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New GOP Health Plan Guts Health Reform

The new health plan from House Rules Committee chair Pete Sessions and Senate Health, Education, Labor, and Pensions Committee member Bill Cassidy would end or undermine all major elements of health reform, including its consumer protections, marketplaces, Medicaid expansion, and individual and employer mandates — likely making millions more people uninsured and underinsured, particularly those with low incomes and pre-existing health conditions.  These facts contradict claims that the plan is a “compromise” that “breaks with conventional GOP orthodoxy” simply because it wouldn’t repeal health reform outright. 

The bill would repeal most of health reform’s market reforms and consumer protections.  Insurers in the individual and small-group markets could again charge higher premiums to people with pre-existing health conditions, drop or limit coverage of essential health benefits such as maternity care and prescription drugs, and charge unlimited deductibles, co-insurance, and copayments.  And insurers could offer “limited benefit plans” with annual dollar limits on benefits.

The bill would let states retain the health reform protections but require them to take action to do so.  States, of course, could have imposed those requirements on insurers before health reform and the vast majority didn’t.

The bill also would repeal health reform’s individual and employer mandates, likely leaving many fewer people with health insurance, relative to current law.  As we’ve explained, the individual mandate leads many more people to enroll in job-based coverage, Medicaid, the Children’s Health Insurance Program, individual-market coverage (such as through the marketplaces), or other coverage sources.  Similarly, the employer mandate encourages employers to newly offer (or keep offering) their workers affordable coverage.  (The bill substitutes other, less effective policies to encourage people to have coverage, such as a state option to automatically enroll people who were uninsured in high-deductible health insurance, and allowing insurers to charge higher “late enrollment” premiums.) 

The bill would provide a new tax credit that people could use for individual-market coverage (inside or outside the marketplaces) or job-based coverage.  But people who used the credit would be barred permanently from receiving marketplace subsidies.  And the credit would be a uniform amount that wouldn’t adjust by income or the cost of available, comprehensive coverage, so it would be worth much less than marketplace subsidies, particularly for those with lower incomes or pre-existing conditions.

The bill’s authors claim that current marketplace enrollees could retain their coverage.  While the bill wouldn’t repeal existing marketplace subsidies, these would only be available in states that still had a marketplace offering “silver” plans.

Moreover, there’s no guarantee that insurers would continue offering comprehensive, health reform-style coverage or participate in any marketplaces that might still exist.  Since they could widely offer low-cost plans with far less comprehensive benefits, attracting healthier people away from marketplace coverage and leaving the pool of marketplace enrollees costlier to cover, premiums for marketplace plans would soar.

Finally, the bill purports to leave health reform’s Medicaid expansion in place but would pare eligibility for adults to 100 percent of the poverty line, down from 138 percent.  Moreover, it would establish a “per capita cap” for Medicaid, substantially reducing federal Medicaid funding over time, relative to current law, with cuts growing each year.  That would effectively raise state costs of the expansion, likely discouraging more states from adopting the expansion and causing many others to drop it.  States also would likely have to make deep cuts to eligibility, benefits, and provider payments for the rest of their Medicaid programs as well.

In sum, this bill isn’t a compromise or an overdue acknowledgment that health reform is here to stay.  While stopping short of fully repealing health reform, it would ruin the historic progress that health reform has brought about.