Parsing the Senate Healthcare Bill

On January 8 of this year, Senate Majority Leader Mitch McConnell went on Face the Nation and said this about the Affordable Care Act (ACA):

Well, what you need to understand is that there are 25 million Americans who aren’t covered now. If the idea behind Obamacare was to get everyone covered, that’s one of the many failures. In addition to premiums going up, co-payments going up, deductibles going up. And many Americans who actually did get insurance when they did not have it before, have really bad insurance that they have to pay for and the deductibles are so high that it’s really not worth much to them. So it is chaotic. The status quo is simply unacceptable. And at the risk of being repetitious, if Hillary Clinton had been elected, we’d be revisiting Obamacare.

The criticisms McConnell leveled at the ACA were accurate and fair. It did not achieve universal coverage. Premiums, co-pays, and deductibles are too high for many Americans to afford. Even some people who receive heavily subsidized insurance find that the insurance covers too little to be worth much to them. And, had Hillary Clinton won the election, she would have looked to make adjustments to the law.

McConnell’s position was, and still is, that Obamacare ought to be repealed and replaced with something else. Now that his party controls the Senate, the House of Representatives, and the White House, he has the opportunity to do just that.

On Thursday, McConnell came forward with the Better Care Reconciliation Act (BCRA). The BCRA has a lot in common with the American Health Care Act (AHCA) that passed the House last month. Most significantly, like the House bill, it makes all of Obamacare’s problems, as highlighted by McConnell, worse.

The BCRA differs from the AHCA in a couple major ways. First, it does away with the AHCA’s age-based tax credits and returns to Obamacare’s income-based subsidy model (though the subsidies under the BCRA are less generous than they were under Obamacare). Second, it pushes the sunset on the Medicaid expansion back a year (to 2021), and converts the program to a per-capita cap system (rather than the open-ended commitment the government honors currently). Finally, as of yet, it contains no mechanism to nudge people to buy insurance. It repeals Obamacare’s individual mandate and replaces it with nothing.

Other than that, the two bills are pretty similar. Both allow states to waive Obamacare’s insurance regulations if they want, both repeal Obamacare’s taxes on wealthy Americans, and both increase the ability of insurance companies to offer skimpier plans. Neither bill repeals Obamacare, per se, but they do make the law much weaker and less generous.

The Congressional Budget Office (CBO) has yet to score the bill, but it isn’t hard to imagine some of its effects. Medicaid will be cut drastically over the next decade and beyond, as the expansion is going away, and the per-capita cap will almost certainly lead states to make changes to the eligibility rules governing the program. Poorer people eligible for Obamacare’s subsidies will receive money tied to less generous plans than they did under Obamacare. States will be able to opt out of the insurance regulations, leading to the proliferation of plans that cover less. And, perhaps most importantly to Republicans, it contains a giant tax cut for the wealthiest Americans.

To be clear, this bill will almost certainly result in a coverage loss (likely leading to higher premiums as healthy people leave the marketplace), and will mean that more people find themselves on plans that have higher deductibles and higher co-pays than they did under Obamacare. Mitch McConnell said that, under Obamacare, these were big problems. Mitch McConnell was lying.

Like the AHCA, the BRCA seeks to solve problems that very few people see as real problems. Most people do not think the wealthy pay too much in taxes. Most people do not think that the answer to Medicaid’s problems is to cut it massively. And finally, most people are not clamoring for less generous health insurance. There are conservative ideologues who think these things, but the general public does not. If the average voter thought these things, then Republicans would not be lying about what their bill does. There would be no need.

We will know more when the CBO scores the bill, but it does not take a policy wonk with an advanced degree to understand the vision of this bill. The vision is simple: people should pay more for their own healthcare and the government should pay less, so that wealthy Americans can pay less in taxes. Few Republican lawmakers will say this, but it’s right there for anyone who can read. They are just hoping nobody notices.

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