Senate Minority Leader Chuck Schumer complained about the “secrecy” of the healthcare bill proposed by Senate Republicans. Then he gave a prepared speech condemning the bill just moments after it was released for his review. That should tell you how fairly this legislation is being evaluated by his party.

In reality, the Senate bill meets every essential principle for healthcare reform that a bi-partisan group of healthcare researchers agreed must be included. (see Healthcare Reform Principles That Cross Party Lines)

The Wall Street Journal editorial board says, “The bill is an imperfect compromise between moderate and conservative Republicans, and it makes pains to accommodate different interests and the Americans, states and businesses that have adapted to ObamaCare over the years. . . But the reform is a major improvement over the U.S. healthcare status quo that will worsen if the bill fails.”

Avik Roy, healthcare economist writing in Forbes, was an outspoken critic of the House bill, the AHCA, but he now praises the Senate version. (see High Praise for the Senate Healthcare Bill)

The Senate Version of the AHCA

The House of Representatives passed the American Health Care Act (AHCA) and the Senate is deliberating over its version of the bill. The Senate bill, called The Better Care and Reconciliation Act of 2017 (BCRA), uses the House bill as a frame of reference but differs in several ways.

Things That Are the Same in Both Chambers:

The Senate bill is the same as the House in these ways:

• Replaces ObamaCare subsidies with tax credits for people who purchase insurance on the individual market
• Ends Medicaid’s status as an open-ended entitlement
• Transitions Medicaid to block grants by per capita enrollment
• Increases flexibility for states to innovate their Medicaid program
• Repeals ObamaCare tax hikes including the 3.8% on investment income
• Begins to resolve some of the healthcare system’s flaws

 

Things That Differ in the Senate Version:

The Senate bill differs from the House bill in these ways:

• Medicaid transitions over 4 years (House 3 Years) and ties the grants to inflation with no adjustment (House tied to inflation plus 1%)
• Eliminates the enhanced Federal Matching Rate – Pre and Post ObamaCare enrollees will be treated the same. (begins 2021)
• Senate tax credits are more generous than the House – but means tested
• $100 Billion for a “stability fund” to support insurance markets
• Uses ACA program called “1332 waivers” to eliminate regulations and mandates to give states flexibility to design new insurance products
• Maintains the “community rating” with 3:1 ratio pricing of ObamaCare

 

The Senate bill is “kinder” to the poor and harder on the rich than the House bill. The tax credits are means tested, which will translate into more credits for the poor and less or none for higher-incomes. The House tax credits also created work disincentives since people earning just enough to leave Medicaid would face higher out of pocket expenses for healthcare. The Senate tax credits avoid this problem.

But it also is “meaner” to the young and healthy because it maintains the 3:1 pricing that drives up premiums for them and benefits older, sicker Americans. This issue would be my criticism of the bill but apparently it was needed to win enough votes from moderates.

Taxes that are passed on to consumers are eliminated and industry taxes that depress economic growth and jobs are eliminated, too. This will fuel economic growth, creating more jobs for all Americans. Democrats will portray this as a “tax cut for the rich” but it really is simply eliminating the “tax hike” of ObamaCare that slowed down our economy.

The Medicaid enhanced federal matching rate of ObamaCare is eliminated which fueled wasteful spending and threatened to overwhelm the federal budget. States that refuse block grants will have to accept the “traditional matching rates” for residents that existed before ObamaCare – which average 52% federal support.

The changes in Medicaid are some of the biggest improvements over ObamaCare. These changes allow states the flexibility to design their own innovative programs that will lower costs and improve quality for their residents. Such programs have already begun under waivers granted by the Obama administration and are proving successful in states like Indiana, Rhode Island, and Florida. The AHCA will ensure such programs will grow and expand to other states without the need for federal waivers.

If the Senate passes this bill, it will go to a conference committee where members of both chambers of Congress will work out the differences in the two bills until they come to a consensus. At this point, I think the Senate bill comes closer to the changes needed to garner enough votes for passage in both chambers.

The importance of this moment cannot be overemphasized. The WSJ put it this way:

“The Senate bill is imperfect, but it includes many conservative policy victories that have long been Republican goals. It’s not too much to say this is a defining moment for whether the GOP can ever reform runaway entitlements. If Republicans fail, the next stop is single payer.”

 

 

 

Can both parties agree on anything in healthcare reform?

That was the question put to the test in a rare conversation between supporters and opponents of ObamaCare.

Lanhee J. Chen, fellow at the conservative Hoover Institute of Stanford University, and Ron Pollack, founding executive director of Families USA, writing in The Wall Street Journal summarized this rare meeting of conservative and liberal thinkers. Joining in the conversation were Sara Rosenbaum, Gail Wilensky, Joe Antos, John McDonough, Grace-Marie Turner and Stuart Butler – a group of health policy researchers who hold diverse political views and policy outlooks.

Principles They Agreed Upon

In the privacy of a conversation apart from the hysteria of media microphones and television cameras, this diverse group was able to elucidate those principles they agree should form the basis of healthcare reform. Here are the points they agreed should be present in any reform legislation:

• Public subsidies for private insurance premiums should be means tested – This ensures that coverage will be more affordable for low-income people.
• States should be given flexibility to streamline coverage options in Medicaid, CHIP, and other publicly supported insurance – This is to ensure that families can obtain the coverage that best suits their circumstances and serves their needs.
• The existing tax exclusion for employer-sponsored health benefits should have reasonable limits
• Subsidies should be provided for people who need help to purchase adequate insurance
• States should be given waivers to reform Medicaid to develop fiscally sound and affordable coverage options.
• States should be given greater authority to configure and redirect revenue streams from Medicaid, CHIP and private insurance to improve and strengthen coverage. Integration of funding streams would make it easier for individuals to keep the same coverage and providers when their employment or life circumstances change. Experimentation by the states would enable states to better serve the needs of their citizens.
• Federal budget neutrality – Neutrality should be required for the cumulative budget impact of a proposal by the states.
• State flexibility should not allow funds for healthcare services to be diverted to other purposes.

