The Senate BCRA Bill Part 1: What it Could Mean for Healthcare in America

 

Much debate and lots of concern have surrounded the new GOP health care bill the Senate released on June 22, 2017, putting an end to all the waiting, but not necessarily all the worry. As the weeks ticked by with most Americans and more than a few senators remaining in the dark, majority leader Mitch McConnell and a handful of Republicans met in secret drafting their version of the GOP Health Care Plan.

The changes made to the original House bill that passed last month are few, but significant, and more changes seem to be on the horizon in face of the opposition it’s received by not just Democratic senators, but Republicans as well, not to mention a growing number of people in the US. To clarify some of the key issues at stake, here’s a breakdown of a few pertinent changes in the Senate health bill as it currently stands and what this could mean for healthcare in the future.

Medicaid/Expansion Cuts

There are two key cuts to Medicaid under the Senate “Trumpcare” bill (the BCRA – the Better Care & Reconciliation Act), but make no mistake, it’s less a health care plan than it is a health care repeal, though most assumed that meant repealing the ACA. The news that Medicaid was on the chopping block as well was somewhat of a surprise. In fact, a recent poll found almost 40% of voters didn’t know about the $834 billion dollars cut to Medicaid expansion in the House AHCA (American Health Care Act). The Senate version goes even further. In the House bill, Medicaid expansion was cut completely by 2020, causing 11 Million people to lose coverage. The Senate bill will phase-out Medicaid expansion over four years, from 2020-2024 before cutting it all together, but also adds deeper cuts to Medicaid itself.

Annual & Lifetime Caps:  OK, bear with me here. This gets a little technical, but it’s important! Currently, state or per-capita Medicaid funding is variable, based on need and use, and set to medical care inflation rates (CPI-M). The Senate bill would change this to a fixed rate, setting annual caps based on standard inflation rates (CPI-U). If coverage or treatment exceeds the fixed annual cap, the state must figure out how to pay the extra costs. From 2000- 2017, medical care rates increased by nearly 2: 1 compared to standard inflation. CBO estimated this would result in a 9% decrease in funding over time, or approximately $10 Billion dollars less each year under the House bill. Early estimates under the Senate bill are closer to 25%, which would mean roughly $20-25 Billion dollars less in Medicaid funding annually. According to Business Insider, this switch could seriously impact low-income seniors, and others currently covered by Medicaid.

“Because Medicaid is already one of the lowest-cost providers of healthcare, a state could either cut benefits, which would affect the quality of coverage, or reduce who is eligible for the program, which could hurt people with disabilities, older people, or people suffering from substance abuse.”  – Harrison Jacobs, BI

This could mean defending key programs like Aid to Families with Dependent Children (AFDC), Temporary Assistance for Needy Families (TANF), and those qualified for food stamps (WIC, n.d.), long-term care for seniors and the disabled, including long-term care through the VA.  While these cuts would decrease the deficit by $321 Billion over the next 10 years, it would also leave 22 Million people without health insurance.

In addition, the Senate bill adds Medicaid work requirements. Each state can set mandatory employment hours to qualify for Medicaid. This particularly impacts the elderly and others with part-time or seasonal/inconsistent work hours. (Students, pregnant women, and people with disabilities are exempt, but NOT seniors over age 65).

ACA Cuts/Changes

Age-Based Limits:  Under ACA, insurers can only charge seniors up to 3X more than younger people for health insurance. The Senate bill raises this to 5X as much. This creates an 800% increase in premiums for older, low-income Americans by age 65, based on CBO’s assessment of the house bill. The Senate bill keeps this provision, so similar hikes in premiums for those over 65 would occur. Seniors are one of the largest growing demographic age groups, so many more seniors will be affected than ever before, and the lower their income, the more they will pay:

  • AVG Annual Premium Rate: $3200
  • 60 & Over AVG Premium Rate: $17,900
  • 64 & Up @ $25,000 Annual Income: $7,000 Premium Hike
  • 64 & Up @ $15,000 Annual Income: $8400 Premium Hike.

It also sets caps on certain illnesses and a lifetime cap in general. For example, if a $120,000 annual cap is set for cancer treatment, and someone caps out in May, the rest of the years’ costs would not be covered. If an illness is prolonged, a person could reach their lifetime cap before treatment is completed as well, leaving it up to patients to cover the cost of treatment or go without.

There is also an 18% reduction in discretionary funds, which could reduce funding or even eliminate entire programs not currently covered by Medicaid. Close to $600,000 annually could be cut from senior services like the Meals on Wheels program, Senior Center Meals, rides, counseling and legal services could see annual cuts of nearly $600,000.

