Does the Senate Health Bill Have More Heart?

The tax credits are more generous than in the House proposal, but Senate lawmakers are looking to eventually impose even deeper cuts on the Medicaid program.

Senate Minority Leader Chuck Schumer responds to the release of the Republican health care bill at the Capitol on Thursday.
AP Photo/J. Scott Applewhite
Erin Durkin
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Erin Durkin
June 22, 2017, 4:54 p.m.

From the start, Sen­ate Re­pub­lic­ans have made one thing clear: Their Obama­care-re­peal bill would be dif­fer­ent from the House meas­ure. At the same time, Pres­id­ent Trump has de­clared he wants le­gis­la­tion with “heart” that’s less “mean” than the House ver­sion.

So does the newly un­veiled Sen­ate bill achieve either goal? It de­pends on which part of the bill you look at.

The Sen­ate le­gis­la­tion still aims to nar­row the Af­ford­able Care Act’s tax cred­its (even if they are more gen­er­ous than in the House bill), provide sub­stan­tial tax cuts for the wealthy, and even­tu­ally end the Medi­caid ex­pan­sion while pro­pos­ing even deep­er cuts on the over­all pro­gram than the House le­gis­la­tion.

“Like the House bill, the Sen­ate bill is primar­ily an in­stru­ment to cut taxes massively for wealthy in­di­vidu­als and cor­por­a­tions while im­pos­ing massive Medi­caid cuts,” said Timothy Jost, a pro­fess­or at Wash­ing­ton and Lee Uni­versity School of Law. Al­though Jost said the private-in­sur­ance sec­tions were strik­ingly dif­fer­ent, he would not de­scribe them as “less mean.”

“I sus­pect that few­er people will lose cov­er­age but that their cov­er­age will im­pose such high cost-shar­ing as to be use­less for many,” he said.

In a state­ment, Sen. Lamar Al­ex­an­der praised the bill and touted pro­tec­tions for preex­ist­ing con­di­tions. “To be­gin with, the draft Sen­ate health care bill makes no change in the law pro­tect­ing people with pre-ex­ist­ing con­di­tions, no change in Medi­care be­ne­fits, and in­creases Medi­caid fund­ing—that’s Ten­nCare—at the rate of in­fla­tion,” the Ten­ness­ee Re­pub­lic­an said.

As for wheth­er Trump thinks the new Sen­ate bill is “mean,” White House spokes­wo­man Sarah Hucka­bee Sanders didn’t give a clear an­swer when asked by re­port­ers Thursday.

“I haven’t had that con­ver­sa­tion, but I do know that he made a state­ment earli­er that said this is a ne­go­ti­ation, and so he’s go­ing to con­tin­ue that pro­cess with both House and Sen­ate mem­bers and his ad­min­is­tra­tion un­til we get the best bill that we can, and that will be the one that he signs,” Sanders said.

Here are some of the key ele­ments of Sen­ate lead­er­ship’s re­peal and re­place of Obama­care:

Medi­caid

On one of the biggest stick­ing points for sen­at­ors—Medi­caid—the draft bill ap­pears to be try­ing to ap­pease some mod­er­ates while giv­ing a win to the con­ser­vat­ives.

The pro­pos­al would provide a three-year glide path when phas­ing out the Medi­caid ex­pan­sion start­ing after 2020. By 2024, levels of fund­ing would be re­stored to pre-ACA levels. Sen. Rob Port­man had wanted a phase-out, al­though he has been press­ing for a sev­en-year pro­cess.

At the same time, the Sen­ate bill pro­poses even deep­er cuts to the Medi­caid pro­gram than were in­cluded in the House le­gis­la­tion. The growth rate for the per-cap­ita cap on spend­ing start­ing in 2025 would be set at the gen­er­al in­fla­tion rate, which is something that Sen. Pat Toomey had been ad­voc­at­ing. This is a slower growth rate than what was in­cluded in the House bill.

But Sen. Susan Collins im­me­di­ately said this pro­vi­sion was a con­cern for her. “That trans­lates in­to lit­er­ally bil­lions of dol­lars, and it would res­ult in states cut­ting back eli­gib­il­ity or rur­al hos­pit­als go­ing un­der be­cause of un­com­pensated care, and those are ser­i­ous prob­lems,” she said.

The Amer­ic­an Academy of Pe­di­at­rics also called out this part of the Sen­ate bill. “The bill in­cludes mis­lead­ing ‘pro­tec­tions’ for chil­dren by pro­pos­ing to ex­empt them from cer­tain Medi­caid cuts,” the group said in a state­ment. “A ‘carve-out’ for chil­dren with ‘med­ic­ally com­plex’ health is­sues does little to pro­tect their cov­er­age when the base pro­gram provid­ing the cov­er­age is stripped of its fund­ing.”

Tax cred­its

After at­tend­ing a caucus brief­ing on the lan­guage, Sen. Bill Cas­sidy told re­port­ers he does think the le­gis­la­tion is less “mean,” point­ing to changes in the tax cred­its. Un­like in the House bill, which pro­posed a flat tax based on age, the Sen­ate pro­poses to have tax cred­its based on age, in­come, and geo­graphy, mak­ing them more gen­er­ous.

However, they will still be nar­row­er than the Af­ford­able Care Act’s tax cred­its. Un­der cur­rent law, people between 100 to 400 per­cent of the poverty level are eli­gible for the cred­its, but the Sen­ate pro­pos­al would lower that to 350 per­cent. The draft bill would also lower the ac­tu­ar­ial value for the bench­mark plan, which would likely lower the dol­lar value of the premi­um tax cred­its.

Cas­sidy did say he would have to eval­u­ate the gen­er­os­ity of the tax cred­its to de­term­ine wheth­er, as the Medi­caid ex­pan­sion is scaled back, lower-in­come people will no longer be able to af­ford in­sur­ance.

Sta­bil­iz­ing pro­vi­sions

The draft text re­leased Thursday in­cludes a short-term sta­bil­iz­a­tion fund to provide $50 bil­lion to­wards re­in­sur­ance in the first four years. For 2018 and 2019, $15 bil­lion would be provided, and then $10 bil­lion would be provided for the sub­sequent two years.

The le­gis­la­tion would also com­mit to fund­ing the cost-shar­ing-re­duc­tion pay­ments through 2019. In­sur­ance com­pan­ies have said these pay­ments are vi­tal to the sta­bil­ity of the mar­ket­place.

Waivers and state flex­ib­il­ity

In­stead of tak­ing up the struc­ture in the House bill—which had also al­lowed sick­er pa­tients to be charged more if they have a lapse in cov­er­age—the Sen­ate is look­ing to stream­line the pro­cess for waivers that already ex­ist un­der the ACA.

Seni­or GOP Sen­ate staff said Thursday that states would be able to use these tools, known as 1332 waivers, to make changes to the es­sen­tial health be­ne­fits that policies are re­quired to cov­er.

But Jost said that states would not be able to waive com­munity rat­ing re­quire­ments, as would be al­lowed un­der the struc­ture of the House bill in lim­ited cir­cum­stances. Un­der the AHCA, states could opt to al­low people with preex­ist­ing con­di­tions to be charged more if they had a lapse in cov­er­age.

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