Senate Health Bill No Better Than House Version

The draft Senate health bill — the Better Care Reconciliation Act, or BCRA — slashes programs that help people get health coverage, using most of the savings to pay for tax cuts for high-income households and corporations.  Like its House counterpart, the Senate bill would effectively end the Affordable Care Act’s (ACA) Medicaid expansion for low-income adults; cut and radically restructure Medicaid funding for seniors, people with disabilities, and families with children; increase premiums, deductibles, and other out-of-pocket costs for millions of people with individual market coverage; weaken or eliminate important protections for people with pre-existing conditions; and give millionaires tax cuts averaging more than $50,000 per year, partly at the expense of the Medicare trust fund.

According to the Congressional Budget Office (CBO), these features of the Senate bill would cause 22 million more people to go without health insurance by 2026.  That means that almost 1 out of every 10 non-elderly Americans who would have health insurance under current law would instead be uninsured as a result of this bill.  

The Senate bill is no less harsh than the House-passed version.  Virtually every provision causes people to lose coverage, makes coverage less affordable or less comprehensive, or cuts taxes for high-income people.

Cuts Medicaid by $772 Billion and Ends the Program as We Know It

The Senate bill would cut Medicaid by $772 billion over ten years — or 25 percent in 2026 — and reduce enrollment by 15 million by 2026, relative to current law, through two major changes.

The bill effectively ends the ACA’s Medicaid expansion, which has allowed 31 states and Washington, D.C., to provide coverage to 11 million low-income adults.  Starting in 2021, states would have to pay increasingly large amounts to cover all of their expansion enrollees, forcing most states to end their expansions.  The Medicaid expansion has improved access to care and financial security for enrollees — increasing the share of low-income adults who can see a doctor and fill needed prescriptions, while reducing the share who are dependent on the emergency room for care or burdened with medical debt.  It has also cut uncompensated care costs for states and hospitals and let states treat more people coping with substance use disorders, including opioid addiction.  The Senate bill would reverse these gains.

The bill also ends Medicaid as we know it for seniors, people with disabilities, and families with children.  Today, Medicaid is a federal-state partnership, with the federal government covering a fixed share of the total cost of providing health care to vulnerable populations.  Starting in 2020, the Senate bill would replace that partnership with an arbitrary cap on per-enrollee federal Medicaid funding (a “per capita cap”) or a block grant for adults, both of which would cover a falling share of actual costs over time. Consequences include:

• Growing cuts to eligibility and benefits.  To absorb the large and growing federal funding cuts from the per capita cap or block grant, states would have to limit eligibility, cut benefits, or — most likely — both.  Certain services could be especially vulnerable to cuts.  For example, home- and community-based services are an optional benefit that most states already limit based on available funds.  Faced with large federal funding cuts, states would almost certainly reduce access to these services, which help some 3 million seniors and people with disabilities remain in their homes instead of having to be placed in a nursing home.
• Making it harder for states to respond to crises.  Cuts from the per capita cap or block grant 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 a natural disaster.

Millions Would Pay More in Premiums, Deductibles, or Both

Most marketplace consumers — especially older Americans — would pay more under the Senate bill in premiums, deductibles, or both.  The bill would make an across-the-board cut to the ACA’s premium tax credits by linking them to less generous health coverage, further reduce premium tax credits for older people, eliminate tax credits entirely for people between 350 percent and 400 percent of the poverty line, allow insurers to charge older people more, and repeal ACA cost-sharing subsidies that reduce out-of-pocket costs for lower-income consumers.

• A typical, middle-aged marketplace consumer would face either higher premiums or higher deductibles.  CBO offers the example of a 40-year-old with an annual income of $26,500 in 2026.  Under the ACA, she would pay $1,700 in net premiums (after counting her tax credits) for a “silver” plan with a deductible of about $800 (after counting her cost-sharing subsidies).  Under the BCRA, she could either pay $3,000 for a silver plan with a deductible of $3,600 or pay $1,600 for a skimpier “bronze” plan with a $6,000 deductible.
• Older Americans would face the largest cost increases.  For a 64-year-old making $56,800 a year, for example, the premium for a silver plan would skyrocket from $6,800 to $20,500 a year.  Even if older people switched from a sliver to a bronze plan with a higher deductible, they would still generally pay higher net premiums.
• Low-income people — many of whom would lose Medicaid coverage — would have access to insurance in name only.  Although the Senate bill would extend premium tax credits to people below the poverty line, coverage would be out of reach for them.  For a person at 75 percent of the poverty line, CBO notes, the net premium for a bronze plan would be only $300, but “the deductible would be more than half their annual income.”  CBO anticipates that most of the people losing coverage due to the end of the Medicaid expansion or the per capita cap would become uninsured: “because of the expense for premiums and the high deductibles, most of them would not purchase insurance.”

Removes Protections for People with Pre-Existing Conditions

The Senate bill removes key protections that the ACA put in place nationwide to ensure that insurance covers essential health services and protects people — including those with expensive pre-existing conditions — against catastrophic out-of-pocket costs.  Decisions about keeping these protections would once again be left up to states.

• Plans could exclude key services.  Before the ACA, plans often excluded coverage for services like maternity care, mental health care, substance use disorder treatment, and prescription drugs.  CBO estimates that, under the bill, up to half the population would live in states where plans no longer covered such services.  Thus, even if people with pre-existing conditions could afford the premiums, their health insurance might exclude the treatment they need. 
• People with certain health conditions could face unaffordable premiums.  In states that narrowed the scope of essential health benefits, insurance to cover the excluded services — such as maternity or mental health care — would become much costlier.  CBO expects that coverage for those services “would become extremely expensive in those areas, as it was in some places before the enactment of the ACA.”
• Plans could again impose annual and lifetime limits on coverage — including employer-sponsored coverage.  Before the ACA, 105 million people, most with coverage through their employers, had plans with lifetime limits on benefits, meaning their coverage could end exactly when they needed it most.  The Senate bill, by waiving the ACA’s standards for the services that plans must cover, effectively waives its bans on annual and lifetime limits as well.

$563 Billion in Tax Cuts for the Wealthy, Insurers, and Drug Companies

The Senate bill uses most of the savings from cutting marketplace subsidies and Medicaid to pay for $563 billion in tax cuts primarily for the wealthy, insurers, and drug companies.

• High-income tax cuts.  The Senate bill repeals two Medicare taxes that apply only to families with incomes over $250,000 ($200,000 for singles).  By 2025, tax cuts would average over $50,000 per year for households with annual incomes exceeding $1 million.  And the 400 highest-income taxpayers — whose annual incomes average more than $300 million apiece — would get annual tax cuts averaging roughly $7 million each.
• Tax cuts for insurers and drug companies.  The bill repeals taxes on insurers, drug companies, and medical device manufacturers — benefiting these companies and their investors, while deepening the cuts to coverage needed to pay for these tax breaks.

Accelerates Depletion of Medicare Trust Fund

The Senate bill would repeal a payroll tax increase on high earners that helps fund Medicare and would increase certain Medicare payments to hospitals.  These changes would accelerate the depletion of Medicare’s Hospital Insurance trust fund by two years (from 2028 to 2026), exposing seniors and people with disabilities to the risk of future benefit cuts.