Republican Sens. Lindsay Graham of South Carolina, Bill Cassidy of Louisiana and Dean Heller of Nevada are planning a bill to repeal Obamacare, a last ditch effort to make good on a seven-year Republican campaign promise.
The senators are planning to use budget reconciliation rules — a legislative loophole that requires only 50 yes votes and bypasses filibusters from Democrats — to pass their bill. The clock runs out on the reconciliation rules Sept. 30, which means the legislators have less than 15 days to get their bill through both chambers of Congress, finalize it, and have it on President Donald Trump’s desk for approval.
Graham, Cassidy and Heller are expected to reveal their plan as early as Monday afternoon, and only a few details are known, Politico reports.
How Does It Work?
The bill would replace Obamacare’s Medicaid expansion, subsidies for private insurance companies (cost-sharing reductions) and tax-credits for middle-income Americans with block grants. The new funding mechanism would start in 2020, and would provide states with the opportunity to apply for grants from a pool of $136 billion. That pool would grow nearly 50 percent in 6 years, reaching $200 billion in 2026.
After the first year, the legislation would institute a formula for allocating block grant funds that would begin sometime between 2021 and 2023. In 2024, the grants allocation would be subject to the number of people enrolled in the program the year prior.
The funds in the block grant pool could go to fund many things, including: funding high-risk populations, known under Obamacare as risk corridors, supplying insurance companies directly with a subsidy in an effort to stabilize premiums and increase marketplace participation, and other measures meant to lower the cost of insurance and promote a stable insurance market, like increasing enrollment among healthier populations.
The bill would also largely keep Obamacare in place until 2020, giving insurance providers and consumers roughly two years to adjust.
The legislation is expected to take out two key features of Obamacare: the individual mandate and subsidies that reduce the cost of insurance to the consumer. While shedding those portions of the Affordable Care Act will likely be net-wins, in the eyes of conservative votes, it could cause the individual insurance marketplace to take a hit.
The bill includes a requirement that insurance companies accept all consumers, even those with pre-existing conditions. If healthy individuals face no penalty in forgoing health coverage, it leaves only the sickest, riskiest consumers participating in the market. This would lead to a death spiral, as has been the case in some portions of the nation under Obamacare, where insurance companies cannot financially participate in the market.
If only the sickest consumers are in the market, the risk to insurance providers is high, as every new consumer presents a substantial liability. To offset any future costs of the enrollee, insurance companies would raise the price, or plan premiums, to guard against future payouts. With no subsidies, the cost of insurance could be too burdensome for many consumers.
Would It Pass?
The senators face a great number of challenges in their push to get the bill through the House, the Senate and to Trump in under three weeks. The bill has yet to have a public hearing in any congressional committee, which was a chief criticism of the Republicans recent efforts to repeal and replace Obamacare, and it hasn’t been scored by the non-partisan budget agency, the Congressional Budget Office (CBO). The bill is also still being drafted, so not even the authors know what it fully entails.
While these three senators toy with the idea of repealing Obamacare, more than a dozen Republican and Democratic senators are working on a solution to fix the problems with Obamacare, seemingly dropping all discussions of repealing and replacing the current system.
Senate Health Committee Chairman Lamar Alexander kicked off a series of hearings in early September that are focused on finding a way to both stabilize the Affordable Care Act and individual health insurance marketplaces and prevent premiums from soaring in 2018. Soaring premiums have been a persistent problem for individuals enrolled on the Obamacare state exchanges. Alexander hopes to have a piece of legislation crafted by Sept. 15.
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