Republicans’ efforts to repeal the Affordable Care Act (ACA), better known as Obamacare, looked a lot like a tall man trying to stay warm under a short blanket. When Republicans pulled in one direction, they lost coverage at the other end.
Hardline conservatives wanted to change regulations that define health insurance, such as a requirement that health plans cover maternity care. But when they got the concessions, the Republicans lost moderate members, who were concerned their constituents would lose basic services. That left the party leadership with no choice but to pull the bill or risk a humiliating defeat.
What would the bill have done if it had passed?
A late amendment to American Health Care Act struck at the heart of Barack Obama’s ACA, allowing states to define the health benefits that insurance policies must cover, called “essential health benefits”.
Just as they sound, these benefits define American health insurance. They require companies to cover the expense of having a baby, catching a cold, or breaking a leg.
Republicans argued that people should “choose” the coverage they want, but because health insurance is interconnected, such a policy was likely to harm all patients.
Think of the health insurance system as a tower of blocks – if you remove one from the middle, it makes the entire structure less sound. That is a good analogy for how removing essential health benefits works. Once one benefit is removed, it makes plans which continue to offer that benefit more expensive, meaning only really sick people will buy them – which further drives up the cost.
For example, before the protections were passed, 62% of insurance plans bought on the open market did not include maternity care, according to the health and human services department. Often, maternity care was offered as an expensive add-on. Another 34% of plans did not cover substance abuse (think: opioid crisis), and 9% did not cover prescriptions (remember that cold?).
That kind of federal plan could be hard for states to decide on by January 2018, and could tempt them instead to certify “bare bones” plans as eligible for federal tax credits.
With the essential health benefits gutted, some experts believed insurance companies would have an incentive to offer a narrower list of benefits. Why?
Because Republicans maintained a requirement that insurance companies sell policies to even very sick people. Experts believed that would push companies to offer skimpy plans, to keep sick people off their rolls.
Imagine a world in which some health plans did not cover chemotherapy. Plans that that did would be much more expensive, because people who had cancer in the past, or whose family had a history of cancer, would be more likely to sign up and use those services.
The effect would be that so many sick people would sign up, the cost of coverage would increase for everyone under that plan.
But wouldn’t people still get help to buy insurance?
Yes – and that was one of the reasons the health plan was always going to be difficult for a broad base of Republicans to support. Giving Americans tax credits to buy health insurance looked to conservatives too much like Obamacare, while huge overhauls to Medicaid – public health insurance for the poor – left moderate Republicans worried about constituents who depend on those services.
Further, Republicans’ last-minute amendments actually increased the price tag of their bill, without insuring more Americans. A Congressional Budget Office analysis found that the changes still left 24 million Americans without insurance and reduced savings over the next decade, from $337bn in the first draft, to just $150bn.
The age tax
On the moderate end, the very powerful American Association of Retired Persons was upset at what it called the “age tax”. That was a plan to allow insurance companies to charge Americans aged over 50 five times more than the young.
Combined with Republicans’ plans to offer less financial help to the poor, it meant a 64-year-old earning $26,500 per year would pay $12,900 more every year for their insurance. Republicans added an $85bn slush fund to the bill to try to counter these costs, but it was unclear how much that might have helped older Americans. Currently, insurance companies are allowed to charge older Americans three times more than the young.
Poverty penalties
Under the Republican plan, the less money you made, the worse off you would be. An analysis by the Tax Policy Center found that people who make less than $10,000 per year would have lost $1,400 per year because of cuts to Medicaid. People earning between $50,000 and $75,000 would have seen a small tax break of about $60.
However, the very poorest would probably suffer the most. A vast $880bn cut to Medicaid would result in 14 million fewer people using the service, Congressional analysts found.
By contrast, rich Americans would have seen a significant tax benefit. People who earn $200,000 per year or more would see an average tax break of $5,640, or about 1.1% of their income. Nearly all of that is from tax breaks Republicans included in the bill.
But wouldn’t this bill spur competition?
Some analysts think it would, especially for young people. But it would still leave many more people, 52 million by the end of the decade, uninsured.
That is not just an inconvenience. Lack of health insurance could result in more than 44,000 deaths per year, researchers at the American Journal of Public Health found. That is more than kidney disease causes.
(TheGuardian US)
