In an ongoing effort to pass health reform, Senate leadership are out with a new version of the Better Care Reconciliation Act. In some ways, this bill is an improvement: The latest version includes more freedom for insurance companies to offer (and for consumers to buy) insurance plans that don't meet all of Obamacare's requirements. Therefore, these plans would be more affordable. It also includes a fund to help insurance companies keep costs low for those with medical conditions and costly claims. And it would let people use Health Savings Accounts to pay for coverage.
Unfortunately, this new version of the bill keeps some Obamacare taxes in place, meaning $230 billion more in taxes than in the previous version.
The change that would allow insurance companies to sell more basic plans (perhaps the most substantive change to the latest bill) is the ultimate result of efforts from conservative Sens. Ted Cruz, R-Texas, and Mike Lee, R-Utah. The senators have argued that no one should be forced to buy coverage above and beyond what they want or need. This change would effectively repeal Obamacare's "essential health benefits" (the federal rules on what insurance plans must provide).
Importantly, state regulations on insurance plans would still dictate just how basic plans could be. And as a compromise, Cruz and Lee would only allow insurers to sell basic plans if they also sold at least one plan with all of Obamacare's bells and whistles.
This would offer some relief to the millions of people who have borne the burden of high premiums under Obamacare, thus providing them with an escape chute from at least some of the law's onerous and costly rules. The Congressional Budget Office will score the latest version of the Senate bill, and their score should include some estimated effects on premiums. When the CBO scored the House version of the bill, the agency said that premiums would be roughly 20 percent lower, on average, in states that chose to waive the essential health benefits. People would be paying less for less coverage, but this choice would be attractive to many.
Some have criticized the reform from Cruz and Lee, suggesting that letting consumers opt into skimpier insurance plans could destabilize insurance markets by segmenting them into healthier folks, who might choose the new plans, and sicklier folks, who because of their health conditions would prefer to stay in the more comprehensive Obamacare-compliant plans.
In response to this, a couple of points:
First, to a certain extent, healthy people have already left the Obamacare exchanges, which is the root cause of Obamacare's problems today. Today, healthy people who don't want to pay for overpriced Obamacare plans have only one other option: go uninsured and pay the penalty. The Cruz/Lee idea offers them a third option: to buy a more basic plan.
Second, the Senate bill also includes a fund to help insurance companies pay for "high-risk" individuals. There was a similar fund in the House bill, called the "Federal Invisible Risk-Sharing Program." Republicans need to do a better job explaining this. Basically, this program, or fund, acts as a protection for people who do have high medical claims, because it uses government funds to subsidize their costs.
Republicans have two ways to look at this. Conservative Republicans might see this as a "bailout" for insurance companies similar to the "market stabilization" programs in Obamacare. But, viewed another way, the fund in the Senate bill could simply represent the federal government funding a large high-risk pool, and high-risk pools are something Republicans have accepted, even promoted, in the past.
The Cruz/Lee addition to the Senate bill is an improvement that is likely to help bring other conservative Republicans to vote "yes" on the bill. There are other changes, too, like that health savings accounts could be used to pay for health insurance premiums. This would finally give all Americans a tax-advantaged way to pay for health insurance — not just those who have employer-sponsored coverage.
On the other hand, the latest bill, like any iteration, has its flaws. This version took the backward step of keeping in place two Obamacare tax increases: the Net Investment Income Tax and the 3.8 percent surcharge on high earners for Medicare. These taxes amount to $230 billion in revenues over the course of a decade. This money belongs in the private sector, but repealing these taxes is proving to be politically difficult.
The next step will be to get this bill to the floor. Of course, Republicans have a difficult task and no wiggle room left, considering that Sens. Rand Paul, R-Ky., and Susan Collins, R-Maine, are guaranteed to vote no.
But the latest version seems to get the Senate closer to what President Trump has asked for – a "beautiful" healthcare bill on his desk.
Hadley Heath Manning (@HadleyHeath) is a contributor to the Washington Examiner's Beltway Confidential blog. She is a senior policy analyst and director of policy at the Independent Women's Forum, and a Tony Blankley Fellow at the Steamboat Institute.
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