office found could lead plans in half the country to drop coverage for mental health, substance use, maternity care, and other benefits People with pre-existing conditions still wouldn’t have access to the services they need, since plans could still exclude coverage for key services and would no longer be required to cap consumers’ total out-of-pocket expenses
Tax cuts Cuts taxes by more than $600 billion, with most benefits going to high-income households, drug companies, and insurers Tax cuts from House bill are virtually unchanged Bill continues to cut taxes deeply for wealthy, drug companies, and insurers – paid for by cuts to health coverage

Ending the ACA Medicaid Expansion

What the House bill does: The House bill effectively ends the ACA’s Medicaid expansion, which has allowed 31 states and the District of Columbia to extend coverage to 11 million low-income adults. Starting in 2020, states would have to pay three to five times as much as they do now to cover new expansion enrollees, forcing most or all states to end their expansions. That would reverse gains in coverage, access to care, health, and financial security; sharply increase uncompensated care costs for states and hospitals; and set back state efforts to combat the opioid epidemic.

What the Senate discussion draft does: The Senate bill would still effectively eliminate the Medicaid expansion in the long run, leaving millions of low-income adults uninsured. Specifically, the bill would phase down federal funding for all expansion enrollees (not just new enrollees) over three years, starting in 2021. As we’ve explained, expansion states won’t be able to absorb a $35 billion hit to their budgets, no matter when it occurs. And poor and near-poor people losing Medicaid coverage won’t be able to afford individual market premiums that would often exceed a quarter, half, or even their entire incomes, even after taking tax credits into account.

The Senate “compromise” wouldn’t even have much effect in the short run. At least eight Medicaid expansion states — Arkansas, Illinois, Indiana, Michigan, Montana, New Hampshire, New Mexico, and Washington — have expansion “trigger laws” under which their Medicaid expansions automatically end if the federal matching rate for expansion enrollees falls at all. Under the Senate proposal to phase down expansion funding, these state triggers would still go off in 2021. Moreover, even non-trigger states would see their costs for new expansion enrollees rise significantly starting in 2021. By 2024, they would have to pay three to five times more for their expansion enrollees, just like under the House bill.  Few state legislatures will choose to find the extra funding to keep their expansions going as the federal funding cuts, and required state funding increases, keep rising each year. Thus, even non-trigger states would likely end their expansions starting in 2021.

Cutting and Capping Medicaid for Seniors, People with Disabilities, and Families with Children

What the House bill does: The House bill would also end Medicaid as we know it for tens of millions of seniors, people with disabilities, and families with children. Today, Medicaid is a federal-state partnership, with the federal government covering a fixed share of states’ Medicaid costs. The House bill would convert virtually the entire program to a per capita cap: an arbitrary cap on per-enrollee federal Medicaid funding, which would cover a falling share of states’ actual costs over time. What’s more, the cuts under a cap would be deepest precisely when need is greatest, since federal Medicaid funding would no longer increase automatically in response to public health emergencies like the opioid epidemic or to a new costly breakthrough treatment or drug that extends lives but also raises costs.

What the Senate discussion draft does: The Senate bill makes the same structural change as the House version – ending Medicaid as we know it – while applying an even lower growth rate to the caps beginning in 2025. In practice, states would have to absorb much deeper cuts in federal Medicaid funding over the long run than under even the House bill – meaning deeper cuts to services and eligibility for seniors in nursing homes, families with kids, pregnant women, and people with disabilities. The long-run cuts to Medicaid due to the lower growth rate could be several times larger – or more – than the already severe cuts under the House cap, estimates suggest. And over the second decade of the bill if it were enacted into law – which is beyond the scope of Congressional Budget Office (CBO) analysis – the impact of this lower growth rate would compound year after year, adding hundreds of billions of dollars in larger cuts above even the House bill, fully decimating the Medicaid program.  And that would happen just as the aging of the population is driving up Medicaid costs as more seniors move from young-old to old-old age (85 and older).  It would leave states even less able to absorb higher unanticipated costs due to a public health emergency or a new but costly drug or treatment.  Eventually, that would mean worse coverage for tens of millions of people, with reduced services for seniors in nursing homes, people with disabilities, and families with children.