 

How well does the new Senate healthcare reform bill adhere to these principles?

The Better Care and Reconciliation Act of 2017 (BCRA) was just released by the Senate. Let’s see how well it stacks up with these bi-partisan principles:

• Public subsidies for private insurance premiums should be means tested – The BCRA tax credits are means tested
• States should be given flexibility to streamline coverage options in Medicaid, CHIP, and other publicly supported insurance – The BCRA gives states flexibility to develop their own Medicaid programs.
• The existing tax exclusion for employer-sponsored health benefits should have reasonable limits – The BCRA maintains the “Cadillac tax” of ObamaCare that places limits on the employer tax exclusion.
• Subsidies should be provided for people who need help to purchase adequate insurance – The BCRA provides this through means tested tax credits
• States should be given waivers to reform Medicaid to develop fiscally sound and affordable coverage options – The BCRA eliminates the need for waivers, giving states the flexibility to reform Medicaid to their needs
• States should be given greater authority to configure and redirect revenue streams from Medicaid, CHIP and private insurance to improve and strengthen coverage – The BCRA does this within the confines of long term per-capita caps
• Federal budget neutrality – The BCRA places caps on Medicaid spending, eliminating the open-ended Medicaid entitlement of ObamaCare.
• State flexibility should not allow funds for healthcare services to be diverted to other purposes – The BCRA includes this.

 

Therefore, the BCRA includes all eight recommended principles of this bi-partisan group of healthcare researchers. While both sides would prefer other changes or retained portions of ObamaCare, on these eight principles they agreed were essential, the BCRA includes every one!

This discussion makes it clear that there is bi-partisan agreement among healthcare researchers on the principles most needed in a new healthcare legislation.

If partisan politics could be put aside in the interest of the healthcare of the American people, both parties should be happy to vote for The Better Care and Reconciliation Act of 2017! What more can you hope for?

 

When the House passed the American Health Care Act (AHCA) there was lots of criticism from Democrats and even some Republicans. The healthcare economists had mixed reviews; some praised it, some didn’t. One of the critics was Avik Roy of The Manhattan Institute, who writes for Forbes.

Roy’s analysis of the AHCA was covered in an earlier post (How Good is the GOP Healthcare Plan?). His criticism was the flat tax credit in this bill rather than one that is means tested. Here is what he said then:

“That approach (flat tax credits) means that millions of low-income Americans in their fifties and sixties will be priced out of the insurance market, while millions of upper-income Americans who don’t need the help will get a big tax credit.”

“By repealing ObamaCare’s Medicaid expansion and replacing it with a flat tax credit that doesn’t provide enough assistance to the working poor, millions with incomes above the poverty line are going to lose their insurance.”

 

A Change of Tune

Now that the Senate has released its version of the bill, known as The Better Care Reconciliation Act of 2017 (BCRA), Roy is singing a different tune. In a post written for Forbes entitled “The New Senate Republican Bill Will Transform American Health Care”, Roy has this assessment:

“The hotly-anticipated Senate Republican health care bill came out on Thursday morning. The airwaves quickly filled up with predictable talking points from both sides. But once the dust settles, it will emerge that the Senate bill will have far-reaching effects on American health care; for the better.”

 

The difference is means testing of the tax credits. He says this solves the problems he described in his earlier criticism and also makes it easier to reform the Medicaid program. He explains:

“Because the Senate bill’s tax credits are robustly means-tested and available to those below the poverty line, the bill is able to repeal ObamaCare’s Medicaid expansion while offering higher-quality coverage to individuals who signed up for Medicaid under the expansion.”

 

Medicaid Reform

Besides lowering the cost of private insurance premiums, especially for low and moderate-income Americans, it makes significant improvements to Medicaid. Roy says this is accomplished in three ways:

• Repeal of ObamaCare’s Medicaid expansion – replacing it with tax credits that allow low-income patients can buy private coverage at an affordable price.
• State flexibility – allows states to check enrollment eligibility more frequently to remove those ineligible. Also encourages innovation in the states to lower costs and improve quality
• Long term per-capita caps tied to inflation – to control the rising costs and make Medicaid fiscally sustainable for years to come.

 

His only real criticism of the Senate bill is that it doesn’t establish a waiting period for those who don’t sign up for insurance during the open enrollment. Lack of this waiting period encourages people to abuse the system by dropping in and out of coverage when they’re sick or healthy. Apparently this issue conflicted with Senate parliamentary rules and is yet to be worked out.

Despite this high praise for the Senate bill from this highly respected healthcare economist, expect Democrats to keep up their demagoguery to defeat the bill. Also, expect the CBO to say at least 18 million fewer Americans will be insured since this is their “baked-in” claim for any bill that repeals the Individual Mandate.

Some Republicans, too, continue to criticize this less-than perfect bill. As I write there are five Republican Senators holding out for improvements. Roy’s response to these Republicans puts this in perspective:

“But any Republican conservative in the Senate who is thinking of voting “no” on this bill: how many times in your life will you have the opportunity to vote for a bill that fundamentally transforms two entitlement programs? How often will you get to vote for a bill that cuts spending by hundreds of billions of dollars? How often will you get a chance to make a difference for millions of your constituents who are struggling under the weight of rising premiums and exploding deductibles?”

 

The time is now for healthcare reform. It’s time to get it done.