Posted on 06/29/2017 9:50:43 AM PDT by 2ndDivisionVet
An amendment is under consideration that maybe, just maybe, could unlock the whole Senate Republican health bill. It might knock over the dominoes necessary for a deal, starting with regulations, moving to tax subsidies, and ending up with more cash for Medicaid and fewer tax cuts for the rich.
It comes with big long-term risks for Americans who have high medical costs — and it could ultimately shift the burden of covering the uninsured further way from middle-class Americans who already have insurance, and more onto predominantly wealthy taxpayers.
Its author? Sen. Ted Cruz of Texas.
Senate conservatives have been searching desperately for a way to unwind more of Obamacare’s insurance regulations as part of the chamber’s health care bill. They are withholding their support for the current leadership plan because it does not go far enough on that front.
It has been a vexing quest. Obamacare’s protections for people with preexisting conditions — the requirement that health plans cover every American regardless of health status and the prohibition on charging sick people more than healthy people — are overwhelmingly popular. That makes many less ideological senators skittish about rolling those regulations back. Then there is also the problem of the Senate procedural rules, which limit what policies Republicans can include in their plan.
Cruz, an anti-Obamacare firebrand who has staked much of his reputation on helping shepherd this health care bill through the Senate, has maybe/possibly found a compromise.
No legislative text of Cruz’s proposal is yet available, but this is the gist: As long as a health plan offered at least one Obamacare-compliant plan in a state, the plan would also be allowed to offer non-Obamacare-compliant plans in that state.
Nothing is certain, but I’m told this is the main conservative ask on the health care bill right now. Senate Majority Leader Mitch McConnell (R-KY) is working hard to find a compromise by the end of the week, after the embarrassment of postponing a vote on the legislation until after July 4.
If conservatives get that win on insurance regulations, they might be willing to accept fewer tax cuts for the wealthy in the bill. Smaller tax cuts would, in turn, free up more money for McConnell to spend on Medicaid and insurance subsidies for poor and middle-class Americans. Those concessions are likely necessary to win over moderates who currently oppose the bill, some of whom are already agitating to scale back the tax breaks for the rich.
Every part of the plan is fickle, and McConnell’s margin for error is nil. But as he scrambles for a deal in the next few days, this might be his best bet. If it came to pass, it would represent a significant restructuring of who picks up the tab to cover the most vulnerable Americans.
Obamacare’s insurance protections have been a huge problem for Republicans
If conservatives had it their way, they would probably repeal all of Obamacare’s insurance mandates: the preexisting conditions protections, the requirement that plans cover certain essential health benefits, the rules for how much of a person’s medical costs a plan must cover, etc. They say those mandates have driven up health insurance premiums, and lowering premiums is their No. 1 policy objective.
But Americans are strongly supportive of, for example, requiring plans to cover everybody no matter their health: 69 percent approve, according to November 2016 poll by the Kaiser Family Foundation.
President Donald Trump also promised during his campaign to protect people with preexisting conditions. Some Republican senators therefore refuse to repeal the regulations nationwide.
“The president very explicitly said over and over again during the campaign that he wished to preserve guaranteed issue,” Sen. Bill Cassidy (R-LA) told me Wednesday. “We criticized Obama when he broke campaign promises. So I think we need to be sensitive to the contract our leading Republican made with the voters.”
Such a provision might also violate the Senate procedural rules that Republicans are using to pass the bill with a bare majority of 50, which are supposed to limit the health care bill to policies that directly affect federal spending and revenue.
So while some conservative senators, like Ron Johnson of Wisconsin, have been advocating in recent days for fully repealing Obamacare’s insurance reforms, that seems politically and procedurally unpalatable.
Cruz’s proposal could thread the political needle, but it has big policy asterisks
Enter Cruz. Here’s how the Texas senator described his plan, in his own words, on Wednesday:
If an insurance company offers at least one plan in the state that is compliant with the (Obamacare) mandates, that company can also sell any additional plan that consumers desire.
What that does is it maintains the existing protections, but it gives consumers additional new options above and beyond of what they can purchase today.
As a matter of politics, you could see how the idea would be a winner: Moderates can say they kept Obamacare’s insurance reforms and conservatives get to say they allowed non-Obamacare plans back on the market.
As a matter of policy, it’s a much more complicated picture.
The fundamental problem is sicker people would be drawn to the more robust Obamacare plans, while healthier people would gravitate toward the skimpier non-Obamacare coverage. That’s a reality that even Cruz acknowledges.
Then inside the Obamacare market, as more and more sick people buy coverage there, costs for health insurers go up and so they increase premiums. It has the makings of a classic death spiral. Because only sick people remain, premiums eventually increase to astronomic levels. It turns the Obamacare exchanges into a high-risk pool.
