On Thursday (6/22), Senate GOP leaders unveiled their version of the healthcare reform bill. The 142-page bill would repeal Obamacare taxes, sharply reduce financial aid that helps millions of people obtain health coverage, restructure subsidies to insurance customers, make deep cuts in Medicaid, and repeal the Obamacare rule requiring most Americans to have some form of health coverage or face steep penalties.
Understanding each update and the impacts can be confusing. That’s where we step in. Let’s take a deeper dive into several of the hottest topics:
The bill would largely maintain Obamacare’s premium subsidies structure. The biggest change being incomes eligible for help will fall to 350% of poverty versus the 400% that it is today. The bill does include some aged-based subsidies but there is a complicated formula that phases out in 2020. The key is that in total, there will be fewer subsidies available.
The new bill links the subsidies to plans with less generous coverage (Bronze Plans) whereas the current ACA benchmarks to Silver Plans. Bronze Plans will have an actuarial equivalent of 58% versus 70% among Silver Plans. Please note, out of pocket maximums are the same.
Both the Individual and Employer Mandates are essentially eliminated as all penalties would be repealed. There is nothing currently in place to incentivize healthy individuals to sign up for insurance.
Section 1332 Waivers
These will be funded with $2 billion to help states with the application process. In turn, this will help states to have more flexible healthcare systems and possibly eliminate Essential Health Benefits and rating ratios.
Simply put, insurance companies will not be allowed to increase premiums or deny coverage to anyone based on preexisting coverage. Although, states may allow them to not cover costs associated with some conditions. This would all insurers to offer less comprehensive policies.
Insurers would be able to charge older customers up to five times as much as they could charge younger customers. Today, this is limited to a 3:1 ratio. Some states could choose to keep it as a 3:1 ratio as the new 5:1 would be a maximum – not a mandate.
With this bill, people can contribute more to their HSAs. These can now be raised to match out of pocked maximums.
The Stability Fund
This fund would receive $112 billion over 10 years and would be aimed at reimbursing insurers who take big losses.
Major reductions are being proposed in the Medicaid program. Medicaid would be funded by giving states a per capita amount or block grant - beginning in 2021. For states that choose to expand Medicaid, the federal government would pay a smaller portion of the costs starting in 2021.
Essential Health Benefit
States would now be allowed to change what qualifies as an essential health benefit. This is where most of the confusion still lies. Regulation can be critical here.
Overall, the Senate bill does generally reflect the House bill – although with some changes. It is still questionable whether the Senate will have enough votes to pass the bill as several Senators have already spoken out against it. However, there are several days left for negotiation.
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