Senate Health Care Bill Includes Deep Cuts to Medicaid

Posted on June 23, 2017

The New York Times
By ROBERT PEAR and THOMAS KAPLAN
JUNE 22, 2017

WASHINGTON — Senate Republicans, who for seven years have promised a repeal of the Affordable Care Act, took a major step on Thursday toward that goal, unveiling a bill to make deep cuts in Medicaid and end the law’s mandate that most Americans have health insurance.

The 142-page bill would create a new system of federal tax credits to help people buy health insurance, while offering states the ability to drop many of the benefits required by the Affordable Care Act, like maternity care, emergency services and mental health treatment.

But the measure landed in rough seas ahead of a vote that Senator Mitch McConnell of Kentucky, the majority leader, wants next week. Four conservative senators, Rand Paul of Kentucky, Ted Cruz of Texas, Mike Lee of Utah and Ron Johnson of Wisconsin, announced that they would oppose it without changes — more than enough to bring it down.

“It does not appear this draft as written will accomplish the most important promise that we made to Americans: to repeal Obamacare and lower their health care costs,” the four wrote in a joint statement.

Other Republican senators, like Dean Heller of Nevada and Rob Portman of Ohio, expressed their own qualms, as did AARP, the American Hospital Association, the American Cancer Society Cancer Action Network and the Association of American Medical Colleges.

“We are extremely disappointed by the Senate bill released today,” the medical school association wrote. “Despite promises to the contrary, it will leave millions of people without health coverage, and others with only bare-bones plans that will be insufficient to properly address their needs.”

Once promised as a top-to-bottom revamp of the health bill passed by the House last month, the Senate bill instead maintains its structure, with modest adjustments. The Senate version is, in some respects, more moderate than the House bill, offering more financial assistance to some lower-income people to help them defray the rapidly rising cost of private health insurance.

But the Senate bill would make subsidies less generous than under current law. It would also lower the annual income limit for receiving subsidies to cover insurance premiums to 350 percent of the poverty level, or about $42,000 for an individual, from 400 percent.

Older people could be disproportionately hurt because they pay more for insurance in general. Both chambers’ bills would allow insurers to charge older people five times as much as younger ones; the limit now is three times.

The Senate measure, like the House bill, would phase out the extra money that the federal government has provided to states as an incentive to expand eligibility for Medicaid. And like the House bill, it would put the entire Medicaid program on a budget, ending the open-ended entitlement that now exists.

It would also repeal most of the tax increases imposed by the Affordable Care Act to help pay for expanded coverage, in effect handing a broad tax cut to the affluent in a measure that would also slice billions of dollars from Medicaid, a program that serves one in five Americans, not only the poor but also almost two-thirds of people in nursing homes. A capital-gains tax cut for the most affluent Americans would be retroactive to the beginning of this year.

The bill, drafted in secret, is likely to come to the Senate floor next week, and could come to a vote after 20 hours of debate.

If it passes, President Trump and the Republican Congress will be on the edge of a major overhaul of the American health care system — about one-sixth of the nation’s economy.

The premise of the bill, repeated almost daily in some form by its chief author, Mr. McConnell, is that “Obamacare is collapsing around us, and the American people are desperately searching for relief.”

Mr. Trump shares that view, and passage of the Senate bill would move the president much closer to being able to boast about the adoption of a marquee piece of legislation, a feat he has so far been unable to accomplish.

Democrats and some insurers say Mr. Trump has sabotaged the Affordable Care Act, in part by threatening to withhold subsidies paid to insurers so they can reduce deductibles and other out-of-pocket costs for millions of low-income people.

And President Barack Obama, who has been hesitant to speak up on political issues since leaving office, waded into the debate on Thursday, saying the Senate proposal showed a “fundamental meanness.”

“The Senate bill, unveiled today, is not a health care bill,” Mr. Obama wrote on his Facebook page. “It’s a massive transfer of wealth from middle-class and poor families to the richest people in America. It hands enormous tax cuts to the rich and to the drug and insurance industries, paid for by cutting health care for everybody else.”

In a message to his supporters, Mr. Obama urged people to demand compromise from their lawmakers before senators vote on the Republican bill next week.

