Remember in the bad old days before the Affordable Care Act, when those who bought individual plans on the private market faced unpleasant surprises – like finding at out very inopportune times that their plans didn’t cover hospitalization or maternity care, or that they’d reached a lifetime limit and their insurer wouldn’t pay for any more care at all? When dysfunctional insurance markets meant individual coverage was effectively impossible to purchase for all but the healthiest or wealthiest? If Senate Majority Leader Mitch McConnell has his way, we’ll be going back to those hated conditions, but with the added burden of deep Medicaid cuts and other provisions that are awful for public health.
As you might recall, last month McConnell presented the “Better Care Reconciliation Act,” which contained several deeply problematic provisions, including fundamental changes to the Medicaid program that would cut it by more than one-third by 2036. All Democrats and several Republicans in the Senate opposed the bill, so McConnell canceled a scheduled vote and started cutting deals. The updated BCRA debuted on July 13th and, in keeping with his unprecedented speed and secrecy on this legislation, McConnell wants a vote on it by the end of the month.
The Cruz amendment and the individual market
From the side of the party that thought the bill didn’t go far enough in undoing the ACA, Senator Ted Cruz (R-Texas) proposed an amendment that would allow insurers to sell non-ACA compliant plans as long as they also sold at least one compliant plan in the same market. (Compliant plans would still have to cover the essential health benefits each state requires and couldn’t charge higher premiums based on pre-existing conditions, among other rules.) This would lead to each market having one set of relatively affordable plans for people with few healthcare needs (which might hold unpleasant surprises for those who get injured or develop new health conditions), and a set of increasingly unaffordable plans for those with chronic conditions, pregnancies, or advanced age – in other words, the problematic conditions the ACA was designed to address.
The Senate bill would also modify the ACA’s premium subsidies. Instead of using 400% of the federal poverty level as a cutoff, the new bill sets the income limit for subsidies to 350% FPL, which is about $42,000 for a single person and $85,000 for a family of four. Importantly, the subsidies would also be pegged to lower-value plans. Under the ACA, subsidies are designed to let people afford a silver plan, which covers an average of 70% of enrollees’ healthcare costs. The BCRA would peg subsidies to plans that cover only 58% of costs, so low-income enrollees might be able to afford premiums but would face substantially higher deductibles and other forms of cost-sharing.
Within a few years of this system taking effect, we’d see a few things in the individual market. Young, healthy people who remained healthy and avoided pregnancy would be paying lower premiums. Those in the low-premium plans who were injured or developed expensive health conditions might find out that their plans don’t cover the services they now need, and some of them would then look for an ACA-compliant plans. Premiums for compliant plans would “skyrocket” (in the words of leading insurers) as the healthier people opted for non-compliant plans. People with incomes under 350% FPL could get federal assistance for premiums – but then when they actually needed care they would probably struggle to pay deductibles of $6,000 (i.e., one-fifth of the annual income of someone earning $30,000). Fewer people would be getting subsidized insurance, and it would be worse insurance. But, because the subsidized ACA-compliant plans would be attracting the consumers with the greatest health needs, their premiums would be rising – and likely result in higher costs to the federal government.
Band-aids for gaping wounds
The revised BCRA keeps some of the taxes the earlier version cut, though it still eliminates $657 billion in taxes. The additional revenue from the rescinded cuts allows for a $45 billion pot to address opioid use disorder and a $182 billion pot (larger than in the previous version) for “state stability and innovation programs” that could include premium support. However, new money for opioid use disorder treatment will be of limited use if millions of people are losing their Medicaid coverage at the same time, and $186 billion won’t go all that far in insurance markets facing death spirals. And, as the Center on Budget and Policy Priorities’ Aviva Aron-Dine points out, most of the stabilization money is slated to go directly to insurers (who will probably find it inadequate), so states will only get about $50 billion between them as they face millions more people without insurance and sharply dropping federal Medicaid contributions.
Many of the Senators who opposed the BCRA in its first incarnation cited concerns about Medicaid funding. These concerns are entirely appropriate given that the Congressional Budget Office estimates that federal contributions to this federal-state program will be 35% lower by 2036 than they would be under current law. These massive cuts remain in the bill, as does the one-year elimination of payments to Planned Parenthood providers, who provide care — including cancer screenings and STI testing, as well as contraception — to a large share of the Medicaid population.
One gesture that the July 13th BCRA makes towards states worried about starkly inadequate federal Medicaid contributions is to allow Medicaid program expenditures in response to public health emergencies to be exempt from the spending caps. But, as Sara Rosenbaum (disclosure: a colleague at the George Washington University Milken Institute School of Public Health) explains at the Health Affairs Blog, this exemption is only an illusion:
First, the period of exemption lasts only five years, from January 1, 2020 through December 31, 2024. Emergencies happening after this date won’t qualify for the spending adjustment. Second, the bill provides no additional federal spending during the period of a declared emergency. The draft simply allows states to eventually qualify for additional federal funding in the years following the emergency if they can prove to the Secretary that their spending on the affected population went up compared to prior years and then only for immediate emergency costs. What state will have the money in advance? And what state will be able to take a chance on spending more given the purely speculative nature of whether an emergency will be declared and emergency expenditures recognized?
Third, states would receive no additional funding ever unless the HHS Secretary actually declares an emergency in the affected portion of the state or for the state’s affected populations. Many public health threats may not rise to a level that triggers a formal Secretarial determination, and the Secretary may be inclined not to make such a determination because of other, spillover effects that come with such a determination, such as the elevated demand for other types of resources.
Fourth, the additional amount of federal funding made available would be limited to the difference between what the state spent on the population in connection with the emergency and the state’s previous expenditures for the same population. Expenditures to cope with the emergency aftermath would not count, and of course these expenditures likely would not occur simultaneously with the emergency expenditures. For example, Zika has triggered emergency expenditures aimed at preventing the spread of the virus, but the true costs of Zika will roll out slowly in the form of babies left permanently and severely disabled by the virus.
The bill’s elimination of the Prevention and Public Health Fund is another blow to our health system’s ability to respond to infectious disease outbreaks and other public health emergencies.
With Senators Rand Paul (R-Kentucky) and Susan Collins (R-Maine) seeming fairly firm in opposing the BCRA, McConnell can afford to lose only one more vote. Senators Shelley Moore Capito (R-West Virginia), Dean Heller (R-Nevada), Lisa Murkowski (R-Alaska) and Rob Portman (R-Ohio) have expressed the most substantial concerns about the bill’s massive Medicaid cuts, and the new BCRA contains provisions that speak – however weakly – to their concerns. A formula for apportioning funds to states would benefit only Alaska; the opioid money would presumably be welcome in Ohio and West Virginia, where the opioid epidemic has been particularly devastating; and Heller had a “very, very good” conversation with McConnell after the revised bill’s release.
Any provisions that McConnell offers these Senators while maintaining the devastating changes to the Medicaid program will amount to fig leaves that give these Senators an excuse to put politics ahead of public health.