Understanding the proposal for replacing Obamacare
On Monday night, House Republicans released their plan to repeal Obamacare and reshape the US health insurance system.
The proposal reaches into virtually every corner of the health care marketplace, with tweaks and innovations likely to affect millions of Americans. It would rescind the individual mandate, defund planned parenthood, cut taxes for the wealthy, reduce the subsidies available to help families afford coverage, and allow insurers to offer less comprehensive plans.
And that’s just the beginning.
As yet, the Congressional Budget Office hasn’t had a chance to provide a definitive estimate of the costs and consequences, but here are some of the most far-reaching elements.
Goodbye mandate, hello continuous coverage
Gone is the deeply unpopular Obamacare rule requiring all Americans to purchase health insurance. In its place, though, Republicans have introduced their own not-quite-mandate, a “continuous coverage” rule saying that anyone who goes without health insurance for 63 days or longer can be charged a 30 percent penalty on their next policy.
There’s a reason Republicans weren’t able to do away with penalties altogether. Health insurance markets can’t work without them. People simply wait until they’re sick before buying a policy, and that drives the cost of insurance way up.
Instead of subsidies . . . different subsidies
Under Obamacare, low-income families received large subsidies to help them purchase coverage. Republicans have a slightly different vision. They want to offer less-generous subsidies, but to a wider range of people.
Rather than base their subsidies on income, they use age. Older people get more, younger people get less. There’s a cut-off for high-earning individuals and families, but even so the Republican proposal is a much a better deal for middle-class families, and a worse arrangement for the poor.
Medicaid expansion becomes Medicaid contraction
Obamacare gave states a strong incentive to expand Medicaid, which ultimately helped millions of low-income Americans get insurance.
Figuring out what to do about Medicaid has become one of the thorniest issues for Republicans, because a number of Republican governors would prefer to maintain the new arrangement.
Under the house proposal, however, the expensive expansion would be frozen as of 2020, and then gradually rolled back. Instead, the federal government would alter the way it funds Medicaid, introducing a formula nearly certain to result in substantial cuts over time.
Abortion and women’s health
Despite warnings that defunding Planned Parenthood would be an unnecessary and politically volatile addition to their Obamacare repeal plan, House Republicans decided to include a provision preventing Medicaid recipients from accessing health care at Planned Parenthood clinics for one year. That would not only deprive the organization of vital funds, it would also make it harder for millions of women to get essential reproductive care.
Separately, people who receive subsidies under the House Republican plan would be blocked from purchasing any health insurance policy with abortion coverage. And given the nature of the individual health insurance market setup, that ban could ultimately make abortion coverage scarce even for people who aren’t getting subsidies.
Insurance ain’t what it used to be
Obamacare introduced minimum requirements for all insurance plans, including limits on out-of-pocket costs and coverage for specific areas, like mental health. House Republicans would loosen these standards, allowing for a broader range of plans, including some that could be pretty bare-bones.
This is one of the reasons it’s hard to predict how many people might lose insurance under the House plan. Yes, subsidies are going down — which would make it harder to afford coverage. But insurers will be allowed to offer less-thorough policies, which could be cheaper to purchase.
Some things are staying the same.
Many of Obamacare’s most popular features are staying put. Insurers will still be prevented from discriminating against people with preexisting conditions. Spending caps will remain in place. And young 20-somethings will be able to stay on their parents’ insurance.
Plus, even if this proposal does ultimately become law, it will take time to phase in. A lot of the biggest changes are set to take effect in 2020, which could make for an interesting political dynamic in that pivotal election year.
What happens next?
This plan has miles to go before it reaches President Trump’s desk. First, it has to make it through committee, then the full House — not to mention the Senate, where several Republican lawmakers have already begun to raise concerns.
But with the release of this bill, we now know what a modern, Republican-forged health care system looks like. All that remains is to find out whether it can actually pass.