In the Senate, Democrats are determined to defend a law that has provided coverage to 20 million people and is a pillar of Mr. Obama’s legacy. The debate over the repeal bill is shaping up as a titanic political clash, which could have major implications for both parties, affecting their electoral prospects for years to come.

Mr. McConnell faces a great challenge in amassing the votes to win Senate approval of the bill, which Republicans are trying to pass using special budget rules that would allow them to avoid a Democratic filibuster. But with only 52 seats, Mr. McConnell can afford to lose only two Republicans, with Vice President Mike Pence breaking the tie.

Democrats have assailed Republicans for putting the bill together without a single public hearing or bill-drafting session.

And Mr. Trump has been only fitfully helpful. He cheered on passage of the House version, then told senators it was “mean.” On Thursday, a White House spokeswoman, Sarah Huckabee Sanders, declared, “I don’t believe that the president has specifically weighed in that it’s right to cut Medicaid” — something the Senate bill decidedly does, as does the president’s proposed budget. Later, Mr. Trump tweeted that he was “very supportive” of the Senate bill.

Republican leaders still must contend with internal divisions that will be difficult to overcome. Numerous Republican senators from states that expanded Medicaid are concerned about how a rollback of the program could affect their constituents, and they face pressure from governors back home.

Some Republican senators, like Susan Collins of Maine, said they were waiting for an analysis of the bill to be issued soon by the Congressional Budget Office, the official scorekeeper on Capitol Hill.

The budget office found that the bill passed by the House would leave 23 million more people without insurance in a decade.

Under the Senate bill, the federal government would continue paying crucial subsidies to health insurance companies through 2019, alleviating the uncertainty caused by litigation and by mixed signals from the Trump administration. Without this money, many insurers have said, they will sharply increase premiums or pull out of the marketplaces in many states.

The Senate bill would also cap overall federal spending on Medicaid: States would receive a per-beneficiary allotment of money. The federal payments would grow more slowly than under the House bill starting in 2025. Alternatively, states could receive an annual lump sum of federal money for Medicaid in the form of a block grant.

State officials and health policy experts predict that many people would be dropped from Medicaid because states would not fill the fiscal hole left by the loss of federal money.

“The Senate bill creates an illusion of being less draconian than the House bill, but is arguably more so” on Medicaid, said Sara Rosenbaum, a professor of health law and policy at George Washington University.

The Senate bill would make it much easier for states to opt out of insurance standards in the Affordable Care Act, including the requirement for insurers to provide certain “essential benefits.”

Republicans said the bill would still guarantee access to insurance for people with pre-existing conditions. But consumers could be exposed to new medical costs if, for example, insurers did not have to cover certain expensive new drugs or medical procedures.

“An individual with a pre-existing condition could be insured, but the services needed to treat that condition might not be covered because of a waiver,” said Timothy S. Jost, an emeritus professor of health law at Washington and Lee University.

The Senate and House bills would both provide tax credits to help people buy health insurance, but Senate Republicans said they tried to direct more of the assistance to lower-income people. Under the House bill, the tax credits would be based mainly on a person’s age. Under the Senate bill, they would be based on a person’s income and age, as well as local insurance costs.

The Senate bill, like the House bill, would cut off federal Medicaid payments to Planned Parenthood for one year. The money reimburses clinics for birth control, cancer screenings and other preventive care. About half of Planned Parenthood patients are on Medicaid.

Also like the House measure, the Senate bill would repeal taxes imposed on high-income people by the Affordable Care Act, including a payroll tax increase that helps finance Medicare.

The bill would delay a tax on high-cost employer-sponsored health insurance — the so-called Cadillac tax — to 2026. It is currently scheduled to take effect in 2020. Employers and labor unions detest the tax and would have nearly a decade to try to kill it.

The Senate bill would provide $50 billion to help stabilize insurance markets and hold down premiums from 2018 through 2021. The money would be distributed by the federal government to insurance companies that apply. The bill would provide $62 billion in grants to states for similar purposes from 2019 to 2026.

In addition, the Senate bill would provide $2 billion next year in federal grants to help states respond to the opioid crisis.

The bill would generally prohibit consumers from using federal tax credits to help buy insurance that includes coverage for abortions. Democrats plan to challenge this provision as a violation of Senate rules being used to speed passage of the repeal bill.