After weeks of secrecy about what the Senate health care reform will look like, Senate Republican leadership finally unveiled their version of repeal and replace – the Better Care Reconciliation Act(BCRA). As we noted in our previous explainer following the narrow passage of the House bill, the path to clearing the Senate is slim. Senate Republican leadership can only afford to lose two votes amongst 52 Senators that span a massive ideological spectrum. The Senate bill already had too many confirmed no votes to even begin debating the bill (in the Senate, it takes a vote to even proceed to consideration), and had to delay the vote planned for this week to July.
For seven years, Obamacare repeal made for great politics for the minority party. It was easy to bash a partisan bill that resulted in the doubling, and sometimes quadrupling, of premiums for individuals, marketplace exchanges collapsing, losses of plans and doctors despite promises, and even a glitchy website upon the grand rollout. But the fact is, there was never a unifying replacement vision. To the surprise of no one, politicians are much more bold and confident when they are on the stump talking about hypotheticals as a political minority than when they are in Washington as a governing majority.
This is Restore Accountability’s latest piece of a series on the health care repeal and replace debate. To read more about the background and developments of the ongoing debate, check out the following articles:
Obamacare Repeal and Replace, Explained 3/20
Health Care Explainer: Where Are We Now? 5/9
Rising Healthcare Costs are a (Federal) Budget Buster 5/26
Out of the Shadows
There has been a lot of ink spilled about the closed-door process by which the Senate version of healthcare reform was developed. Undemocratic and unprecedented was a common refrain. The lack of disclosure of the bill writing process may be undemocratic, but it is certainly not unprecedented. In fact, waiting until the last minute to reveal a bill that was negotiated solely behind closed doors is the go-to strategy used by leaders of both parties. There have been countless $1 trillion spending packages and tax extenders bills revealed with a do-or-die ultimatum, hardly time for reading, and no room for amendments. Yes, the secret deliberation of bills of such enormous consequence is a massive problem for our representative democracy, but unfortunately it is hardly unprecedented.
Obamacare is not going away
These healthcare bills are difficult to track, even by a former Senate staffer! However, it is easier to think of the House and Senate Republican proposals as three separate parts: 1) Medicaid reform; 2) repeal of Obamacare tax increases; and 3) scaling back and providing flexibility within the Obamacare structure – with the key exception of eliminating the individual mandate.
The bill saves about $772 billion over the next 10 years compared to the projected baseline by transitioning Medicaid from an open-ended entitlement to a per-capita system. Ten years from now, the federal government will still be spending more on Medicaid, just not as much as is assumed by current law. We wrote about the problems with the waste and overspending associated with the open-ended design of Medicaid in a previous piece. Restore Accountability will have more to say in a future article about the DC-budget speak where a reduction in the rate of increased spending, but still increased spending overall, is claimed to be a cut. The Republican bill also eliminates $760 billion in taxes that were created by Obamacare to help fund the subsidies and federal expansion of healthcare. These taxes were predominantly levied on health insurers and wealthy Americans.
Linking the tax cuts and Medicaid reforms as taking from the poor to give to the rich has been an oft-used talking point by opponents of the Republican bills. Two important points need to be made here: 1) debates about tax policy – including about progressive tax rates and overall federal revenue levels – will be front and center once Congress turns to tax reform; but 2) Medicaid reform has been a part of nearly every Republican plan to reduce the deficits and get to a balanced budget – the Republican bills using most of the savings from Medicaid reforms as an offset to repeal Obamacare taxes, bailout insurers, and potentially buy-off wavering Senators with new provisions means that even deeper spending cuts or revenue increases will have to come from elsewhere if we are going to address our budget issues.
But, Republicans have not spent the last seven years talking about Medicaid reform and tax cuts. They have talked about repealing Obamacare with its costly regulations and failing exchanges. But, for the most part, the key elements of the Obamacare structure remain in place in the Senate bill. Like the House bill, the BCRA repeals the individual and employer mandates and replaces them with a continuous coverage policy that disincentivizes people to just wait until they get sick to buy insurance (which is a completely rational thing to do if insurers must offer insurance to those with pre-existing conditions).
