10 Takeaways From Senate’s New Trump-Care Bill

The Senate Republican leaders have now drafted their version of “Obamacare Repeal and Replace” otherwise known as Trumpcare or, formally, the “Better Care Reconciliation Act” or BCRA.

Here are OTW’s Top Ten Takeaways.

10. It’s an Amendment, Not a Repeal

Unlike the House’s American Health Care Act (AHCA) the Senate’s bill is essentially a GOP amendment to the existing Affordable Care Act (ACA). In fact, had the Republicans sought to amend the ACA instead of fighting it back in 2009, this is the kind of amendment they would likely have offered. The BCRA rolls back most of the tax hikes of the ACA, cuts the ACA’s spending rate, erases the individual and employer mandates and gives states more control over implementation of the healthcare plan.

  9. Senate GOP Kept the ACA Tax Credit Framework

The House GOP’s AHCA repealed the ACA’s tax credit scheme, which was adjusted based on household income and replaced it with an age-adjusted tax credit. That attracted significant criticism since it was not scaled to income, which appeared to place an excessive burden on elderly patients. The Senate chose to keep the ACA premium tax credit structure, but added an age-adjustment piece starting in 2020, tied the credits to higher-deductible insurance plans and allowed taxpayers below 100% of the Federal Poverty Line (FPL) who are ineligible for Medicaid to get the credits too.

8. Senate BCRA Will Cost More Than the House AHCA

The Senate GOP’s decision to provide tax credits for insurance enrollment for persons below 100% of the Federal Poverty Line. That means higher federal spending as compared to the House proposal. Nineteen states did not expand Medicaid under the ACA. Millions of people whose incomes were below the poverty line were therefore left without health insurance. Both Senate and House bills cut federal support for Medicaid in future years. As a result, those people would become eligible for this tax credit, which, unlike Medicaid, is financed entirely by the federal government.

 7. Older Americans Pay More

The Senate bill proposes that people with incomes at the 2017 federal poverty level would pay a maximum of 2% of their income, or $23.10 a month for coverage. The bill also incentivizes people to shop for insurance by allowing them to save more if they purchases a plan which is cheaper than the median price of a plan in the market.

Since the tax credit is tied to age, older persons will pay higher premiums. People in their 20s with incomes at 350% of the FPL would pay a maximum of 6.4% of their income in premiums, which equals $260 a month; a person in his 60s with an income at the same level would pay a maximum of 16.2% of his income, or $655 per month.

 6. Less Money for Medicaid

The Senate bill, like the House AHCA, rolls back Obamacare’s enhanced federal matching funds for Medicaid over the period 2020 to 2024. States would be allowed to maintain enrollment for the population covered by the ACA, but at the regular, rather than enhanced, federal match rates.

Medicaid matching funds would be indexed to medical services sector inflation through 2024, and then by the consumer price index afterwards. Medicaid spending has typically grown faster than general inflation. Indexing the per-capita limits to the CPI from 2025 and beyond would lower long-term federal spending on the program.

 5. Five New Categories of Medicaid Enrollees

The Senate bill sets Medicaid federal matching funds to new per-person limits for five different categories of Medicaid enrollees. The per-person limits are based on state-specific pattern of spending for these populations in recent years. The Senate bill also allows block grants for non-elderly and non-disabled populations in lieu of per-capita spending limits. But the block grants would run for a minimum of five years and be indexed to the Consumer Price Index (CPI) after the first year.

 4. Insurance Cost-Sharing Through 2019

The Senate bill provides funding for the ACA’s cost-sharing reduction program through 2019. That addresses the immediate financial crisis facing insurers and buys time for federal and state governments to make further changes to stabilize the exchange market for the long run.

 3. Other Insurance Stability Measures

The Senate bill includes $50 billion to fund programs that lower the risk on insurers of participating in the individual insurance market. There is also a separate $62 billion, eight-year fund for the states which could be used to help lower premiums for high-cost insurance enrollees and to generally stabilize and lower premium payments in the non-group market. States would be required to provide matching payments to receive these federal funds.

 2. No Pre-existing Conditions Allowed

The ACA’s community rating, which requires that individuals with pre-existing conditions be charged the same premium as those without such conditions, remains intact. Although states are granted new flexibility to modify insurance market rules and essential health benefits.

 1. More Insurance Coverage Than the House, but Less Than Obamacare

The Senate bill does provide higher subsidies for insurance enrollment for low-income households than the AHCA. But it does not require people to obtain health insurance. The bill repeals the ACA’s individual mandate but does not include the House provision that imposes a one-year, 30% premium surcharge on individuals applying for coverage who failed to remain continuously insured.

The Senate GOP is spending more for insurance coverage than the House bill, but less than Obamacare. The Congressional Budget Office (CBO), which concluded that the House’s AHCA would cut insurance for approximately 24 million Americans, has the Senate BCRA and should provide a scoring shortly.

The smart money says that the Senate version of Trumpcare will be less onerous for Obamacare insurees than the House’s AHCA.