Photo via The Department of Homeland Security
Nevada Gov. Brian Sandoval speaks during a meeting of the Council of Governors as part of the 2017 National Governors Association meeting on Feb. 24 in Washington, D.C. At the time, Sandoval joined a chorus of other Republican governors imploring Congress not to touch Obamacare’s Medicaid expansion .
Since House Republicans revealed their long-awaited plan to repeal and replace the Affordable Care Act, often known simply as Obamacare, earlier this month, there have been lingering questions about what effects the new bill might have on the 18 million Americans who use the law to get their health insurance.
On Monday, House Speaker Paul Ryan downplayed expectations for the number of people who that might lose their insurance under the new plan, dubbed the American Health Care Act. Speaking with CBS’ “Face the Nation,” he said that the goal of the plan shouldn’t be universal coverage, but rather reduced health care costs.
“What we are trying to achieve here is bringing down the cost of care, bringing down the cost of insurance not through government mandates and monopolies but by having more choice and competition,” Ryan said.
Later that day though, the number was larger than anyone thought it would be. Over the next decade, an estimated 24 million Americans will lose health insurance under the new GOP plan, according to a report from the Congressional Budget Office. In the same report, the CBO also found that the plan would reduce the deficit by about 300 billion and reduce the average cost of premiums by about 10 percent over the same period of time.
But why are these numbers so high and how else would the new plan affect Nevada specifically?
Things as they stand
To understand how the GOP plan to repeal and replace Obamacare works, you must first understand how Obamacare functions in the first place. By and large, the Obama administration viewed the health law as a way to widely expand access to health care and cut the number of uninsured Americans — a number that was as high as 18 percent in 2010 when the ACA was initially passed by a Democratic Congress.
To accomplish this, Obamacare makes use of three things: the mandate, which presents anyone without insurance with a tax penalty for not signing up, the use of insurance exchanges and tax credit subsidies, which facilitate the buying of health care plans on the free market, and a massive expansion of Medicaid, which provides healthcare to low-income Americans.
The most notable change-agent was the optional expansion of Medicaid. Utilized by 32 states and Washington, D.C., the expansion includes roughly 11 million new Medicaid enrollees who are largely paid for by government coffers. In Nevada, Medicaid rolls were expanded by about 300,000, roughly doubling the state’s pre-Obamacare Medicaid numbers.
More than that, there’s the issue of subsidies. If someone decides to buy health insurance on the free market, that purchase is subsidized through income-based tax credits (thus, the lower the income, the higher the subsidy). Put simply, the ACA relied on the wealthy and the young, who are often much healthier than their older and poorer counterparts, to balance the system and keep premiums low.
All in all though, the ACA ended up being a mixed bag for American consumers. While the uninsured rate did drop from 18 percent to 11 percent in the seven years since its passage, major claims made by President Obama that people wouldn’t lose their doctors or that premiums wouldn’t go up ended up being far more false than true.
Even so, public support for the ACA has been on the rise. According to Real Clear Politics, which averages out numerous polls over time, those in favor of Obamacare exceeded those against for the first time ever around the time of President Donald J. Trump’s inauguration in January. Since then, the gap has widened — if only slightly — to a 48.5–44 split in favor of the ACA.
How things change
All three major tenets — the mandate, the subsidies and the Medicaid expansion — are changing in major ways.
The Republican plan ditches the mandate in favor of a 30 percent penalty on re-entering the healthcare market. If you lapse on your insurance, you have to pay 30 percent extra for one year in order to get back in. It shifts the payout from penalties from the government to private insurers and while it isn’t technically a mandate, many conservative Republicans are unhappy with change, calling it “Obamacare 2.0” or “Obamacare Lite.”
The plan also changes the nature of subsidies, using age as a metric instead of income. As people grow older, the subsidy grows from a lower limit of $2,000 to an upper limit of $4,000. In broad terms, the new subsidies benefit the wealthy, who can now utilize subsidies they may not have had access to before, though the benefits of any of these fixed subsidies are highly dependent on the cost of health care in any given individual market, something that varies widely from county to county.
Finally, the plan would gradually phase out the Medicaid expansion over the next few years, instead shifting money to states through the use of block grants. The CBO report released Monday notes that this shift would cause the greatest savings for the federal government, and would have a net reduction of the deficit of about $300 billion over the next 10 years.
The news came much to the disappointment to many state governors who had counted on continued support for Medicaid. One of these governors is Nevada’s own Brian Sandoval, who spoke highly of the expansion in the days before the release of the new GOP plan and who was unenthusiastic about the GOP’s new efforts.
“We’ve said all along, ‘Work with the governors,’ that it should be a governor-led effort and for the Congress to rely on the governors,” Sandoval said after the new bill was released. “Well, they came out with their own bill, which doesn’t include anything that the governors have talked about.”
How things stay the same
What the plan leaves largely intact are many of the consumer protections that come bundled with the ACA, including the mandated coverage of pre-existing conditions, maternity coverage, and the ability for those under 26 to stay on their parent’s health care plans.
However, there are still questions over whether or not these provisions will even be able to stay through final passage. Specifically, the pre-existing condition protections inside the ACA were largely dependent on the mandate. This is because as the government forces insurance companies to cover sicker people, the cost of covering those people forces premiums to rise across the board. To balance that out, the mandate encourages young, healthy people to join the individual marketplace and, theoretically, reduce the cost of premiums for everyone.
Without a mandate, the CBO says that the number of healthy people will likely drop, pushing average premiums up as a result.
And while the new GOP bill has already passed through two committee meetings and is headed for a floor vote soon, a challenge in the senate is near certain. Until then though, the waiting game continues.
Photo via twitter.com/SpeakerRyan
Paul Ryan outlines the American Health Care Act to reporters on Friday, March 10. The bill, which would serve as the first step in the GOP “repeal and replacement” of Obamacare, could head to the House floor for a vote as soon as the next few weeks.
