Any legislation that clears Congress under the repeal and replace banner needs to do four things:
- It needs to rescue millions of people in ACA exchange plans now who are at risk of losing their coverage because of ObamaCare’s multiple failures.
- It must provide states more flexibility in managing their Medicaid programs so they can better serve their neediest citizens.
- It needs to provide a system of subsidies for people who need help in purchasing coverage but who aren’t offered health insurance at work and who are not eligible for public programs, especially Medicaid or Medicare.
- And it needs to return more authority to the states to oversee their health insurance markets, but with new flexibility and resources.
Both the House and Senate bills achieve these goals, albeit in somewhat different ways. The Senate learned from the response to the House bill that some adjustments needed to be made to get it passed and signed by the president. And Senate Majority Leader Mitch McConnell has led the effort to try to walk the incredibly thin line of accomplishing all of this through the tortured and limited reconciliation process which the Senate must follow to allow passage with a simple majority of 51 votes.
The Senate’s bill—The Better Care Reconciliation Act— would zero out the penalties for the despised individual mandate and the job-killing employer mandate. And it would also repeal the nearly $1 trillion in taxes in the ACA but with a re-trigger date of 2026 for the Cadillac Tax on high-cost health insurance plans.
The Senate bill would keep the basic structure of the tax credits in the ACA—adjusted for income but with subsidies capped at 350% of poverty rather than the current 400% level (which means a family of four with an income of up to $86,100 would be eligible for subsidies for health insurance premiums, rather than families making up to $98,400.)
The conservative policy community had argued for years that the federal government should provide refundable tax credits to help targeted populations to afford health insurance. We argued that people with job-based health insurance and those on public programs receive generous subsidies from the federal government for their health coverage, but people who aren’t eligible through either of those channels need help too if they can’t afford coverage on their own.
The ACA adopted refundable credits but suffocated an idea intended to stimulate equity, choice, and competition under tens of thousands of pages of rules and regulation. The Senate bill keeps the basic income-related structure of the ACA credits, but caps them at a lower level to provide more help for people with lower incomes and health needs.
The legislation presented to senators on Thursday would give states more flexibility, through changes to the existing Section 1332 of the ACA, to relax federal rules so states can escape the ObamaCare straightjacket and have more flexibility overseeing their health insurance markets. One thing we have learned from the ObamaCare experience is that the federal government is out of its league in regulating something as regional and even local as health insurance.
States also could ask for waivers to mesh tax credits, Medicaid money, and even Children’s Health Insurance program funds to provide better coverage for families, rather than having them siloed into different programs, and they could therefore spend taxpayer dollars more efficiently. There are significant efficiencies that could be gained through state flexibility that should calm fears about reductions in the rate of growth of Medicaid spending.
The Left is, predictably, apoplectic about the Senate bill, warning of dire catastrophes if it passes. But they know, and some even acknowledge, that it’s not working and changes must be made.
The Senate bill is not a complete “root and branch” repeal of the ACA because, well, members of Congress and governors don’t want that since millions of people would lose health coverage if they did a simple repeal. They are responsible for governing now and must also put in place a safety net for those currently on coverage and create a new platform for improvements to our health sector going forward.
The Senate bill is only 142 pages of legislative text, versus well over 2,000 pages in ObamaCare. This is a more modest and restrained bill, but it does what it needs to do to create a new platform for coverage and important new flexibility for the states. Congressional leaders promise more health reform bills going forward—targeted bills that could gain bi-partisan support and possibly a 60-vote filibuster-proof majority in the Senate. But that can’t start, and tax reform can’t start, until repeal and replace legislation is passed.