Cruz’s counter, when I asked him about this, was the Obamacare subsidies that the Senate bill is largely keeping, though it scales them down. Under Obamacare, people who receive the subsidies are partially inoculated from premium increases because they pay only a certain percentage of their income for health insurance. The Senate’s bill also includes upward of $100 billion to further subsidize people with high medical costs.
“You would likely see some market segmentation” Cruz told me. “But the exchanges have very significant federal subsidies, whether under the tax credits or under the stabilization funds.”
That is true. But outside experts argued that the costs to the federal government could be unsustainable. As the Obamacare markets turned into high-risk pools, premiums would increase, driving the cost of the tax subsidies higher and higher.
“Keeping the ACA tax credits would, in theory, protect subsidized consumers,” Larry Levitt, senior vice president at the Kaiser Family Foundation, told me. “But the cost of those tax credits would quickly skyrocket, because healthy people would flock to non-complaint plans, which could cherry pick them with inexpensive premiums.”
Cruz acknowledged that his plan would depend on taxpayer subsidization of people with high medical costs. But, he argued, it was better for the federal government to pick up the tab than requiring health plans to charge sick people and healthy people the same premiums, increasing costs for the latter.
“It’s not fair to a working-class person who’s struggling to put food on the table, for the federal government to double their premiums trying to work an indirect subsidy for others who are ill. Far better to have it through direct tax revenue,” Cruz told me.
So it becomes a question of the federal government’s willingness to pay that bill, indefinitely into the future. Otherwise, people with high medical costs could be stuck with a market that doesn’t function and isn’t adequately subsidized. The whole idea is dependent on an effectively unlimited federal commitment to pay the bills.
“The marketplaces would turn into de facto high-risk pools,” Levitt said. “How long would Congress allow the ACA tax credits to stand as the costs increase rapidly?”
The other problem is that the Obamacare subsidies cut off at 400 percent of the federal poverty level, about $48,200 for a single person. The Senate plan would lower that threshold to 350 percent.
Americans with higher incomes who wanted to buy an Obamacare-compliant plan, people likely to have high medical costs themselves, would have no protection from skyrocketing premiums.
“If they're healthy, they could buy inexpensive non-compliant plans. But if they have pre-existing conditions, they'd be stuck in plans with escalating premiums,” Levitt said.
The Cruz plan could potentially break the Senate’s health care stalemate
Nevertheless, Cruz’s proposal represents a pragmatic attempt to bridge the policy and political divides within the Senate Republican conference.
It is also a notable admission that Congress, even under control of Republicans, recognizes the need for the federal government to help many vulnerable Americans afford health coverage.
“If those with seriously illnesses are going to be subsidized, and there is widespread agreement in Congress that they are going to be subsidized, I think far better for that to happen from direct tax revenue rather than forcing a bunch of other people to pay much higher premiums,” Cruz said.
If McConnell adopted the proposal — Cruz’s office declined to comment on the ongoing Senate negotiations — it could start knocking over dominoes that would bring Republicans closer to consensus on a health care bill.
First, moderates would need to accept it as an adequate protection for people with preexisting conditions. Then the conservatives, having won a victory on their biggest priority, could then be willing to bend on some other issues. They might, for example, be open to keeping some of Obamacare’s taxes to pay for moderate priorities.
Some of those more moderate senators, such as Mike Rounds of South Dakota, said Wednesday that they wanted to limit the tax breaks for the wealthy to help boost the funding for poor and middle-class Americans.
“The challenge is if we do things, we also have to find a way to pass for it,” he told reporters. “I think we ought to to take a look at the investment tax that’s in the system and whether or not it would be appropriate to allow that tax to remain so that we can afford to pay for some of these additional costs.”
That would allow McConnell to pump more funding into Medicaid, the insurance subsidies and the opioid crisis. The majority leader is already adding money to the bill; Politico reported funding for the opioid crisis would be increased from $2 billion to $45 billion. But that probably won’t be enough: Sen. Shelley More Capito (R-WV), one of the senators most focused on Medicaid and opioids, said her core concerns were with the current bill’s Medicaid cuts. More funding, perhaps facilitated by Cruz’s proposal, could help.
The math will always be tough, because leadership can lose only two of the 52 Senate Republicans. Everything would have to fall into place. But such a grand bargain could conceivably get a majority behind the plan.
The other looming threat to Cruz’s proposal is the Senate’s “Byrd Rule,” which is supposed to limit the health care bill to policies that directly affects federal spending and revenue. Many outside experts are doubtful that changes to insurance regulations meet that standard.
But Cruz told me Wednesday that he thought his proposal would work under those rules and that the Senate would not have to take the drastic step, as he had previously advocated, of overruling the Senate parliamentarian who adjudicates these issues.
