The Senate’s health insurance bill is finally available for scrutiny. While Washington watchers analyze its chances for passage, let’s take a look at the consequences for consumers. Here’s what you should keep an eye on as the bill moves forward toward inevitable tweaks and an expected vote next week.
Subsidies. The Senate bill has edged away from the age-based tax credits in the House bill in favor of Affordable Care Act-style income-based subsidies. Under the ACA, subsidies are available to people earning up to 400 percent of the federal poverty level. Under the Senate plan, starting in 2020, that would be scaled back to 350 percent of the poverty level, meaning people beyond that level may face unaffordable health care coverage.
The Senate bill keeps the House provision that allows insurers to charge older consumers five times as much for coverage as younger people (vs. the ACA’s three times more).
In addition, the percentages are tied to less generous coverage. ACA subsidies are tied to a benchmark plan, currently the silver plan, with a moderate deductible. The Senate plan changes that to the higher-deductible bronze plan. Bottom line: Even with subsidies, you’ll likely be paying for less generous coverage with higher deductibles and more out-of-pocket costs.
Then there’s the cost-sharing subsidies. Under the ACA, low-income patients received subsidies for out-of-pocket health care costs, including deductibles and co-pays. This has been the target of a legal dispute, and the Trump administration hasn’t made clear if it would stop these subsidies. That uncertainty, in part, led several insurers to pull out of the ACA insurance exchanges.
The Senate bill would continue the cost-sharing subsidies for the next two years, helping stabilize the exchanges for this transition period. Unfortunately, this information came a day after insurers had to file their final reports on premium increases and their intention to participate in the exchanges.
Preexisting conditions. Republican leaders claimed today that people with preexisting conditions will be protected. The existing rule under the ACA stating that insurers can’t charge people with preexisting conditions more than other people for the same policy will continue under the Senate bill.
But this is tricky. The key phrase is “the same policy,” said Robert Greenstein, president of the Center on Budget and Policy Priorities. It’s important to consider that the Senate bill would give states the flexibility to take waivers on essential health benefits. That means the states will be allowed to set their own standards for what insurers must offer on various policies, versus the mandated essential standards under the ACA.
Thus, you may see insurers offering scaled-back policies that offer lower premiums but also lower coverage, including no maternity care, no mental health care, no cancer care, etc. Young healthy people may be drawn to these less restrictive policies while older, less healthy people will end up in a more expensive coverage pool.
“Technically you aren’t charging a different price for the same policy, but you’ve shunted people with preexisting conditions into a pool that will demand much higher premiums,” said Greenstein.
Medicaid cuts. The Senate bill makes draconian reductions to Medicaid, which covers 70 million Americans, including low-income patients, nursing-home residents and people with disabilities. But it does so over a longer time frame than the House bill, giving the initial first impression that the cuts are kinder.
Like the House bill, the ACA’s Medicaid expansion would be phased out under the Senate bill. The plan would also restructure the program, capping the amount of federal funding states get on a per-capita basis rather than a budget basis.
Then in a new twist, in 2025 those per-recipient caps would be based on general inflation increases instead of health care cost increases, which are usually about twice as much as inflation. “The Senate bill goes a substantial way to almost destroying Medicaid in the long run,” said Greenstein. “And there’s no real reason for it.”