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Last Thursday, Senate Republican leaders unveiled their new healthcare bill, the Better Care Reconciliation Act of 2017 (BCRA), with an amendment included this Monday. Their proposal for the repeal and replacement of the Affordable Care Act (ACA) was expected to go to a vote this week but has been rescheduled for after the Fourth of July.—
The Advisory Board has created a chart that compares the ACA to the House and Senate Republican bills. While some of the provisions of the ACA remain in the new Senate bill, including the CMS Innovation Center (CMMI) and the provision permitting individuals to stay on their parent’s insurance until 26, there are some significant changes. One of the biggest changes? The Congressional Budget Office report estimates that the number of uninsured will increase by 22 million by 2026.
Here are our 5 key insights from this post:
- This new bill phases out Medicaid expansion starting in 2021 and cuts the budget by 2024.
>> Our takeaway: 11 million Americans were insured under Medicaid expansion, in 31 states and Washington, D.C., so expect huge gaps in coverage, should this pass.
- This bill converts Medicaid from a program with a commitment to pay all of Medicaid enrollees’ bills to a “per-beneficiary cap” system that allows states to pick their benchmark based on 8 consecutive quarters, from Q1 2014 to Q3 2017. These rates adjust annually similar to the House bill, based on the Consumer Price Index for Medical Care (CPI-M) plus 1 percentage point, between 2020-2024. Starting in 2025, it would adjust annually based on the Consumer Price Index for All Urban Consumers (CPI-U).
>>Our takeaway: This plan measures the amount of the cap between 2020 and 2024 based on CPI-M which is a measure of how rapidly medical costs are rising. Starting in 2025, it would switch to CPI-U, which is a measure of how rapidly all costs are rising. Medical costs tend to rise at a higher rate than total costs. This change from CPI-M to CPI-U would set Medicaid up to be underfunded in the future.
- This bill continues to impact uninsured Americans looking to seek insurance on the individual market, through a 6-month waiting period. Individuals who will have a lapse of coverage of at least 63 days in 2018 will be able to participate in open enrollment in 2019, but will not have coverage for 6 months. If they do not enroll during this time they will either have to wait 6 months or until the first day of the next plan year for coverage, based on whichever date is later. Exceptions include newborns enrolled in coverage 30 days after birth and an individual under 18 who is adopted or placed for adoption and enrolled in coverage 30 days after adoption.
>>Our takeaway: This bill removes the ACA provision that fines uninsured individuals but still continues to penalize them. This waiting period will make it harder for those who have had a lapse in coverage to regain it.
- This bill allows for states to seek waivers from Obamacare requirements like the essential health benefits, a provision that requires insurers to cover services like maternity and newborn care, prescription drug coverage, and mental health. This provides the payers with greater flexibility on plan design offerings in combination with insurance premiums.
>> Our takeaway: Just as we expect to see a spike in the uninsured, we should also expect to see a spike in the underinsured. If states are no longer required to mandate coverage for what the ACA defined as “Essential Health Benefits” then individuals could be subject to paying more for services that were previously covered. Curious as to what is included in these essential health benefits? Read more here.
- This bill continues with tax credits, based on age, income, and geography, similar to Obamacare, although it reduces the amount of individuals eligible. Starting in 2020, the Senate bill provides tax credits for individuals at between 0% and 350%, whereas the ACA provided tax credits for people whose income was between 133% and 400% above the poverty line.
>>Our takeaway: The Senate republican bill offers tax credits to individuals at the poverty line in Medicaid expansion states, who would have previously received Medicaid, so their healthcare costs will certainly increase. On the contrary, low-income individuals in states that did not provide Medicaid expansion would receive a subsidy that they were not eligible for under the ACA.
Read more of The Advisory Board’s analysis of the Better Care Reconciliation Act here.