Graham-Cassidy Obamacare replacement plan
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On July 13, 2017, Senators Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.) released a proposal to modify the Affordable Care Act (ACA), also known as Obamacare.[1] The plan addressed the budgetary and fiscal provisions of the ACA and did not contain a provision to repeal the law in its entirety. Instead, the plan would have kept in place most of the ACA's taxes and fees and sent that money to the states for them to make changes to health insurance and healthcare at the state level.
An initial version of the plan was introduced as an amendment to the American Health Care Act of 2017 during the Republican effort to repeal the ACA in July 2017. The amendment did not receive a vote.[2]
The plan was reintroduced in September 2017. Without enough votes to pass the bill, which was opposed by Republican Sens. Susan Collins (R-Maine), Rand Paul (R-Ky.), and John McCain (R-Ariz.), Senate Republicans decided on September 26, 2017, not to bring the bill to a vote.[3][4]
Text of plan
Below is the full text of the healthcare proposal introduced by Senators Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.) in September 2017.
Summary of plan
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The Graham-Cassidy plan addressed the budgetary and fiscal provisions of the ACA and did not contain a provision to repeal the law in its entirety. Instead, the plan would have kept in place most of the ACA's taxes and fees and sent that money to the states for them to make changes to health insurance and healthcare at the state level.[5][6][7][8]
Tax credits
The plan would have repealed the federal premium tax credits and the cost-sharing reductions provided to individuals under the ACA. States could create their own system of tax credits and subsidies, if they chose. Under the plan, tax credits using federal funds could not be used for plans that covered abortions except for those necessary to save the life of the mother or in cases of rape or incest. The plan would have also eliminated the limit on the amount of overpaid tax credits the federal government could recoup.[8]
Individual and employer mandates
The federal requirements for individuals to obtain health insurance and for employers to offer it would have been effectively eliminated by reducing the penalty to $0. States could establish their own requirements, if they chose.[8]
Healthcare grants
In place of federal tax credits, cost-sharing reductions, and the Medicaid expansion, the plan would have funded a grant program for states to design their own systems for health insurance and healthcare. The funds could be used to establish programs or policies to help cover high-risk individuals, stabilize premiums, and reduce out-of-pocket costs. The plan would have appropriated $1.18 trillion between 2020 and 2026 for the grant program. Funding would have been allocated using a formula based on the amount of ACA-related federal funding provided to a state for the Medicaid expansion, tax credits, and cost-sharing reductions and the number of low-income individuals in a state. A more detailed outline of the formula can be found here.[8]
In applying for the grants, states could request waivers from the following ACA provisions:[8]
- The provision that restricts the extent to which insurers may vary premiums based on age or other factors, except restrictions on variations based on sex or other protected classes of individuals
- The provision that prohibits health insurers from varying premiums based on preexisting conditions
- The provision that requires insurers to cover a standard set of health benefits
- The provision that requires insurers to provide rebates to consumers if they do not spend a minimum percentage of premium revenue on medical services
Insurance market rules and funding
Many of the ACA's insurance market rules would have remained in effect. Under the plan, insurers would still be prohibited from denying coverage for pre-existing conditions. Insurers would also still be required to allow dependents to remain on their parents' insurance coverage until age 26. Under the Graham-Cassidy plan, any individual could purchase a catastrophic health plan; under the ACA, this was restricted to individuals under 30 or those who met a hardship exemption.[8]
The plan would have established a fund of $25 billion to pay out to insurers to mitigate disruptions to health insurance coverage and address urgent health care needs. The funds would have been paid out in 2019 and 2020. The bill did not fund cost-sharing reduction reimbursements and would have ended the program in 2020.[8]
Medicaid
The ACA allowed states to expand eligibility for their Medicaid programs to childless adults earning incomes below 138 percent of the poverty level. The Graham-Cassidy plan would have ended this Medicaid expansion and all federal funding for it on January 1, 2020.[8]
Beginning in 2020, the bill would have converted Medicaid financing from an open-ended entitlement to a per-capita (i.e. per-member) amount to be adjusted based on the number of individuals in four distinct groups:[8]
- elderly individuals
- blind and disabled individuals
- children
- other adults
The plan would have set a target spending amount for states based on spending during a past two-year period that the state chose. Until 2025, the amount allotted to a state would have increased each year by the medical component of the consumer price index (CPI) for urban consumers; for elderly individuals and blind individuals, it would have increased by medical CPI plus 1 percentage point. After 2025, the amount would have increased by the CPI each year. Beginning in 2020, states that spent more than the targeted amount on their Medicaid programs in any given year would have received a reduced amount of funding the following year.[8]
Under the plan, states could apply to receive their Medicaid funding in a block grant. The block grant would have been capped based on the target per-member amount for the state multiplied by the number of enrollees and the percentage increase in the state's population over the previous two years, and it would have increased in subsequent years by the CPI for urban consumers.[8]
States would have been required to reevaluate the eligibility of Medicaid enrollees every six months and would have been allowed to include a work requirement for non-disabled, non-elderly, non-pregnant adults enrolled in Medicaid. At the time, states were required by law to obtain federal approval to include a work requirement.[8]
Health savings accounts
The plan would have allowed individuals with high-deductible health plans to use health savings accounts (HSAs) to pay premiums in excess of amounts that were already credited or deducted through the federal tax code. The plan would have increased the limit on annual HSA contributions to the combined amount of the deductible and the limit on out-of-pocket spending. In 2017, high-deductible health plans had to have deductibles of at least $1,300 for an individual or $2,600 for a family. Out-of-pocket costs were limited to $6,550 for individuals and $13,100 for families. This meant that under the plan, using 2017 figures, an individual could contribute $7,850 to an HSA each year and a family could contribute $15,700. By comparison, for 2016, these limits were capped at $3,350 for individuals and $6,750 for families.[9][8]
Planned Parenthood
The bill would have suspended federal funding for one year to community health centers that provided family planning, reproductive health, and related medical services and that also provided abortions for reasons other than rape or incest or to save the life of the mother. This would have included the nonprofit organization Planned Parenthood.[8]
Taxes
The ACA tax on over-the-counter medications and 2.3 percent excise tax on medical devices would have been repealed. The 40 percent excise tax on high-cost employer-sponsored health coverage (known as the Cadillac tax) would not have been repealed.[8]
In addition, the tax penalty for withdrawals from health savings accounts for nonmedical expenses would have been reduced from 20 percent to 10 percent.[8]
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See also
Footnotes
- ↑ CNN, "First on CNN: Graham, Cassidy unveil details of alternative health care plan," July 13, 2017
- ↑ Congress.gov, "H.R.1628 - American Health Care Act of 2017," accessed January 2, 2020
- ↑ The Hill, "Senate won't vote on ObamaCare repeal bill," September 26, 2017
- ↑ Politico, "Inside the life and death of Graham-Cassidy," September 27, 2017
- ↑ Congress.gov, "S.Amdt.586 to H.R.1628," accessed August 9, 2017
- ↑ Congress.gov, "H.R.1628 - American Health Care Act of 2017," accessed August 9, 2017
- ↑ Bill Cassidy, U.S. Senator for Louisiana, "Read About Graham-Cassidy-Heller-Johnson," accessed September 20, 2017
- ↑ 8.00 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08 8.09 8.10 8.11 8.12 8.13 8.14 8.15 Bill Cassidy, U.S. Senator for Louisiana, "HR 1628, an Amendment in the Nature of a Substitute," accessed September 20, 2017
- ↑ Willis Towers Watson, "IRS announces 2017 limits for HSAs and HDHPs," May 11, 2016
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