  • $290,000 from Meals on Wheels
  • $250,000 from Senior Center Meals
  • $40,000 from Senior/Disabled Rides & Counseling/Legal Services

Penalties:  One of the biggest complaints about Obamacare have been the mandates requiring people and employers carry insurance plans or receive a financial penalty. The idea was “to avoid the insurance death spiral” where healthy people wait until they’re sick to get health insurance. This forces insurers to raise their premiums to cover those who are sicker and more expensive to pay for, which can cause a downward spiral of more and more people dropping their coverage. (Patient Protection and Affordable Care Act, n.d.).

Under the Senate bill, these penalties, or mandates, are replaced, which may ensure the “death spiral” opponents claim ACA is causing. The real issue, however, is not the mandates, but unregulated insurance rates. Programs like Medicaid and Medicare are the only programs with government regulated pricing. On the free market, rates are anything but consistent and prices are hardly regulated at all. The House bill called for these penalties to be removed completely. Under the Senate version, they’re replaced with a 6-month lockout on coverage if insurance lapses. If someone is uninsured or lapses in coverage occurred the prior year, premiums could go up as much as 30%.

The quality of Care: The ACA, which is really the Patient Protection and Affordable Care Act, put in place protections for what must be covered by insurance plans, linking Quality of Care to Medicare and Medicaid subsidies and reimbursements. So, the better care doctors, nurses, hospitals, and emergency rooms provide, the more money they receive through Medicare and Medicaid incentives. Those costs are eaten by the insurance, pharmaceutical, and medical device companies who can’t pass costs on to consumers because of government-regulated pricing which sets limits on what they can charge. This is arguably one of the main reasons that health insurance and pharmaceutical companies fight so hard to keep universal healthcare from passing, and certainly why the ACA isn’t working for some people. ACA still allows HMO’s and insurance companies to set their own rates outside of Medicare-caid, as does the Trumpcare Bill, so the issue of affordability is still not being addressed. Either program will keep insurance rates high for free market health plans, but Trump care makes the problem even worse. This may also be why so many people are now pushing for single payer, or “Medicare-caid for All” insurance. Not so the government PAYS for insurance, but so that it can REGULATE insurance prices, keeping costs and care affordable for everyone.

Essential Protections & Waivers: There’s a little bait-and-switch in the current Senate bill. After a backlash from voters over removing pre-existing conditions in the House bill, the Senate bill attempts to get around this by leaving the protection in without providing complete coverage for chronic and/or expensive treatments usually associated with pre-existing conditions. While the Senate bill keeps pre-existing condition protections, it lifts the mandates for ACA’s 10 Essential Health Benefits. The National Academy of Medicine defined the law’s “essential health benefits” as:

  1. Ambulatory Patient Services
  2. Emergency Services
  3. Hospitalization
  4. Maternity & Newborn Care
  5. Mental Health & Substance Use Disorder Services:  Behavioral Health Treatment
  6. Prescription Drugs
  7. Rehabilitative & Habilitative Services & Devices
  8. Laboratory Services
  9. Preventive & Wellness Services & Chronic Disease Management
  10. Pediatric Services, Including Oral & Vision Care

(Patient Protection and Affordable Care Act, n.d.)

Under the Senate health bill, states can request a waiver allowing insurers not to cover these essential care items under the guise of providing lower insurance rate options. While prices might by lies on some of these plans, fewer services will be covered. Childbirth, for example, could cost tens of thousands of dollars if waived from insurance plans, while emergency services that are often extremely expensive may not be covered at all.

Even in a state that doesn’t take advantage of these waivers, people still might lose out on basic services if insured through their employer. Companies that reside in more than one state are not required to offer insurance plans based on where you live and may opt to buy insurance for all their employees through a “waiver state”.  So, even here in Washington where it’s unlikely these waivers would be used, what big employers decide to do is up to them.

These plans won’t necessarily be cheaper in the long run, either. By removing mandatory penalties and cutting $600-$1400 Billion dollars from Medicaid and Medicaid expansion, fewer people will be covered, sending the uninsured to emergency rooms when conditions become acute, requiring more treatment for unmanaged health, which hikes up premiums and costs for people who are insured. Without enough people on the free exchange, health premiums could go through the roof, just as they did prior to ACA. The result is we pay a lot more for less coverage, and the poorer, sicker, older you are, the more you’re likely to pay.

Women’s Health: While the Senate bill leaves in the stipulation that insurers can’t charge women more for health insurance, states can now receive a waiver to exclude maternity care, contraceptives, and other basic women’s health care needs. No funding at all would be allowed for women’s clinics that offer abortions. 80% of Planned Parenthood would be defunded next year, which provides services for women at or below 150% of the federal poverty level. Only 03% is spent on abortion services, so 77% of cuts would come from vital services low-income women depend on like prenatal care, breast cancer screenings, sex education services, contraceptives, and testing/treatment for STD’s. According to the Guttmacher Institute, 20 Million low-income women rely on Planned Parenthood for these and other women’s health services.

