After reading the health bill that the Senate released yesterday, we were wondering how exactly Republicans would argue for this bill. It has massive cuts to Medicaid, increased costs for the sick and older Americans, higher deductibles, waivers letting states opt out of the ACA’s insurance protections… in fact, we didn’t see anything that the majority of Americans would support aside from maybe the repeal of the individual mandate.
Then we saw Pennsylvania Senator Pat Toomey’s op-ed in the Philadelphia Inquirer: apparently the strategy is to mislead constituents about what the Senate bill actually does. So much of the Senator’s op-ed was wrong or misleading that we decided to address it point-by-point.
The single most politically litigated topic in the United States in a generation has been Obamacare. In election after election, including two of my own in 2010 and 2016, the American people repeatedly put into office men and women who promised them relief from this law.
Yep, I believe Senator Toomey and other Republicans promised to repeal Obamacare and replace it with something better. We’d argue that this plan does neither.
The reason is simple: The foundation of Obamacare, a dramatically enhanced federal role in health insurance, has failed to deliver on the promises of its architects.
Obamacare hasn’t delivered on every one of its promises, but it has inarguably delivered on its biggest: fewer people are uninsured than at any time in America’s history, and they have coverage that actually protects them when they get ill. Here’s the CBO’s coverage estimates for Obamacare vs. the House bill, which, like the Senate version, ends the Medicaid expansion and cuts tax credits to help purchase insurance:
Millions, who liked their plans and their doctors, couldn’t keep them.
Only 2.2% of Americans who purchased coverage on their own (400,000 people), and just 0.3% of Americans with coverage through their employer (500,000 people), had their health insurance policies cancelled when the ACA took effect in 2014. Not millions.
Increasingly, parts of the country have no Obamacare-compliant plans for sale.
It’s true that about 45 counties in Ohio, Missouri, and Washington, have no insurers offering plans on the ACA marketplaces (at least for now: new insurers could still enter). [UPDATE: Which is what just happened in Washington— now every county in the state has ACA plans.] Some counties are in a state that didn’t expand Medicaid, so the risk pool for private insurance is disproportionately poor (and therefore sick), causing insurers to lose money. Other counties have a lot of people on pre-ACA (“grandfathered” and “grandmothered”) plans. Those plans have cherrypicked the healthiest people– since they were sold when insurers could exclude people with pre-existing conditions– and that again makes the Obamacare risk pool sicker and more expensive to cover.
The biggest problem though is that the Trump administration keeps threatening to pull the ACA’s cost-sharing reduction subsidies— that uncertainty has caused a bunch of insurers to bail from the exchanges this year. For example, it’s the reason why Anthem said it was leaving Ohio’s ACA marketplaces, which could leave 20 counties with no exchange insurer.
Costs have skyrocketed. In Pennsylvania, premiums are up 120 percent since 2013. Competition is almost nonexistent; 40 percent of our residents can choose from only one insurance provider on the exchange.
Not sure where he got the 120% figure, but average listed premiums did go up a bunch in 2014 for a couple reasons: (1) plans had to actually cover stuff; many people buying coverage before Obamacare got cheap, but crappy plans because that’s all that was available or all they could afford; and (2) pre-ACA plans could offer really low rates to cheap-to-cover healthy people, and drop people with expensive-to-cover pre-existing conditions.
However, the ACA’s tax credits mean that most people pay premiums below the sticker price. People who are above the income cutoff for tax credits do often find that their premiums are unaffordable– it’s one of the biggest flaws with Obamacare– but the Senate bill only makes things worse. It lowers the cutoff, exposing more people to high premiums. So for example, a 60-year old in York County making $44,000 per year can currently get a silver-level plan for $4,470/year (10% of their income), thanks to ACA tax credits. Under the Senate’s bill, that same plan would cost them $22,520 (over half their annual income).
Coverage is far below the forecasts touted by the law’s advocates. The Congressional Budget Office’s initial prediction for participation in the exchange was off by over half for this year—a difference of 13 million people.
The estimate for the exchanges was off because the CBO expected more employers to drop coverage, since employees would now have this other option. Overall, since the passage of the ACA there are 4 million fewer uninsured than the CBO expected in 2013 (right before the ACA took effect).
These dismal results, accompanied by almost $2 trillion in new federal spending and $1 trillion in new taxes, are set to continue and grow worse unless Congress takes action.
The ACA is doing fine, and is actually on track to improve next year, now that insurers have some experience pricing ACA plans. According to Pennsylvania insurance commissioner Teresa Miller, premiums will only increase 8.8% according to next year’s rate filings– much less than typical double-digit increases before Obamacare. But that’s only if the Trump administration stops screwing with the ACA’s cost-sharing reductions– if he doesn’t, Miller says that Pennsylvania insurers will raise premiums more than 20% on average.
Republicans have begun the process to roll back this misguided experiment, and the first step is to address the most immediate challenges presented by Obamacare’s collapse.
Again, the CBO has made it clear that Obamacare was not on the verge of collapse. Stop saying that.
The Senate draft proposal will not affect that vast majority of Pennsylvania families that receive their coverage through an employer, Medicare, or the Children’s Health Insurance Program. However, the individual market, with just over 400,000 participants in Pennsylvania, is in dire need of relief.
In the short run, the Senate proposal will stabilize this market by continuing Obamacare subsidies for all eligible Americans of modest incomes, and subsidizing high-cost enrollees via a new stabilization fund. Insurers will get some relief from Obamacare regulations to help lower premiums. More broadly, the bill’s tax credits, expansion of health savings accounts, repeal of Obamacare taxes, and restoration of state insurance oversight will help to drive down costs for everyone as we transition to a more consumer-driven market.
