Senate Majority Leader, Senator Mitch McConnell (R-KY) plans to have a final vote on the Senate majority health bill by the end of this week. The Senate bill, released on Thursday morning, modifies the House bill but for the most part sticks to the same core elements: eliminates the individual mandates, weakens requirements that all policies provide a package of essential benefits including mental health and substance use treatment services, converts Medicaid into a per capita cap and/or block grant, rolls back Medicaid expansions, narrows subsidies to customers and insurance providers and cuts taxes used to finance the current ACA which largely targeted wealthier citizens.
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While four conservative senators (Cruz-TX, Johnson-WS, Lee-UT, Paul-KY) immediately announced their lack of support (but not outright opposition) it’s safe to say that many betting people in Washington D.C. believe Majority Leader McConnell will get to the 50 votes he needs by the end of this week. To be certain he will have to win over several Senators but this will be a top party priority and loyalty test for the 52 Republicans. On Friday Senator Dean Heller (R-NV) came out in opposition with the strong backing of Nevada’s Republican Governor Brian Sandoval. Both seem very strong in their opposition and Governor Sandoval has not been hesitant to oppose his party in the past. Heller is generally considered to be one of the few vulnerable Republican senators up for re-election in 2018.
McConnell needs the four conservatives and not lose more than one more Republican in addition to Heller. No Democrat is expected to vote for the bill. In political reality, to stop the bill there would likely have to be at least four Republicans voting no since no Senator will want to be the third and deciding vote that brings down the top priority of the President and their party.
The Congressional Budget Office should release their analysis today. It will likely show a loss of insured and substantial cuts in Medicaid. It’s mostly a question of how much more or less of each in comparison to the House bill. There should be a substitute of the Thursday Senate bill (which is a substitute of the House reconciliation bill) and the debate may start at some point on Wednesday with 20 hours of debate equally divided between the two parties. That would eat up debate time sometime on Thursday. There are even Washington rumors that if the Senate can move the bill, Speaker Paul Ryan (R-WS) would hold the House in session early next week to get the 218 votes. He has two more votes in that regard with the two House seats filled by Republicans this past week (Georgia and South Carolina). It is unlikely that McConnell would go ahead with a vote if he can’t get to 50.
Key Features In The BCRA (Better Care Reconciliation Act)
Mandated insurance coverage
The mandates to buy insurance would go away with no one required to buy insurance and no company required to provide it. In this respect, the Senate bill is different from the House bill since the House bill creates a 30 percent premium penalty if you go without health insurance for a period. The appeal would be that some policies could be cheaper to buy because they would provide less coverage including less substance use, mental health coverage, emergency room and maternity coverage. The Senate bill does not create penalties or incentives for healthy adults to buy insurance beyond some limited tax credits. The insurance pool will likely be costlier to cover putting pressure on premiums. If that results in hospitals picking up more costs because policies don’t provide coverage, that raises premiums for all.
Subsidies and Premium Support
The subsidies to purchasers would be replaced by tax credits. The subsidies that offset costs to insurance companies for some lower income purchasers would be extended for two years but the Administration could delay or deny those supports as they are doing now. This uncertainty on this policy has helped to drive some insurers out of the exchanges in the past few months.
The tax credits in the Senate bill would be more targeted by age, income and location while the House bill was focused age. Both bills however lower the coverage income-wise of who could qualify with the Senate bill phasing out credits starting around 350 percent of poverty instead of the more middle-income 450 percent of poverty under the ACA. The Senate bill does provide some tax credits to some poor people but that is because they are cut off from Medicaid coverage that currently exists.
The Senate bill continues the requirement that people cannot be denied insurance because they have a “pre-existing” condition. This is different from the House. Insurance companies could not deny coverage for pre-existing conditions but without the requirement that everyone get coverage and with states having and ability to reduce the coverage by opting out some of the ten essential benefits package it may simply means that premiums go up for all in that group.
Before the ACA, some states had adopted laws that prohibited discrimination based on having a health condition. But without requirements that push healthy people into the insurance pool, premiums increased. In addition, some people who are healthy could wait to purchase insurance until they suspect they have a serious illness. The Senate bill, like the House bill, leaves intact the provision whereby parents can continue to cover their adult child to 26.
Medicaid takes the biggest blow. The Senate slows down some of the House roll backs in coverage but the two most fundamental threats to Medicaid, a “per capita cap” and a state optional block grant are still intact and a threat that would destroy the entitlement. These entitlements to services include services for children that are currently provided through the EPSDT (Early and Periodic Screening, Diagnostic and Treatment) and the guarantee that youth that aged out of foster care can continue to be covered by Medicaid to age 26. In fact, the Senate formula for the per capita cap, whereby a state formula is crafted based on some sub groups: children, elderly, disable, etc., adjusted by an inflation formula will be tied to a stricter and lower urban consumer price index that tracks lower than health care inflation. The Senate inflation measure makes the Medicaid cuts steeper in the long run.
Another big blow to Medicaid programs is the loss of ‘DSH” or disproportionate share hospital payments. These are payments made to some hospitals that get a bigger reimbursement because they have a disproportionately higher level of uninsured patients walking through their emergency rooms. DSH was replaced through the ACA as the number of uninsured went down through the expansion of Medicaid coverage and increased purchase of private health insurance. The Senate bill cuts Medicaid and doesn’t account for the disproportionate share. This is likely to hit some of the poorest, rural and urban states.
Senator McConnell will have to bargain for votes, making the bill conservative enough for some and moderate enough for others. He has been lobbying his members all along and that is why there are only the five senators saying no publicly with each qualifying their opposition. Political trades could result in some political cover while still stripping away vital coverage. For example, many Senators are concerned about the opioid epidemic such as Senator Rob Portman (R-OH). Senator Portman in the recent past has been sending signals that some additional substance use treatment funding could help get their votes. The Senate bill does include $2 billion in drug treatment funds over two years but such funding is a fraction of the overall support the current ACA has provided and the ACA coverage is not limited by an annual appropriation. The expansion of mental health and substance use services is not pegged to any one addiction either and many drug treatment experts would argue that treatment services isolated from health care coverage would have limited results.