The actual policies contained in the Better Care Reconciliation Act, the Senate Republican plan introduced on Thursday to repeal and replace Obamacare, would help some Americans a lot. The biggest winners are households making $250,000 a year or more, which would see two different taxes targeting them repealed; households with millions in investment income would come out particularly far ahead.
But vastly more Americans would come out behind. 22 million will lose health care coverage, according to the Congressional Budget Office estimated would lose insurance under the bill that passed the House in May. Medicaid beneficiaries will have to deal with $774 billion in cuts over ten years, plus additional ones in years after that.
And because the bill substantially weakens regulations for both individual and employer plans, millions of people who still get insurance will see the extent of their coverage shrink, and see themselves forced to pay out of pocket for expensive procedures that would otherwise be covered.
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The list of people losing out from the bill doesn't end there, though. Here are a few of the main groups that will be negatively affected if this legislation becomes law.
Of the 22 million people the CBO projected would lose coverage under the Senate bill, 15 million are currently covered by Medicaid, which the bill would cut by about $774 billion over 10 years.
These are the poorest and most vulnerable people who'll lose insurance under the bill.
In the 31 states (and Washington, DC) that expanded Medicaid following the Affordable Care Act, all adults earning up to 138 percent of the poverty line are eligible for Medicaid. Non-expansion states often feature much lower income thresholds to qualify for Medicaid, particularly for non-parents — but they will also see people lose coverage.
The BCRA would effectively end the Affordable Care Act's Medicaid expansion starting in 2021. Under current law, the federal government initially paid 100 percent of costs of Medicaid expansion beneficiaries, a percentage set to wind down to 90 percent in 2020 and stay at that level permanently. Under the BCRA, the federal government would gradually wind down that percentage to the states' normal matching rates for Medicaid — rates that are as low as 50 percent in certain states.
The Congressional Budget Office has argued that this will mean no more states pursue expansion. It will also spark states with "trigger laws" — which end the expansion if there's any reduction in the federal match — to automatically abandon it starting in 2021. Those states are Arkansas, Arizona, Illinois, Indiana, Michigan, New Hampshire, New Mexico, and Washington.
Joan Alker, a Medicaid expert at Georgetown University, estimates that those eight states alone could lead to 3.3 million Medicaid enrollees losing coverage. But many of the other 24 states will abandon the expansion due to the lower match rate as well. And keeping it going will be even harder due to other, fundamental changes the bill makes to the Medicaid program.
But it's not just people who gained coverage under Obamacare's Medicaid expansion who would lose out. The law would also adopt a policy known as a "per capita cap" for Medicaid that would hurt all beneficiaries.
Currently, the federal government matches state spending on Medicaid, offering about $1 to $2.79 for every dollar states spend on it. Poorer states get a bigger match. But the BCRA would change all that.
Rather than matching state Medicaid spending, the AHCA would give each state a set amount of money per person. Until 2025, the amount would grow from year to year according to the medical component of the Consumer Price Index, to account for inflation. Then it would switch to the overall CPI.
The medical component of CPI is growing more slowly than Medicaid costs are expected to grow right now, according to the Center on Budget and Policy Priorities, and the CPI as a whole grows far more slowly. So switching to a per capita cap is essentially a federal cut to Medicaid amounting to hundreds of billions over 10 years. We'll have to wait for the CBO report to know exactly how many hundreds of billions.
A per capita cap is at least somewhat responsive to changes in Medicaid enrollment — unlike a block grant, which gives states a set amount of money, it gives them a set amount of money for every person who's eligible. But it could lead to cuts in some other ways as well. Take a state like Florida that's aging fast. The BCRA includes separate caps for different groups of beneficiaries — the elderly, disabled, non-elderly adults, etc. — so states can't get more money by dumping lots of seniors in favor of 24-year-olds.
However, there is still a lot of variation in cost within those categories. "Within your elderly group, you have the young and old, 67-year-olds and 85-year-olds, and the latter are much more expensive," Georgetown's Alker told me in March. A state like Florida, which has a large senior population, could see costs rise fast as its population ages with time. But a per capita cap wouldn't keep up with that. To get around that, the state might be motivated to kick off older seniors and focus enrollment on younger ones.
There are some federal requirements as to whom states must cover, but they only go so far, and most states now provide additional coverage that they can roll back. "You do have to cover people on Supplemental Security Income" — a program for disabled, elderly, and blind people with low incomes — "but a lot of folks in nursing homes [are] optional coverage," Alker continued.
