B. Allen Bradford-The latest Republican attempt to repeal and replace key parts of the Patient Protection and Affordable Care Act (“PPACA”) a.k.a “ObamaCare” may come to a vote in the United States Senate this week. The “Graham-Cassidy” bill is a complex piece of legislation (see it here: Graham Cassidy as of Sep. 25, 2017)—not easy reading. But here are 11 key points that may help you decide whether it’s a good law or not.
FEDERAL SUBSIDIES TO HELP PAY FOR INSURANCE ENDS. The other GOP bills (which I summarized earlier this year) provided tax credits for many people who buy their own health insurance. This was intended to replace the PPACA’s individual subsidies (to help those who earn up to 400% of federal poverty level buy insurance). AS OF 2020, THE NEW LAW ENDS THE SUBSIDIES FOR GOOD WITH NO REPLACEMENT. It also would end all cost-sharing payments (to help lower income families pay “out of pocket” costs) and small business tax credits. Individual states may choose to provide payment assistance, but the federal government will not.
MEDICAID EXPANSION ENDS. In fact, Graham-Cassidy would end Medicaid funding as we know it. Currently, Medicaid is funded based on the needs of the indigent population. Under the new proposal, the federal government would simply give each state a block of money based on that state’s population (and not the number of indigent or sick people in the state) and let the state figure out how to spend it. You might think state Medicaid agencies would be happy about that, but instead a group representing every states’ Medicaid directors have come out in opposition.
THE MONEY SAVED FROM 1 AND 2 ABOVE WILL BE GIVEN TO THE STATES IN A BLOCK GRANT PROCESS. Per a Commonwealth Fund report “The bill repeals the ACA’s marketplace subsidies and Medicaid expansion, which currently cover about 30 million people. The Center on Budget and Policy Priorities (CBPP) estimates Graham-Cassidy would cut $239 billion from current spending levels, and then divide the remaining funding among states according to a complicated block-grant scheme that results in gains for some states at the expense of deep losses in other states. CBPP projects that the states that would lose the most funding are those that expanded Medicaid, including highly populated states like California and New York.”
BUT ALL FEDERAL FUNDING WILL END AFTER 2026. In other words, no more money for subsidies or Medicaid expansion unless Congress then decides otherwise.
PENALTY FOR NOT BUYING HEALTH INSURANCE ENDS. Graham-Cassidy would, like the other GOP bills, end the federal mandate that individuals and employers with more than 49 employees must buy health insurance or pay a penalty.
INSURANCE COMPANIES MAY CHARGE MORE FOR PRE-EXISTING CONDITIONS. Like the prior Senate bill, this one allows states to establish their own “essential health benefit” requirements for health insurance, subject to approval by the federal Department of Health and Human Services (“HHS”). For example, your state could allow health insurance companies to charge a higher premium for people with pre-existing conditions, or limit how much the insurance pays for your health care during your life or during the year, provided the state gets a waiver from the federal government. Under current PPACA law, insurance companies simply cannot do that.
INSURANCE COMPANIES MAY CHARGE MORE BASED ON AGE. Before PPACA, health insurance companies could base premiums on many factors, including age, health conditions, gender, place of residence, benefit value, tobacco use and more. PPACA only allows premiums based on age, where you live, benefit value and tobacco use; and older folks may not be charged more than 3 times as much as younger ones. Under Graham-Cassidy, plans may charge older people up to 5 times as much, and states could ask HHS to let insurance companies charge even more based on age and other factors.
IF YOUR EMPLOYER PROVIDES YOUR HEALTH PLAN, THERE MAY BE NO CHANGE! So far as I can tell, Graham-Cassidy only revises how PPACA law applies to fully insured health plans. Many employers fund their own health plans, which are not subject to state insurance laws. So certain PPACA rules would still apply to those plans: No pre-existing condition exclusion; “guaranteed access” to insurance regardless of pre-existing condition; no lifetime maximums; no plan rescission except for fraud or misrepresentation; maximum limits on amount you pay out of pocket.
MOST PPACA TAXES WOULD REMAIN IN PLACE. The PPACA imposed an extra 0.9% earned income tax on individuals with annual incomes greater than $200,000 and couples with incomes over $250,000; a 3.8% Medicare tax on investment gains and increased the tax on long-term capital gains from 15% to 20%; extra taxes on health insurance companies; and a 2.3% excise tax on medical device companies. (See this for full list: Americans for Tax Reform.) Graham-Cassidy would end only the medical device tax and leave the others intact.
MEDICARE REFORMS SURVIVE! Just as with the prior GOP bills, this one does nothing to alter the PPACA’s numerous Medicare reforms, such as the “Shared Saving” and “Accountable Care Organization” provisions.
LIKE THE ORIGINAL HOUSE REPEAL BILL, THIS ONE WOULD INEXPLICABLY GUT THE PREVENTION AND PUBLIC HEALTH FUND. Per Vox “The goal of the fund was simple: Boost public-health money, much of it for the US Centers for Disease Control and Prevention (CDC), to support activities that keep people from becoming sick with preventable chronic ailments like diabetes, heart disease, and cancer and infectious diseases that can be staved off with vaccines.”
I drew some of my information from the following sources: I begin with the always excellent Timothy Jost in Health Affairs; Kaiser Foundation Very Helpful Summary and Links; ABC news useful comparison to past GOP proposals; favorable opinion from the Hill; opposing opinion from New York Magazine; CNN Money Summary.
B. Allen Bradford is a senior member and co-founder of Bradford, Perlstein & Associates, LLC, and is “of counsel” with James, James & Joyner. Most of his clients are emerging and entrepreneurial businesses, health care providers and other professionals. He writes this occasional column primarily to demystify the intersection of legal and health issues for individual consumers, physicians and small businesses. However, nothing herein is intended as legal advice. You can follow Allen on Twitter at: @LegalHealth.