Goldman Sachs (GS) may be bearish on an Obamacare repeal, but a Republican House draft for a repeal bill obtained by Politico provides new detail on what to expect if Congress does end up killing the Affordable Care Act.
There are no major surprises here, as the plan is similar to Health and Human Services Secretary Tom Price’s previous ideas.
Here are some highlights:
A different type of individual mandate
First off, the bill would kill the unpopular individual mandate, which ensured that not just people with pre-existing conditions would sign up. Instead, under the new bill, people who didn’t have continuous coverage would see a 30% increase in premiums for a year. As Bloomberg’s Steven Dennis noted on Twitter, that means you’d pay a penalty later instead of at tax time. In other words, it’s a mandate by another name—one that gives the illusion of choice as there’s still a penalty for people who choose not to have insurance.
Subsidies based on age
The next big change would be in subsidies (in the form of tax credits), which in 2020 would switch from being income-based to age-based, a move that would make, for instance, Bill Gates eligible for a bigger subsidy than a poorer, younger person. However, the GOP’s plan would cut almost all the taxes that paid for Obamacare—except a tax that’s similar to Obamacare’s Cadillac tax, which would begin taxing generous employer healthcare plans in 2020. This leaves a large question mark in terms of any new law’s ability to be revenue neutral. Analysis from the Congressional Budget Office has yet to be released.
Cut back Medicaid expansion
Another big change in 2020: No more Medicaid expansion, and states would have federal funds capped by their populations, which would likely reduce the number of Americans receiving the benefit by 7 million, according to the nonpartisan Congressional Budget Office. Since Obamacare was implemented, around 15 million more people have gotten insurance through the law’s expansion of Medicaid, according to the Kaiser Family Foundation. A recent poll by the Kaiser Family Foundation found strong bipartisan support for Medicaid, which has expanded in 16 states with Republican governors. This is much more favorable than Obamacare, though the law is now currently more favorable than not by a slim margin.
In 2019, the essential health benefits requirement that made certain treatments and preventative care covered in full would be sunset.
One of the most politically explosive pieces in the draft of legislation, which is currently unnamed, is defunding Planned Parenthood, a move that some Republicans see as too dangerous. According to the draft, no federal funds could go to a “prohibited entity.” The bill includes abortion provider in its definition of “prohibited entity.”
For older people, regulations that limit differences between insurance premiums of young and elderly were capped under the ACA at three-to-one. Under this new bill, they would be increased to five-to-one, meaning premiums for the elderly could skyrocket by 66%.
It’s important to note that this is still a draft, unnamed, numbered, analyzed, or reviewed by the Senate. The biggest takeaway, however, is that the bill will likely not live up to President Donald Trump’s promise of “insurance for everybody.”