Five Takeaways From the Leaked Republican Bill to Repeal Obamacare
WASHINGTON — A formal draft of the House Republican plan to repeal and replace the Affordable Care Act leaked out on Friday.
The final version is likely to be different — how much different, it’s hard to say. The draft obtained by Politico is dated two weeks ago, and rumors have been swirling here that Republicans received an unfavorable analysis from the Congressional Budget Office, the official scorekeepers on the cost and coverage implications of legislation.
But this is nonetheless an important milestone — real legislative text, prepared with an eye toward the complex parliamentary procedures needed to pass ACA repeal with only Republican votes, and presumably with the endorsement of House leadership.
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Much attention will be paid to the proposed tax credits offered for people to buy health insurance and the changes to the tax treatment of employer-based insurance. Here are five provisions with big implications for health and medicine.
It would dramatically overhaul Medicaid.
The bill would phase out by 2020 the Medicaid expansion that has covered millions of people under Obamacare. Instead, states would begin to receive a set dollar amount for each person covered by the program — with variations based on health status; more money would be allocated for the disabled — a change from the open-ended entitlement the program is now.
These proposals, long a goal of the GOP, have spurred a number of concerns. People with complex medical needs worry that, if spending is capped and states have more flexibility to decide what to cover, they could be at risk. There appear to be very few exclusions from the spending caps — some have theorized that if the plan exempted certain services from the caps, that could help mitigate the risks for high-cost patients.
The changes could also make it more difficult for the program to afford new breakthrough treatments, a challenge that the current iteration of Medicaid has already faced with the expensive hepatitis C drugs.
It would repeal Obamacare’s requirements for what health insurance must cover.
The legislation would repeal the ACA’s essential health benefits requirements, which mandated that health plans cover 10 categories of health care services. It would instead leave decisions about what coverage to require to the states, starting in 2020.
Among the services that the law required plans to cover were mental health and substance abuse treatment. In the midst of the opioid crisis, recovery advocates in Washington had been hoping to save that provision. It appears that that decision would now be in state officials’ hands, and the fear is plans might look to limit that coverage because people with addiction issues are expensive to treat and therefore cover.
It would repeal the Prevention and Public Health Fund.
The bill would repeal this funding stream, intended to support various prevention and public health activities, in 2019. Congress initially provided $15 billion over the fund’s first 10 years, and it was eventually suppose to increase to $2 billion per year in perpetuity.
The fund has been at perennial risk since its passage in 2010, pilfered at times for other programs, but it nonetheless remains an important source of public health funding. It has become an essential part of the Centers for Disease Control and Prevention’s budget — accounting for 12 percent of the agency’s funding by some estimates — and there would be no obvious replacement for those dollars without further congressional action.
It would repeal the tax on pharmaceutical manufacturers.
The drug industry has not agitated to have its manufacturer tax repealed, in the same way that the medical device and health insurance industries have. But the Republican bill would nonetheless nix the tax starting in 2017. The industry still had $4 billion to left to pay in 2017, $4.1 billion in 2018, and $2.8 billion per year after that.
The taxes on medical devices, health insurance plans, and even tanning beds would also be repealed. Those revenue streams help to cover the cost of the ACA. Republicans are instead proposing changing the tax treatment of employer-based health insurance, which is currently not taxed, to pay for their plan. It is an idea popular with economists, but politically perilous. Major employer groups are already aligning against it.
It loosens restrictions on health plans’ ability to charge older people more.
One thing the bill doesn’t do is repeal the ACA provision that prohibits health plans from discriminating against people with preexisting conditions. That may be because it would be hard to justify under the procedural rules that Republicans need to use to pass the bill — plus that policy is among the law’s most popular elements and even President Trump has said it should be maintained.
But another key insurance reform meant to protect sicker people takes a hit: The GOP bill would allow insurers to charge older people five times more than younger people; the ACA had limited the difference to three times as much. The powerful AARP is already mobilizing against such a change, long expected to be part of the plan.
The bill appears to try to mitigate that change by basing its tax credits for purchasing insurance on age: Older people would receive a bigger tax credit.
Is that sufficient to keep people covered, as Trump and other Republicans have pledged to do? That’s one of the questions that the scorekeepers at the CBO will be expected to answer.