Planned Parenthood Annual Budget for Services:

  • 03%: Abortions
  • 07%: Cancer Screening
  • 13%: Prenatal/Pregnancy Care
  • 31%: Contraception
  • 45%: STD Tests & Treatment

Subsidies & Costs: Under ACA, 70% 0f health insurance plans must go to cover health care costs. Under the Senate bill, only 58% of co-pays and prescription costs must be covered. It also lowers tax credits for incomes from 400% above the poverty line, which is roughly a $48,000. annual salary to 350% ($42,00).  This means middle-income brackets would receive less in tax credits towards premium reductions. This is also tiered by age, so that at age 33, the cap is lowered to 175% above the poverty level, or $21,000 annual income, which means premiums that are roughly 5.3% of someone’s annual income, and after age 59, it would be around 8.3% or roughly $1750 annually.

Service-Based Costs: ACA also requires 80% of premiums and money paid for health care to go towards services or reimburse consumers the remainder. Only 20% is allowed for administrative, marketing or CEO salaries. Approximately $396 Million was returned to 4.8 Million families on 2015 alone, and average rebates were $138 per person, paid from shareholder profits. AHCA removes this stipulation and leaves it up to each state to decide.

2018 BCRA Rates for Washington State:

  • Average Premium Hike” $571 per person
  • 344,300 Lose Coverage: 244,900 from Medicaid, 69,00 from employer-sponsored coverage, and 29,300 from individual market coverage.

 

Tax Break: This is the other significant bone of contention among middle-income workers and small business owners hoping to see a reduction in what they anticipate in premium increases under the ACA’s “Cadillac Tax”. However, this excise tax is not a direct hike in premiums for all health insurance coverage. Rather, it’s a 40% hike in costs for insurers who provide premium health plans above what’s considered “excess” health care, according to the ACA facts website. In other words, “It’s 40% of every dollar spent over $10,200 for individuals and $27,500 for a family in 2018. It is not just a flat 40% increase on the total dollar amount.” (Obamacarefacts.com- Cadillac Tax).

While much of this cost would be passed on to consumers, it is only for non-essential services, or premium plans for companies and individuals who can afford higher rates for extra health perks, not plans for middle incomers already struggling with their premiums. While this excise tax was intended to cover high end “luxury costs”, without hiking up regular insurance rates to cover these executive non-essential service perks, it also didn’t lower rates for middle incomes and smaller businesses. It was intended for big companies and wealthier individuals to pay more for the extra services they can afford- like buying a $50,000 Cadillac, instead of a $12,000 Nissan. The Nissan price tag may fluctuate a little as Cadillac prices increase, but there’s still between $35 -75, 000 differences in their prices. The same principle was anticipated here. Yet, rather than get rid of the Cadillac Tax altogether, as the Obamacare critics had hoped, the Senate Bill simply delays it’s going into effect until 2026. Whatever the hike in premiums turns out to be, the Cadillac Tax has not been repealed after all.

Instead, the Senate bill focuses on other huge tax breaks for the wealthy, approximately 45% of which benefit only the top 1% of incomes. Under the GOP health plan, the 3.8% investment tax on incomes over $200,000 per year will be repealed. This gives a $44.5 Million dollar annual tax break for individuals with incomes over $875,000 while those with incomes of $5 million or more will save close to $25o,000 each year.   Business owners like billionaire casino- owner Sheldon Adelson, for example, or the Walmart family who owns “more wealth than the bottom 40% of America”, according to Politifact’s TRUE-pedometer of the now infamous  Bernie Sanders quote.

While some marginal breaks are given to lower incomes, this really is a huge tax break for the wealthy few at the expense of lower income, working class Americans, and seniors. An estimated  $700 billion dollars will be lost over the next decade due to the tax breaks, as opposed to the $772 billion saved from cutting Medicaid expansion by 2026, according to the CBO’s recent analysis.  In other words, nearly all 22 million people displaced under the Senate plan could still be covered were it not for these excessive tax breaks for the very rich.  Only, these losses will continue, not to mention spike regular health care premiums and reduce funding for Medicaid in the future. The billions of dollars added to the federal deficit by wealthy, corporate tax breaks like these are considerably more costly than one-time savings from Medicaid expansion cuts.

There is even more to the Senate BCRA bill than what’s been included here. If you’d like to read through a copy yourself for a more in-depth view, you can follow this link.

It seems to me that in a country as wealthy as ours, treating our most vulnerable citizens, the children, the elderly, the sick and the poor as well as those from struggling nations who receive humanitarian aid and other resources from the US each year should be possible. If we can commit $38 billion dollars in military aid to Israel who provides universal healthcare for all their citizens, then surely, we can keep our own most vulnerable citizens covered for needed medical treatment and vital healthcare services.

 

Letitia Page

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