“I think under the plain text of the Budget Act of 1974, it satisfies the Byrd test,” he said.
No legislative text of Cruz’s proposal is yet available, but this is the gist: As long as a health plan offered at least one Obamacare-compliant plan in a state, the plan would also be allowed to offer non-Obamacare-compliant plans in that state.
I think the most important thing is to phase it out for newcomers.
THE CLAUSE MUST READ FOR THE NEXT THREE YEARS ONLY.
This way, people will realize that they need to pay for any insurance NOW. Even a catastrophic plan. Because “previous conditions” is being phased out in three years, and insurance companies should not have to pay out on sick people who were not already insured. And no one knows when they or their children might get a serious condition or accident.
The people who sign up in the next three years and get help while already sick is a finite group. We all suck it up and carry them FOR LONG TERM GOALS.
But as long as we inform everyone in the country that they only have three years and then previous conditions are done, they all have time to sign up for at least a cheap catastrophic plan.
Best part about making the clause temporary: AFTERWARDS THE SOB STORIES WILL BACKFIRE. You had three effing years to sign up for ANYTHING. You must have wanted your child to die!!
Damn straight but they always have the gullibles by the cojones with those damn sob stories. See my previous, making it very temporary might work. And from then on it would be free market for insurance cos and providers.
When was the last time the Congress, or a President, even remotely considered whether a proposed piece of legislation or executive order was constitutional before moving to enact it? Even Pres. Trump doesn’t seem particularly concerned about constitutional limits on the size, scope, power, and cost of government.
Intriguing. I assume non-Obamacare compliant policies would not be forced to accept people with pre-existing conditions, currently required by the Senate bill, and could cap total payout at a certain amount? Because unless it does that then it will do nothing to reduce the cost of premiums.
I guess we’ll see what Cruz is, won’t we?
“That kind of action cannot be done with the reconciliation approach. It would require 60 votes in the Senate which aren’t there at this time.”
Exactly and also we are dealing with RINO’s. With that said we know it will not be a perfect bill. Yes we could let Obamacare collapse but in the end we will still have to go through the same process on order to get a bill passed.
Bump for later.
You can add Lawyers to that!
Under Obamacare the only pre-existing condition that insurers can charge extra for is smoking.
Up to 50% more.
Why that 50% limit isn’t placed on ALL pre-existing conditions shows the stupidity of it all.
The limit protects, but is reasonably ‘fair’.
Digging through the VOX bias it sounds like Cruz is making a last-ditch effort to keep a state opt-out in the bill.
GOTTA HAVE AN OPT-OUT: one that is practicable. Not sure this is.
my favorite is - “may cause anal leakage”
I think Sen. Cruz is on to something. Personal preference is repeal and replace, assuming that cannot happen perhaps this is credible first step.
I say that under the assumption that insurance providers can be sourced from out-of-State. That the non-idiot care market has competitive pressure.
Yeah, just repeal the GD thing as they promised!
I’m realistic, sure, Obamacare is unconstitutional; the Dems passed it in the middle of the night, read to find out what’s in it, they got Obama to sign it. It’s an entitlement. It is going to be hard to get the votes to fully repeal it.
The current version does full defund Planned Parenthood and Trump would sign that.
Basically, Cruz’s is proposing that insurers can offer any plans they want to us in states that have at least 1 Obamacare compliant plan. This means we’ll be off the hook for subsidies to Democrats, and marginal R’s can go back to their states and say they kept Obamacare’s pre-existing protections, etc.
The downside is that it’d add to the debt since the Obamcare-plan people would become a high risk pool and still get tax credits to keep them on the plan.
The upside is that it opens back up the market for whatever plans you want and gets us half way home with getting out from under Obamacare altogether (phasing out the tax credits would be the last step).
Excellent comment ... to which I add my rant:
So when did the single phase campaign promise of “repeal ObamaCare” morph into “repeal and replace ObamaCare”? Why replace it at all? Repeal ObamaCare now in toto, root and branch, all of it. Close and disband any and all bureaus, departments, offices, etc that were created to support any part of ObamaCare. Terminate any and all personnel in those departments hired to implement ObamaCare.
If there must be a ‘replace’ phase to this endeavor, let it be to create a few simple guidelines (not laws) supporting free market driven system ie: allow cross-states sales & marketing, limit malpractice awards, streamline FDA drug testing and approval system, etc.
Unfortunately the truth is that once the Feds seize a power from the states and/or the people, the only way to separate any politician from that power involves a rope and a tree.
Before I reply, I’m going to research it.
-PJ
What he’s proposing it what I said awhile back. Keep Obamacare but pass something that says we can buy any type of insurance policy the insurance companies offered.
Catastrophic plans will come back and if prices come down there will be many more people actually insured.
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