Friday, June 23, 2017

Comparing the Major Provisions of PPACA to the House and Senate Replacement Proposals with Audio from Armstrong & Getty

Overarching Thoughts

1) The Senate absolutely did not “start over” but simply made a few tweaks to the Obamacare Lite bill passed by the House. I’d call this Senate version Obamacare Lite Plus.

2) If you didn’t think the House bill went far enough to repeal Obamacare, you will really hate the Senate bill because, on the whole, it backtracks a few steps toward Obamacare.

3) If I were evaluating these bills based upon how they addressed the problems we faced in healthcare in 2010, I’d grade Obamacare an F, House Bill a D- and Senate Bill an F+.

4) If evaluating these bills today, knowing Obamacare is the law of the land I’d grade the House bill as a C+ and the Senate bill as a C.

  • Both the House and Senate bill repeal all but one Obamacare tax. 
  • Both the House and Senate bill eliminate the Individual and Employer mandates. 
  • Both bills allow for larger use of HSAs and FSAs. 
  • Both bills permit the states a bit more freedom in dealing with many of Obamacare’s coverage mandates. 
  • Both bills phase out the Medicaid expansion ushered in by Obamacare. The House bill does it sooner but the Senate bill does it in greater degree in the long run assuming politicians could stick to benefit reductions – but we know they cannot. 
  • All three plans cement a redistribution of wealth and new federal entitlement of $1.5 to $1.75 trillion dollars. 
  • None of the three laws significantly work to reduce the cost of healthcare in America in a meaningful enough way to avert future economic turmoil. 
  • The House or Senate bill probably prolong our slide into socialized medicine but only by a couple of years. At this pace the U.S. will end up in some form of rationed and socialized healthcare in 7 to 10 years.
I spent a few minutes on the Armstrong & Getty Show this morning discussing this:

House Bill
Senate Bill
10 Year Cost
$1.75 T
$1.63 T
$1.43 T

Uninsured After 10 Years
28 million people
51 million people (note that CMS scored it at 41 million)

50 million people
26 Year olds
Can stay on parents’ insurance irrespective of college enrollment or dependent status.

Taxpayer dollars to buy insurance
Individuals making less than 400% of FPL get money. This is about $100K of income for a family of 4. Not required to pay more than 9.5% of income for health ins.
Abandoned income based subsidies and allowed refundable tax credits based on age bands. Credits did phase out for higher income levels.

Hybrid approach for incomes up to 350% of FPL (about $86K for family of 4). Adults 59-64 could pay up to 16.2% of income. See Marginal Revolution for a good discussion on the issues around income-based subsidies.

Amount of taxpayer dollars to buy insurance

Subsidy amounts based on an ins. plan designed to cover 70% of medical expenses. 

Bases subsidy amounts on age as opposed to income or plan cost. Would be least dollars redistributed of the three plans. 

Subsidy amounts based on a plan that is designed to cover 58% of medical expenses.
Preexisting Conditions
Coverage cannot be denied or cost more.
States can get permission to let insurers charge more for some preexisting conditions. States would have access to federal money to help those with expensive policies or conditions.
Insurance companies would be required to accept all applicants regardless of health status and charge them the same premium just like in O’care. But the draft bill would let states ask permission to reduce some required coverages.

Tax Burden
Implemented 21 new taxes on business, individuals, and various industries. 
Eliminates 20 of the 21 new taxes, delays Cadillac Tax from 2020 to 2026
Eliminates 20 of the 21 new taxes, delays Cadillac Tax from 2020 to 2026

Obamacare expanded Medicaid from persons at 100% FPL to 138% FPL and promised the federal government will pay 90% of that expansion. 31 states took that deal. 
Would limit Medicaid reimbursement by a per-enrollee cost, based on 2016 average costs. And phase out the expansion in 2020. 
Allows the 31 states that expanded Medicaid to continue getting federal funding through 2023, with reduced funding starting in 2021. The bill sharply curtails federal support for Medicaid expansion in 2024, likely causing many states to end the expansion. Deeper proposed cuts could begin in 2025. 

Subsidies for Out of Pocket Costs
Provides subsidies to help people with lower incomes pay for out-of-pocket costs like deductibles and co-payments. Note, these subsidies are in legal doubt now under PPACA.

Eliminates these subsidies immediately. 
Preserves the subsidies through 2019, then eliminates them altogether. 
Prohibitions on annual
and lifetime limits
Bars insurers from setting a limit on how much they have to pay to cover someone.
Preserves this rule, but gives states the option to eliminate it as part of a waiver of insurance market rules.

Preserves this rule, but gives states the option to eliminate it as part of a waiver of insurance market rules.
Underwriting Premiums for Older vs. Younger Americans
Bans insurers selling policies directly to individuals from charging their oldest customers more than three times what they charge their youngest ones thereby unfairly burdening the young with higher premiums. 

Allows insurers to charge older customers the actuarially sound amount of five times as much as younger ones.
Allows insurers to charge older customers the actuarially sound amount of five times as much as younger ones.
Individual Mandate
Requires all Americans to buy health insurance or pay a tax penalty, with exceptions for 30+ categories of ‘hardship’

Eliminates the penalties. Instead, when people who've gone uninsured decide to buy health insurance, they'll have to pay a 30% surcharge on their premiums for one year.

Eliminates the penalties. Currently no provision to dissuade people from gaming the system. This must be corrected
Employer Mandate
Requires companies with 50 or more employees to offer government approved, affordable health insurance to persons working 30 or more hours per week. 

Eliminates all employer mandate penalties.
Eliminates all employer mandate penalties.
Health Savings Accounts
In 2017, allows an individual to put $3,400 and a family to put $6,750 into a tax-free health savings account.

Nearly doubles these limits to $6,650 for individuals and $13,300 for families.
Nearly doubles these limits to $6,650 for individuals and $13,300 for families.
Flexible Spending Accounts
Prevents Americans from using these pre-tax accounts for over-the-counter medications without also obtaining a prescription.  Caps overall use of an FSA to $2,500 per person per year. 

Allows over-the-counter use of FSAs without first obtaining a prescription. Removes annual cap on the amount of money a person may put in an FSA. 
Allow States to Impose Work Requirements for Able Bodied Persons Seeking Medicaid
PPACA did not allow for this. 
Gives states the option of requiring some Medicaid recipients to work or pursue job training.

Gives states the option of requiring some Medicaid recipients to work or pursue job training.