Beyond that, the bill retains the support structure that helps individuals that do not get insurance through their employer to buy insurance – it just scales back the amount of people eligible and the generosity of those subsidies. The bill also does not eliminate the regulatory regime of Obamacare, but it does provide states the ability to apply for waivers to move in a more free-market direction. The outcomes of this added flexibility could be massive – or not. It depends on the systems that states come up with.
Differences between Senate and House
For a summary of the House passed bill, you can go to this link. The Senate bill is similar in the aforementioned three key parts(medicaid reform, tax cuts, and additional flexibility). Here is a brief synopsis of the main similarities and differences.
Same as House:
Repeals Obamacare taxes
Eliminates employer and individual mandates
Changes Medicaid to per-capita system in 2020 but with different cost adjustments
Eliminates cost-sharing subsidies that are payments to insurers to cover low-income people’s deductibles and copayments
Adjust the maximum amount that insurers can charge older people compared to younger people from 3 to 1 to 5 to 1.
Increases health savings account incentives
Provides states the ability to request waivers to determine what is an essential health benefit
Freezes Medicaid funding for planned parenthood for one year
Different from House:
The House bill replaces the individual mandate with a 30 percent surcharge for a lapse in coverage. The Senate bill requires someone to wait six months prior to purchasing to new coverage if they have a two-month lapse.
Unlike the House which provided age-based tax credits up to $150K income, the Senate bill maintains the ACA structure of income based subsidies – but are less generous than the ACA
Creates a stability fund that reimburses insurers who take big losses due to Obamacare.
The CBO score for the BCRA was released yesterday and it showed similar impacts as the House bill. The BCRA would reduce the deficit by $321 billion over the next decade, meaning our national debt will be $24.6 trillion rather than $24.9 trillion in 2027. But, the headline numbers are the projected coverage numbers – which CBO estimates 22 million less people will have insurance coverage 10 years from now, and 15 million would not have coverage compared to current law immediately. This immediate drop in coverage is because the repeal of the individual mandate – which suggests that CBO believes that almost 15 million people are purchasing insurance because it’s the law rather than because it’s something that they want or need. The next 7 million come from later years, which CBO projects changes to Medicaid will lead to less people covered by the program. However, a portion of that amount is projected increases in coverage from states that may choose to opt for Medicaid expansion that haven’t already if Obamacare stays in place– political predictions on top of policy models that should be taken as a best guess rather than a prophecy.
As of this writing, there are too many Republican Senators that have claimed that they are opposed for the BCRA to pass and Senate leadership decided to delay a planned vote to try to garner more support. The Senate can only afford to lose two, and five are already opposed – two moderates and three conservatives. The House was also in a position where they could not bridge the gap between conservatives and moderates and had to delay a vote. The addition of two amendments got enough members from each group to support the same bill. It is unclear whether there is a similar compromise that get the moderates and conservatives back on the same page – or whether the momentum of opposition will ultimately doom the BCRA.
Senate leadership had set up a tentative deadline to pass the bill by the end of this week, but has been punted to July under the hope that a deal can be reached to get to 50. Unfortunately for taxpayers, there will likely be many attempted negotiated side deals to pay off wavering Senators for their support. The difference between the minimum savings needed and the CBO projected deficit reduction is a little less than $200 billion. This is going to be play money for Senate leadership to bribe people with perks for their states in a similar fashion to the Cornhusker kickback and the Louisiana purchase that got paved the way for Obamacare’s passage.
This is a sad, but appropriate ending to a process that was driven by the politics of repeal but without a clear vision of what a better healthcare system will look like beyond vague platitudes. Lacking vision and a message, Republicans’ politics are driving the policy rather than the other way around. Its unclear whether the politics of seven years’ worth of promises will be enough to drive the plan over the finish line. It is clear that neither party has a popular and viable plan to drive down healthcare costs that are harming both family and federal budgets.