*Photo Credit: AP Photo/J. Scott Applewhite
The latest Republican push for repeal and replace is underway. Written by Senators Lindsey Graham of South Carolina and Bill Cassidy of Louisiana, the bill has come from out of the blue to snag the endorsements of President Trump as another chance to fulfill a campaign promise Republicans have been making for the past seven years. But what does the Graham-Cassidy bill do?
Ends Medicaid Expansion and exchange subsidies, creates block grants
The bill can be best explained as a federalist approach to healthcare. Throwing out the Obamacare subsidies for individuals and insurers along with ending the matching funds for Medicaid expansion, Graham-Cassidy would instead provide states with block grants to use as they wish. Theoretically, blue states could use the funds for a single-payer push while red states could use it to subsidize a high risk pool. Regardless, the bill would also end the federal exchange. As most states rely on the federal exchange for functions like enrollment, ending the federal exchange would mean the states would be responsible for forming their own health insurance programs by 2020 if they want to keep having a healthcare exchange system in their states.
Changes formula that determines how much money states get
Graham-Cassidy is not as simple as taking the money that states already get for Medicaid and subsidies and letting them spend it as they wish. The entire system that determines the amount of money that states receive is being changed via a new formula that will distribute to states based on the number of people around the poverty line. This means that states with generous amounts of coverage will see the federal government no longer accommodating it through matching funds. In shorthand, this will mostly benefit states that did not take part in the ACA’s Medicaid expansion and cut funding to states that did expand Medicaid. Under estimates by Avalere Health, 34 states would see their funding cut with states like California and New York losing billions while Texas would see a gain of $35 billion over a six year period. Overall, the bill would cut around $215 billion from the typical amount that Obamacare would have provided under a six-year period.
But even this isn’t necessarily accurate. The text of the Graham-Cassidy bill states that the formula that decides how that $1.176 trillion in block grants is divvied up is purely up to the HHS Secretary. This formula that people are analyzing could be changed anytime after 2020 and dramatically change the way federal money is distributed.
Ends the federal mandate
Graham-Cassidy would end both the employer mandate that required businesses of 50 or more employees to provide healthcare for its employees as well as the individual mandate that required every American to have healthcare under threat of a fine of $695 per year. This goes even further than the AHCA pushed by Paul Ryan earlier this year which had allowed insurers to charge a 30% surcharge for a year on those who let their coverage lapse for a certain period of time. Graham-Cassidy would not punish consumers at all for not buying insurance. This would likely mean that the remaining state exchanges, which have shown some signs of stabilizing its number of insurers even while premiums increase, would be further rocked by the outflow of citizens from the market if the individual mandate is lifted.
Lifts regulations on pre-existing conditions
Graham-Cassidy would allow states to end the pre-existing condition rule that requires insurers to not factor medical history when determining how much to charge for coverage. This would allow insurers to better determine the risk in providing coverage to someone and charge more if they are sicker or older than the average.
Allow catastrophic coverage plans
Unlike Obamacare, which didn’t allow people to buy catastrophic coverage plans (health care plan that covers only the worst ailments with high deductibles in exchange for low premiums} until they are 30 years old, Graham-Cassidy would allow anyone of any age to choose to go with a catastrophic coverage plan. This goes along with Graham-Cassidy’s repeal of Obamacare’s 10 essential health benefits that all insurance plans must cover such as maternity care, mental health, prescription drugs, and pediatric services.
Increase access to HSAs
Under Graham-Cassidy, people would also be allowed to deposit more into health savings accounts (HSA) which users can draw from to pay medical bills. While Obamacare made it so that HSA funds could not be used to pay for insurance premiums, Graham-Cassidy would change this.
Defund Planned Parenthood
The final change in Graham-Cassidy would be the long Republican goal of defunding Planned Parenthood, but for only a year after the passage of the bill.
What doesn’t it do?
Graham-Cassidy will repeal only one of the Obamacare taxes, the medical devices tax. The others, such as the tax on high income earners, the tax on healthcare providers, and the tax on healthcare plans with especially high premiums (the Cadillac tax), are all Obamacare taxes that AHCA would have repealed which Graham-Cassidy won’t. This bill also wouldn’t follow AHCA in creating a high risk pool to subsidize more sick individuals that need insurance. Finally, the bill lacks the tax credits of the AHCA which would subsidize families in buying insurance. In fact, in addition to not creating more, Graham-Cassidy would let the tax credits that were a part of Obamacare expire.
What are the politics of this bill?
The rush to get this bill through has been evident with no CBO estimate of uninsured from the bill being pursued and Senators being extremely vague about what it even does. This is because the bill is under an extremely tight deadline. According to their budget reconciliation bill, which allowed them to pass a repeal bill with a simple majority as long as it’s revenue neutral, Republicans need to pass the bill by September 30 of this year or else they need to get Democratic votes. This explains why the CBO score is being pursued (a requirement to see if the bill would be revenue neutral) while the effect on the coverage rate is ignored considering the 11 million uninsured figure was key to the defeat of AHCA.
With opposition from the outside mounting, the bill, in some ways more far-reaching than AHCA or BRCA, is almost certainly the last chance for the Republicans to fulfil their healthcare promises. Senators Graham and Cassidy will be making their case before the public in a televised debate against Senators Sanders and Klobuchar on September 25, 2017, but it will all rest on the backs of a handful of Senators. Rand Paul has said he’s a hard no, calling the bill “amnesty for Obamacare. John McCain has also come out against the bill. So now, it’s up to Susan Collins of Maine and Lisa Murkowski of Alaska to decide whether Graham-Cassidy will be law or thrown on the pile of failed attempts to “repeal and replace.”