About that last sentence…
the bill’s tax credits,
–The bill’s tax credits would bring down premiums for the young and healthy, but for older people (and “older” in this context means around 40 or above) premiums will be much more expensive. That’s because the Senate bill increases the caps for what older people can pay for a plan (and bases those caps on a crappier plan, making the cost increase even worse). It also let’s insurers charge older people who don’t qualify for tax credits much more for coverage: under the ACA, insurers could only charge older people three times as much as young people; the Senate bill says they can now charge them five times as much.
expansion of health savings accounts,
–HSA’s are best for people with higher incomes: (1) you have to make enough to be able to afford to save money to put into it, and (2) the tax savings isn’t that great unless you’re in one of the higher tax brackets. In any event, the Senate doesn’t change HSA’s all that much. Meanwhile the Senate bill cuts the ACA’s cost-sharing reductions, which are what make deductibles affordable for Americans with lower incomes. For people with incomes up to 150% of the poverty line, the average deductible under the ACA is $255; under the Senate bill their average deductible would be $6,000.
repeal of Obamacare taxes,
— I guess he’s talking about Obamacare’s taxes on insurers, drug makers, and medical device manufacturers. Ending those taxes might bring down premiums slightly (the taxes aren’t huge), although corporations could just pocket the savings if they’re repealed. Unless he’s talking about the tax on tanning salons, in which case, yes, the price of your tan will likely go down.
restoration of state insurance oversight
–States still have insurance oversight (which is why PA still has an insurance commissioner) under the ACA. All Obamacare did was set minimum standards that plans have to comply with, and the Senate bill lets states recklessly opt out of those standards. It takes more than a few sentences to explain why these state waivers would be such a disaster– luckily University of Michigan law professor Nicholas Bagley wrote an excellent, easy-to-understand article about them here.
Despite inaccurate reports to the contrary, the Senate draft bill keeps Obamacare’s expansion of Medicaid, the program for low-income Americans. Obamacare created a new category of eligibility: working age, able-bodied, childless adults.
First, it wasn’t just childless adults who benefited from the Medicaid expansion: before Obamacare, Pennsylvania parents had to make less than 38% of the poverty line to qualify. In 2017, that would be just $9,350 a year for a family of four. It also isn’t really true that the Senate bill keeps Obamacare’s expansion of Medicaid, which has two parts: (1) new eligibility rules and (2) increased federal funding to pay for the newly eligible. As Toomey admits, the Senate bill ends that funding.
Under the Senate bill, both the 700,000 Pennsylvanians who signed up for this expansion and future expansion enrollees will retain their federal eligibility for the program. In fact, the federal government will pay at least 90 percent of their costs through 2020, with states paying the balance. Then, over a four year phase-in period, states wishing to cover this new category of recipients will be required to pay their fair share—only 48 percent in Pennsylvania—for the Medicaid expansion. This is the same amount states currently pay for every traditional Medicaid category: the aged, disabled, children, and families.
Under Obamacare’s Medicaid expansion, the federal government pays 90% of costs (or $9 for every $1 the state pays)– the way Toomey phrases this, it sounds like that’s new under the Senate bill, but it’s not. The Senate bill lowers the federal share to 52% (a $1 to $1 match). That reduced match means it would cost Pennsylvania an extra $1.5 billion annually to keep the expansion. So yeah, the Senate bill doesn’t technically end expansion, but the effect is the same– most states can’t afford to fill that gap and will have to drop coverage for these individuals and families.
It would be difficult for Pennsylvania to keep the expansion on its own. Under the ACA, the federal share was paid for largely by taxes on the wealthy, but Pennsylvania’s constitution has a “uniformity clause,” which has prevented us from taxing higher incomes at higher rates. So Pennsylvania couldn’t just reinstate the taxes on the rich that Toomey wants to eliminate– we’d likely have to raise taxes on the poor and middle class too, or figure out another way to pay for it. Meanwhile, in the Senate bill there are also big cuts to the federal share of traditional Medicaid that we’ll have to deal with at the same time.
Perhaps most importantly, for the first time in its history, the Medicaid program will be reformed so it is sustainable for future generations and for taxpayers. For decades, Medicaid spending growth has been out of control. It is now a major driver of our federal deficits and debt. Obamacare exacerbated it by adding millions to the rolls without any reform. Our bill will begin, eight years from now, to transition from this uncontrolled, unsustainable spending growth to a slightly slower, hopefully manageable, rate of growth.
Medicaid costs– like all health costs– are growing more quickly than inflation. The Senate bill doesn’t fix that though– it simply shifts a bigger cost burden onto states, who would then have to choose between cutting the services that are covered, raising taxes, or kicking people off the program. Unless Senator Toomey has another way he believes Pennsylvania can make up for the billions that his plan would cut from Pennsylvania’s Medicaid program– in which case, I’d love to hear it.
In the coming days, this proposal will be studied […]
The “coming days” part stood out to us. Obamacare had 25 consecutive days of hearings in the Senate— the GOP’s replacement bill was written in secret, wasn’t released to the public until a day ago, and they’re talking about voting for it as soon as Tuesday.
I pledged to the people of Pennsylvania that I would work tirelessly to replace Obamacare with a more stable, affordable health-care system that puts families in charge of their health-care decisions. I also promised voters to put our entitlement programs on a sustainable fiscal path. This legislation is an important step toward those goals, saving countless Pennsylvanians from the collapse of Obamacare, reducing the federal deficit, and preserving an important safety net for future generations.
Once again, Obamacare was NOT COLLAPSING. Over a million Pennsylvanians rely on it for coverage, and the Senate bill (which Toomey apparently supports) guts the funding that makes their coverage affordable. It then goes a step forward and guts federal funding for traditional Medicaid, putting Pennsylvania’s disabled, children, and elderly at risk.