Republicans recently introduced two bills to “replace” the Affordable Care Act – one co-authored by Senators Susan Collins (R-ME) and Bill Cassidy (R-LA) and another by Senator Rand Paul (R-KY). Neither bill has been endorsed by Republican congressional leadership and both are unlikely to gain any traction. While more replacement bills may come out, it’s important to recognize that introducing a bill is not the same thing as passing a comprehensive replacement plan. Ultimately, these bill introductions are a distraction from the true issue these senators have at hand – deciding whether to vote for a reconciliation bill that takes coverage away from millions, without any consensus on what will replace it.
Even if either of these bills were the true Republican “replace” plan, they both fail to maintain, let alone build off of, the level of access, coverage and affordability currently provided by the Affordable Care Act.
Both bills repeal the most favorable parts of the ACA
While both bills purport to be better alternatives to the ACA, they gut almost all of ACA’s private insurance market reforms and consumer protections that have helped millions of individuals gain and maintain coverage, such as:
- Online marketplaces for enrollment
- Income-based premium subsidies and cost-sharing reductions
- Requiring plans to cover the Essential Health Benefits, including emergency care, maternity care, coverage of mental health and substance use disorders and preventive services
- Not allowing plans to charge individuals more based on gender and limiting how much more insurers could charge based on age
- Eliminating annual or lifetime limits
In its place, the Senators’ “plans” offer bare-bones coverage and impose more barriers to accessing it.
Both bills would make coverage less affordable than the ACA for those with low incomes
Both bills rely heavily on the use of Health Savings Accounts, or bank accounts in which individuals can contribute pre-tax dollars and then make withdrawals to pay for the premiums and other out-of-pocket costs. But this HSA-based alternative will ultimately mean higher costs for many individuals, particularly those who need the most help.
First, the HSA-based option does away with the ACA’s income-eligibility test for financial assistance, which ensured individuals with lower incomes received more help than those with higher incomes. In addition, the ACA calculated tax credits in such a way that individuals would only pay a certain percentage of their income towards premiums, thereby protecting them from spending a majority of their income on health care costs.
In contrast, both Senators’ plans eliminate income-based eligibility tests when determining how much financial assistance someone can get, and offer fixed amounts of assistance that are not tied to the underlying cost of health insurance. For example, Senator Paul’s bill only provides $5,000 in tax credits to all eligible individuals, regardless of their income. Under the Collins/Cassidy plan, any individual earning under $90,000 or a family earning under $150,000 will get the same tax credit, adjusted for age and location only. That means a family earning $20,000 a year will get no more help affording their premiums than a family earning $140,000 a year. Therefore, under both plans, low-income individuals and families will not be receiving the type of assistance needed to be able to access coverage and care.
In addition, the Collins/Cassidy bill only provides 95 percent of the ACA’s funding levels to states to help them provide financial assistance to their residents. But because their plan expects more individuals would be eligible for HSAs than the number of individuals currently eligible for financial help under the ACA, the Collins/Cassidy bill will try to cover more individuals with less federal money. This would either put states on the hook to keep ACA levels of financial assistance or result in less help for those who need it most.
Both plans offer skimpier coverage than the ACA
As mentioned above, both bills remove the requirement that health plans cover “Essential Health Benefits,” or 10 categories of important health services that were covered by most plans under the ACA, meaning insurers will be able to offer plans with meager coverage. In addition, Collins and Cassidy allow states to auto-enroll uninsured individuals in a “default” plan that would have a high deductible and only cover limited services, even though the main thing people want from health reforms is lower out-of-pocket costs. States can also transition their entire Medicaid-expansion population to that “default” plan, causing this most vulnerable population to have far higher costs and weaker benefits.
Both plans impose more barriers to coverage and care than the ACA
Collins, Cassidy and Paul penalize those who experience gaps in coverage by allowing insurers to deny them coverage altogether or charge them much higher premiums. Paul’s plan adds an additional barrier to maintaining coverage: a two-year open enrollment period that limits the window of time that people can enroll before they are required to meet a continuous coverage requirement. The Collins-Cassidy plan would only allow people with pre-existing conditions who fail to maintain continuous coverage access to a skimpy high-deductible plan, and would also implement a “late enrollment” penalty and fees on HSA withdrawals. Therefore, anyone with a pre-existing condition who experiences a short coverage gap will only have meager coverage for their health needs, and coverage they may not be able to afford.
Replacing the ACA feels like a bad game of charade
In many ways, the introduction of these plans feels more like smoke and mirrors than true policy alternatives. The Collins/Cassidy plan allows states to “keep” the ACA, but ultimately undermines that decision by capping and cutting the funding available to support it, and only providing financial assistance at 95 percent of what the state’s residents would have received under the ACA. In addition, this amount would not be adjusted for inflation or the state’s total expenditures, causing states to receive less money overall over time. So while their bill promises to offer state flexibility and freedom, in reality it offers less resources, which will make it harder for both individuals and states to enjoy the benefits of the ACA.
Although Senators Collins, Cassidy and Paul are the first “plans” released to replace the ACA in this new administration, there is no indication of broad support for either bill in the Republican caucus. Not only that, but the fact that Senators are releasing one inadequate plan after another shows they haven’t come anywhere close to reaching an agreement on what will replace the ACA. Until there is consensus on a plan that would build on – rather than tear down – the gains made under the ACA, it is imperative for all Senators to reject a reconciliation bill that takes insurance away from millions and raises costs for millions more.