Republicans in the US Senate on 22 June released the long-awaited draft healthcare reform bill, entitled the Better Care Reconciliation Act of 2017.
Implications | The bill is the Senate's response to the American Health Care Act (ACHA), which was recently passed by the House and aims to roll back most of the provisions of the Affordable Care Act. |
Outlook | Senior Republicans are pushing for a vote on the Better Care Reconciliation Act next week in a bid to curtail in-depth public scrutiny of its provisions. It would take only three Republicans to vote against or abstain for the bill to fail in the Senate. The Congressional Budget Office (CBO) assessment of the impact of the bill, due next week, may be crucial in helping some make up their minds on whether to support the bill. |
The proposed legislation, known as the Better Care Reconciliation Act of 2017, has been drafted by Republicans behind closed doors for weeks, with Democrats – all of whom are expected to vote against it – effectively excluded from the discussion. The weeks of secrecy have now come to an end, with the proposed Senate bill finally unveiled yesterday (22 June) and accessible here.
The bill is the Senate's attempt at legislation to repeal and replace Barack Obama's flagship healthcare reform, the Affordable Care Act (ACA, also known as Obamacare). The Senate bill comes weeks after the House of Representatives made its own attempt at similar legislation, passing the so-called American Health Care Act (AHCA) with a narrow majority in May (see United States: 5 May 2017: US House passes bill to repeal and replace Affordable Care Act).
Assuming the current draft bill is approved by the Senate, it would need to be reconciled with the House version of the legislation before a final co-ordinated legislation goes to President Donald Trump for approval. It is worth noting that the House version of the bill faced severe criticism in the media, and President Trump himself reportedly appealed to Senior Republicans to come up with a less "mean" and more defensible healthcare reform bill than the version approved by the House (see United States: 14 June 2017: US president reportedly urges senators to depart from House version of healthcare bill in U-turn).
Main provisions and differences from AHCA
Medicaid expansion
Medicaid expansion provisions under Medicare, which extended the programme to people earning between 100% to 138% of the federal poverty limit, would be phased out over four years. Federal funding will tail off, with 90% of current funding provided in 2020, and declining by 5% each year until 2023, after which federal funding will stop. No new entrants into the Medicaid expansion will be allowed from 2020. The provision will result in millions of people losing access to health insurance under Medicaid and having to rely on the less generous access under individual insurance plans.
Medicaid spending growth
Similar to the House bill, the Senate bill imposes a per capita cap for federal Medicaid spending. After 2025, the growth in spending would shift from the consumer price index for medical care to the CPI for all goods – equivalent to a lower level of growth in federal funding than the states receive.
Flexibility for states to introduce Medicaid work requirements
Under the Senate bill, the states can introduce requirements for people to maintain employment in order to retain eligibility for Medicaid, unless they are students, pregnant or disabled. This requirement has been a long-time wish for some Republicans.
Tax credits
The Senate bill proposes helping to pay for people to access health insurance via a system of tax credits – similar to the House bill. Unlike the House bill, however, and more in line with ACA provisions, the Senate bill proposes basing tax credits on income level, rather than on age. People earning up to 350% of the poverty level would be eligible for credits – less generous than the Obamacare cap of 400%. However, tax credits would take age into account as well and would decline as a person ages. Business Insider estimates that a 33-year old making 175% of the federal poverty limit would receive enough in credits so as to spend 5.3% of their income on premiums, while a 59-year-old will be spending 8.3% of their income on health insurance premiums under the Senate bill. Tax credit provisions would be somewhat more generous to elderly Americans compared to the House bill, but certainly less generous to middle-class earners compared to Obamacare provisions.
Cost-sharing subsidies to insurers
Under the Senate bill, payments to insurers for cost-sharing subsidies – designed to help them offset the cost of offering low-income Americans plans with lower deductibles – will be provided until the end of 2019. Although this is a one-off measure, it will provide much-needed certainty to health insurers who have been leaving the market in droves as uncertainty over the future of Obamacare under Republican pressure grew.
State waivers for Obamacare regulations
Under the Senate bill, states can request a waiver to opt out of the essential health benefits (EHBs) under Obamacare, which require all plans to cover 10 basic types of care. This provision is similar to what is included in the House bill; however, unlike the House bill, the Senate does not allow states to repeal the so called community rating (i.e., the provision mandating that all people of the same age in the same area are charged the same amount for health insurance).
Repeal Obamacare's taxes
Similar to the House version, the Senate bill would remove requirements for wealthier individuals to provide Obamacare funding through things such as the 3.8% tax on investment income on individuals earning more than USD200,000.
No funding for Planned Parenthood
As expected, the Senate bill would eliminate federal funding for providers offering abortions, effectively defunding Planned Parenthood. Some states have already taken steps to safeguard institutions involved in the provision of contraception and abortions via emergency state grants, in anticipation of such a move.
One-off grant to fight opioid abuse
The Senate Bill would provide a USD2-billion fund for states for programmes supporting individuals with mental or substance use disorders. The one-off payment will be available in 2018.
Outlook and implications
Despite controlling the Senate, Republicans face several hurdles in passing the legislation by Senate Majority Leader Mitch McConnell's self-imposed deadline of 30 June. Republicans currently enjoy only a 52–48 advantage over Democrats in the chamber, meaning they can only afford to lose three Republican votes, as all Democrats are expected to oppose. Indeed, following the bill's public release, four conservative Republican senators announced they could not support the proposal in its current form, calling it a continuation of Obamacare. Each said they could consider supporting it with amendments, although these might not be possible under the Senate's reconciliation process that Republicans are using to pass the bill. McConnell will also likely face resistance from two or more moderate Republicans who favour a more gradual wind down of the ACA's previous Medicaid expansion. Even if Senate Republicans reach a deal, the proposal will then have to go back to the House, where conservative Republican House members will have to decide whether they can support legislation that leans far more to the left than they would naturally desire.
An important indicator as to whether McConnell can obtain a majority will derive from the Congressional Budget Office (CBO), who is expected to 'score' the bill early next week. During the previous debate over the final House bill, the CBO relayed that although the proposal would save the government USD119 billion over a decade, it would leave 23 million Americans without health insurance. This prospect helped drive down the legislation's popularity with the US public, ultimately leading President Trump to attempt to distance himself from it. Although insurance losses might not be as dramatic under this new legislation, any CBO forecast indicating a number similar to those projected to lose insurance under the House bill would probably prevent the Senate bill from becoming law. Several senators have expressed reservations about the bill already for a variety of reasons. Among those, influential Republican Ted Cruz (Texas) reportedly stated, "This bill draft does not do nearly enough to lower premiums," according to The Guardian. Furthermore, a spokesman for Susan Collins, a leading moderate Republican, said she wanted to see the CBO analysis due next week to assess "the impact on insurance coverage, the effect on insurance premiums, and the changes in the Medicaid programme", while Dean Heller (Nevada) expressed "serious concerns" with the proposed scaling back of Medicaid in the new bill.
Although McConnell would be hoping to avoid a rejection of the Better Care Reconciliation Act of 2017 in the Senate, he seems ready to accept it, as he appears intent on moving past healthcare policy in order to focus on other Republican policy concerns, such as lowering corporate tax rates.