Raising Premiums and Deductibles, and Slashing Tax Credits

What the House bill does: The House bill cuts about $300 billion from subsidies that currently help moderate-income people afford individual market coverage, slashing tax credits that help people afford their premiums and eliminating subsidies that help low-income people pay deductibles, copays, and coinsurance. It also increases “sticker price” premiums starting next year by repealing the ACA’s individual mandate that people have health insurance or pay a penalty.

What the Senate discussion draft does: The Senate bill would also make coverage and care significantly less affordable than they are today, especially for lower-income people, older people, and people in high-cost states. While the Senate bill retains the basic structure of the ACA’s tax credits, which adjust for age, income, and geography, it would sharply reduce these tax credits and other marketplace financial assistance beginning in 2020.

First, the bill eliminates cost-sharing reductions that reduce deductibles and other cost sharing for lower-income people. Second, it cuts tax credits for virtually all consumers by linking them to less generous coverage. Third, it revises the ACA tax credit schedule, generally cutting tax credits for older people, while somewhat increasing them for younger people. Fourth, it eliminates tax credits altogether for people with incomes between 350 and 400 percent of the poverty level – about $40,000 to $50,000 for a single person. And finally, like the House bill, it allows insurers to charge older people up to five times as much in premiums as younger people.

For most of the roughly 9 million people who get subsidized coverage today, that would mean a choice: pay significantly more in premiums to keep similar coverage, or keep premiums similar with much higher deductibles. For people who chose the latter, typical deductibles would rise to about $6,300 – from about $3,000 for people with incomes over 200 percent of the poverty line and less than $1,000 for people with incomes below 200 percent of the poverty line. If people instead try to keep deductibles in line, they would pay more in net premiums, especially older consumers and people in high-cost states. And for those people between 250 and 300 percent of the poverty level who lose tax credit eligibility altogether, cost increases would be especially large: a 60-year-old with income just above the cut-off would lose tax credits worth more than $3,000 in every state, nearly $10,000 in West Virginia, and even more in Alaska. 

Removing Protections for People with Pre-Existing Conditions

What the House bill does: The House bill removes key market reforms and consumer protections that the ACA put in place nationwide. Under the House bill, states could choose to let individual market plans return to excluding key services, charging people with pre-existing conditions unaffordable premiums, or both.

What the Senate discussion draft does: The Senate version would remove protections for people with pre-existing conditions – but through a somewhat different mechanism. It would let any state waive the ACA’s essential health benefits requirements along with some other core consumer protections. Instead of creating a new system of waivers, the Senate bill builds on the waivers that the ACA already allows – but removes restrictions that make clear that states can only waive ACA rules if they show that they will still cover as many people, with coverage that is just as comprehensive and just as affordable. By removing those guardrails, the Senate bill – just like the House bill – allows states to freely eliminate standards for what plans have to cover, subject to no restrictions at all. CBO predicted that would mean that half of individual market consumers might be unable to purchase coverage for maternity care, mental health care, and substance use treatment, and it concluded that “out-of-pocket spending on maternity care and mental health and substance abuse services could increase by thousands of dollars in a given year for the nongroup enrollees who would use those services.”

Eliminating the guardrails on these so-called “1332 waivers” could also expose people with pre-existing conditions and other serious health needs to even more damaging consequences, since states also could waive other protections, like the ACA’s requirement that plans limit people’s total out-of-pocket costs.

Cutting Taxes for the Wealthy, Insurers, and Drug Companies

What the House bill does: The House bill uses most of the savings from cutting marketplace subsidies and Medicaid to pay for about $660 billion in tax cuts that go primarily to the wealthy, insurers, and drug companies. By 2025, tax cuts would average over $50,000 per year for households with annual incomes exceeding $1 million.

What the Senate discussion draft does: The Senate would provide nearly identical tax cuts as the House bill – tax cuts that go primarily to the wealthy, insurers, and drug companies and that are paid for by cuts to health coverage.

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