This helps explain why disability rights activists are appalled by the per capita cap plan. "People with disabilities who rely on home- and community-based services through Medicaid — such as personal-attendant care, skilled nursing, and specialized therapies — could lose access to the services they need in order to live independently and remain in their homes," the Center for American Progress's Rebecca Vallas, Katherine Gallagher Robbins, and Jackie Odum note.
As if that weren't enough, the bill has also been changed to allow states to impose work requirements on Medicaid, a policy that would not effectively spur people to work or reduce poverty but that could meaningfully reduce access to care for poor families, and which even many conservative health care experts oppose.
A per capita cap would also cause problems if a new, expensive, but necessary drug comes on the market, or an epidemic hits. Those are both changes that would raise the per capita amount Medicaid has to pay year to year, but which a per capita cap wouldn't budget for.
For instance, the opioid epidemic has taxed state Medicaid programs as more patients need treatment for substance use disorder. Today, an increase in need leads to an automatic increase in federal funds flowing to states. But the Republican plan would halt that and put the whole burden on states. To try to make up for that, it adds a mostly symbolic $2 billion fund to address the opioid crisis, which almost certainly wouldn't be enough to address this problem.
The BCRA also allows states to forgo the per capita cap and adopt an even more drastic reform if they want to: a full block grant. States would get a fixed pot of money for Medicaid over a 10-year period, increasing every year only with the normal inflation rate. There would be absolutely no allowance for increased population, or for increased need during recessions. States would be forced to raise taxes or restrict eligibility when federal funds inevitably prove inadequate. Seniors and people with disabilities would be exempted, but would inevitably be hurt as the program itself undergoes cuts.
Why would states choose to take this much less money from the feds? Because, as Edwin Park, Judith Solomon, and Hannah Katch at the Center on Budget and Policy Priorities explain, the block grant also provides states with "virtually unfettered flexibility to decide how to spend the federal funds they receive. … Under the block grant, states would no longer have to comply with most federal Medicaid requirements for children and adults. States could immediately cut eligibility and benefits to avoid any shortfalls and they would be allowed to carry over unused funds to the next year."
States would no longer be required to cover poor parents. They could charge unlimited premiums, deductibles, and copayments. They could impose enrollment caps and waiting lists, and they could cut the range of services provided to poor children.
"Over time, states electing the block grant would be forced to use this flexibility to make increasingly draconian cuts to their Medicaid programs, as the block grant funding cuts became increasingly severe," Park, Solomon, and Katch write.
A new provision in the Senate bill, not in the House version, offers additional federal funding for states whose per-beneficiary spending on Medicaid in various categories comes in more than 25 percent below average, and reduces funding for states where it comes in more than 25 percent above average.
This change, flagged by Slate's Jordan Weissmann, would affect a wide number of states.
According to Kaiser Family Foundation data from 2014, that year 25 states (including DC) exceeded average national per-beneficiary spending in at least one category (whether on disabled people, seniors, adult, or children):
- District of Columbia
- New Hampshire
- New Mexico
- New York
- Rhode Island
- West Virginia
The bolded states exceed the mean by more than 25 percent in multiple categories. There's an exclusion for low-population-density states, which would exempt Alaska, Montana, North Dakota, South Dakota, and Wyoming from this provision. But the affected states still include many places with at least one Republican senator, and which Trump won, like West Virginia, Tennessee, Pennsylvania, Ohio, Nebraska, Missouri, Kansas, Iowa, Indiana, Georgia, and Arkansas.
These are both states that are unusually generous (like New York) and states that have higher-than-average health costs due to underlying poor health, like West Virginia, which struggles with coal-related health problems among other issues. Several states, like New Hampshire and Vermont, are heavily hit by the opioid epidemic. "States have higher spending for a number of reasons, many of which are outside of their control — like higher costs because of geography or less provider competition," CBPP's Katch notes.
What happens to these states? They get a cut of 0.5 percent to 2 percent in their per capita caps. Some years, Katch notes, that would totally wipe out the growth in caps due to inflation. The CPI often comes in lower than 2 percent, meaning that a state in a year with 2 percent inflation that got dinged 2 percent due to this provision would have to freeze spending.
