Some Republican senators have introduced a bill they say could be a basis for bipartisan compromise on Obamacare.
The basic idea is to hand the program’s money over to the states, and let them decide how to spend it.
In many ways, it’s a typical Republican proposal. It envisions most people gravitating toward cheaper, less generous insurance plans ― and using special savings accounts, subsidized by the government, to pay for whatever costs are uncovered.
It would allocate federal spending based on a pre-determined formula, and might not keep up with the demand for coverage.
But the proposal also has two interesting twists.
One is that state officials could choose to stick with the Affordable Care Act’s coverage scheme, or something very close to it, if that’s what they prefer.
The other is that, at least provisionally, it leaves Obamacare’s taxes in place.
How The New Proposal Would Work, In Theory
The proposal is called “The Patient Freedom Act of 2017.” The easiest way to think about it is probably the way that its lead sponsors, Sen. Bill Cassidy (R-La.) and Sen. Susan Collins (R-Maine), described it on Monday ― as offering state officials three basic choices.
The default option would be to replace Obamacare with a more conservative coverage scheme.
States would ratchet back existing regulations on insurance, allowing carriers to offer cheap, bare-bones plans that the 2010 health care law outlawed.
The plans would still be subject to some of Obamacare’s consumer regulations ― like a prohibition on lifetime benefit limits, and a guarantee of mental health coverage. But other regulations, like ceilings on out-of-pocket spending, would disappear.
States would also create individual personal savings accounts, using federal funds as initial deposits. People could use these funds to pay for insurance, out-of-pocket expenses, or both.
(States would also have the option of enrolling people in basic plans automatically, unless people opt out of them.)
This is the type of coverage scheme Cassidy and Collins said they would prefer, and the one they envision most states adopting.
But the proposal would offer states the possibility of sticking with Obamacare, if that’s what officials would prefer. It would have to be an affirmative choice, requiring an either executive or legislative action, or both, depending on state law. But, Cassidy and Collins said, states that take the necessary steps could basically keep current arrangements in place.
In other words, they could keep their expanded Medicaid programs going. And they could keep offering subsidized, highly regulated private insurance through exchanges.
Under either of these options, the money that states get from the federal government would be the same ― equal, supposedly, to 95 percent of what they would get if Obamacare were still in force.
To offset those costs, the federal government would draw on the same funding sources that Obamacare does, including payroll taxes that the law imposed on the wealthiest Americans ― although Cassidy said he expected Republicans to come up with alternative funding later on, as part of a broader discussion of tax reform.
The final option for states would be to reject federal money altogether, and deal with health care completely on their own.
How The Proposal Would Work, In Practice
Cassidy and Collins emphasized the potential for their proposal to attract bipartisan support, by appealing to Democrats who want to maintain Obamacare benefits in their states as well as to Republicans who favor handing more power to the states.
“California, New York, you want Obamacare ― you can keep it,” Cassidy said. “I disagree with it, but Republicans believe power is best held at the state level.”
Collins also spoke of her desire to make sure that nobody loses insurance and that, over time, the number of people with coverage would actually increase. “Our goal is to expand coverage to those nearly 30 million Americans who still don’t have coverage under the Affordable Care Act,” she said.
But it’s not clear the plan, as written, could achieve such a lofty goal ― or whether it would even allow states that like Obamacare to keep the program going as is.
One question is about the funding. The legislation says the Secretary of Health and Human Services will calculate the precise value, but the legislation isn’t terribly specific about how the HHS secretary is supposed to calculate that 95 percent ― or about how the value is supposed to change over time.
In the past, proposals from Cassidy and other Republicans have envisioned funding growing at a fixed rate that, over time, would decline relative to the price of health care ― gradually exposing people to greater medical expenses.
Of greater concern is what would happen in states that stick with the default option, and scrap Obamacare for a more traditional conservative scheme. Under such plans, lower and middle-income people can struggle to find comprehensive coverage ― and, as a result, the ones with large medical bills can end up with no way to pay them.
That’s one reason an early analysis from the Center on Budget and Policy Priorities, based on a summary of the bill posted online before the full legislative language, warned that the bill “could leave many millions who now rely on ACA health coverage, especially those with low incomes and pre-existing health conditions, uninsured or going without needed care.”
Experts contacted by The Huffington Post said Monday evening they hadn’t yet had time to analyze the plan and its implications. And Collins, during the press conference, warned that the proposal was really a “work in progress” ― in other words, the beginning of a conversation among lawmakers, rather than the end.