One of the ostensibly brilliant ideas in Senate Republicans' plan to repeal the Affordable Care Act is to move low-income families from Medicaid to the private insurance marketplace, allowing them to use the premium subsidies provided by the ACA.
But there's a catch, according to a new analysis of the proposal. For many low-income families, the marketplace premiums and deductibles combined would amount to more than their total income, even after subsidies. Moreover, despite shifting more of these costs to enrollees, the change would cost the federal government more than Medicaid.
To put it simply, the Senate plan would present many low-income families with no option but to buy useless insurance, and wouldn't save the federal government a dime.
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The analysis comes from health policy experts Deborah Bachrach and Patricia Boozang at the Los Angeles-based law firm Manatt, Phelps & Phillips. It reaches the same conclusion as other analyses of the Senate GOP's "Better Care Reconciliation Act," the repeal plan that Senate Majority Leader Mitch McConnell (R-Ky.) is attempting the shove through his chamber with voting beginning as early as next week.
Loren Adler and Paul B. Ginsburg of the Brookings Institution, for example, found that the bill would lead to "a large increase in average annual healthcare costs for those with lower incomes, whatever their age and family type." But they point out that the increase would be especially sharp for older people. That's because the bill eliminates subsidies that help pay down deductibles and co-pays, which tend to kick in at a higher rate for older enrollees, and because the bill would allow premiums for older people to be pegged higher than the ACA allows, in relation to those for younger insurance buyers.
The Manatt study asks, "Can people losing Medicaid under BCRA afford marketplace coverage?" Its answer is "no."
Neither analysis thinks much of a late-breaking tweak to the Senate bill that would create a $200-billion fund for the 31 states that expanded Medicaid under the ACA, known as Obamacare. Seema Verma, the Trump-appointed head of the Centers for Medicare and Medicaid Services, has been trying to assure reluctant GOP senators from expansion states that the money could be used to defray low-income families' out-of-pocket costs. But that 10-year infusion would not be nearly enough to make up for the more than $750 billion the Senate bill would take out of Medicaid funding over the same period.
Moreover, the last-minute backing-and-filling has raised new questions about the Republicans' goal in healthcare policy: Is it to find a way to genuinely improve the lot of Americans who buy health insurance on the individual market, or merely to find enough votes to push some sort of repeal narrowly across the finish line in the next few legislative days?
The incoherence of the emerging repeal bill suggests the latter. As my colleague Noam Levey reports, the confusion is "feeding a growing sense of chaos on Capitol Hill." Senate Republicans, who hold a razor-thin 52-48 majority, "are openly fretting about the lack of information about legislation that could leave anywhere from 22 million to 32 million more Americans without health insurance."
The Manatt analysis raised the same point. "Why replace an existing system that works reasonably well," Bachrach and Boozang ask, "with a new, temporary patchwork of pools, grants and waivers that costs more and falls short of what the Medicaid program already does?"
Under the ACA, households with incomse up to 138% of the federal poverty limit — or about $34,000 for a family of four — are eligible for Medicaid coverage in the 31 states that chose to accept the expanded program. In those states, premium subsidies are available to households over that threshold and up to 400% of the poverty limit. In non-expansion states, the subsidies are available to households with incomes between 100% and 400% of the poverty limit. The federal government covers more than 90% of the cost of the expansion, with the states paying the rest. The ACA also provides subsidies to help cover deductibles and co-pays to households earning less than 250% of the poverty line (or $61,500 for a family of four).
The Senate bill would eliminate the expansion and the deductible subsidies, while making households with incomes below 100% of the poverty line eligible for premium subsidies. Another provision, meanwhile, would raise the level of deductibles and co-pays and lower the value of premium subsidies for low-income families. That provision would benchmark the subsidies not to silver-level plans, which cover an average 70% of enrollees' costs, but to a plan covering only 58% of costs. Because all plans under the ACA must provide certain minimum benefits, the lower-value plans would have higher deductibles. Manatt calculated that the average family deductible would be about $12,393.
When Manatt crunched the numbers, it found that for households with income below 75% of the poverty level, or $18,450 for a family of four, the average of premiums, deductibles and other out-of-pocket expenses would reach 104% of their total income — even after premium subsidies. For families or individuals with slightly higher incomes, the costs would still be crippling. Those at 100% of the poverty line, or $24,600 for a family of four, would be paying about four-fifths of their income in premiums and out-of-pocket expenses, and those at 133%, or $32,718, would be paying nearly two-thirds of their income.
The figures underscore the stark reality of the Senate GOP's desperate push to repeal the ACA: For millions of Americans, it presents a dire threat to their health and their pocketbooks.