The provision "just goes after higher cost states, blindly, it would appear," according to Sara Rosenbaum, professor of health policy at George Washington University who serves on a board advising Congress on Medicaid policy. The bill, she elaborates, "pushes the highest-cost states to an arbitrary mean regardless of conditions on the ground that may be causing the state variations and then imposes an even more punishing growth cap over time."
Like the House bill, the BCRA has a provision letting states waive essential health benefits, a key reform from the Affordable Care Act that required all insurers to cover 10 types of procedures and medical services:
- Outpatient care without a hospital admission, known as ambulatory patient services
- Emergency services
- Pregnancy, maternity, and newborn care
- Mental health and substance use disorder services, including counseling and psychotherapy
- Prescription drugs
- Rehabilitative and habilitative services and devices, which help people with injuries and disabilities to recover
- Laboratory services
- Preventive care, wellness services, and chronic disease management
- Pediatric services, including oral and vision care for children
"This means that plans in the individual market could once again decide not to cover maternity care — like 88 percent of plans did before the Affordable Care Act passed," as Vox's Sarah Kliff explains.
The BCRA offers tax credits to buy health insurance that are markedly smaller than those in Obamacare, and which are used to cover less coverage. Under Obamacare, tax credits were tethered to the cost of plans covering 70 percent of medical expenses. The BCRA would reduce that amount to 58 percent. That means higher deductibles, copayments, and other cost-sharing devices to make up for lower premiums than a more generous plan would have.
That's particularly bad news for the people being kicked off Medicaid, who would get tax credits but would be forced to use them to buy coverage that has cost sharing. Medicaid, by contrast, has minimal or no premiums, deductibles, or copays, depending on the state. It's true that people in states that didn't expand Medicaid would get tax credits where they currently get nothing, but the coverage they'd receive would be inferior compared with if their governors and legislatures had simply adopted the expansion.
Moreover, the changes to credits are also bad news for low-income people already on the exchanges, who would get smaller credits for worse coverage.
The CBO expects that because of these issues, few low-income people will even bother to use the tax credits to buy insurance. "The deductible for a plan with an actuarial value of 58 percent would be a significantly higher percentage of income," the office writes; indeed it'd reach about $6,000 a year, or most of the income of a poor person. "As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan, CBO and JCT estimate."
But older people not yet old enough to qualify for Medicare who get their coverage individually by buying on Obamacare's exchanges would also be out of luck. Under Obamacare, premiums are capped as a share of income, and the caps don't vary by age. Under the BCRA, the caps would vary by age. While a single person earning three times the poverty line ($35,640) pays no more than 9.69 percent of their income on premiums under Obamacare, under the BCRA the caps would vary from 6.4 percent for people under 30 to 16.2 percent for people over 59.
So for a 60-year-old at 300 percent of the poverty line, the maximum premium would go from $3,442 a year to $5,773, per Vox's Sarah Kliff. And the plan would be less comprehensive, only being required to cover 58 percent of health costs, not 70 percent as under current law.
As another example, the CBO estimates that a 64 year old earning 375 percent of the poverty line ($56,800 in 2026) would have to pay $16,000 a year in premiums, for a $6,000 deductible. Their combined premiums and deductible could amount to nearly 40 percent of their annual income.
This is a less noticed element of the House and Senate bills, but many school districts rely on Medicaid to provide services to disabled students. Because of the cuts implied by the per capita cap and block grant provisions, AASA, a group representing school superintendents, is warning that school services for disabled children could be cut back or rationed as a result of the federal Medicaid cuts.
""A per-capita cap, even one that is based on different groups of beneficiaries, will disproportionally harm children's access to care, including services received at school," AASA's Sasha Pudelski, along with the National Alliance for Medicaid in Education's John Hill and the National Association of School Psychologists' Kelly Vaillancourt Strobach, said in a statement. "Schools are often the hub of the community, and converting Medicaid's financing structure to per-capita caps threatens to significantly reduce access to comprehensive health care for children with disabilities and those living in poverty."
If you rely on a Planned Parenthood clinic for non-abortion services, such as birth control, pregnancy and STD tests, and cancer screenings like breast exams and Pap smears, the Better Care Reconciliation Act affects you as well. For at least one year, Planned Parenthood could no longer receive Medicaid reimbursements, even though it's already barred from using federal Medicaid money to get abortion services.
In more than 100 counties across the country, Planned Parenthood is the only full-service birth control clinic, so denying the organization Medicaid funds would drastically reduce access to contraception and related services for people in those regions.