House Republicans make it official: Gutting the ACA is back on the table again (Part 1)

As I noted back in December...

Since Donald Trump was defeated in the 2020 Presidential election, most people seemed to be under the impression that the Republican Party's decade-long obsession with tearing down President Obama's signature legislative accomplishment, the Patient Protection & Affordable Care Act, was finally over.

Healthcare journalist extraordinaire Jonathan Cohn even pulled the trigger on publishing his definitive history of the ACA, The Ten Year War...although honestly, there was still one remaining major legal loose end to tie up which wouldn't happen until about eight months later.

Since then, while there has still been some squabbling over various aspects of the ACA and a few lingering federal lawsuits over one provision of it or another, for the most part the conventional wisdom among the public, the pundits and the politicians (both Democratic and Republican alike) seems to have been that the ACA is now fully baked in as much as Medicare or Medicaid. Republican members of Congress may still grumble over it, but they seem to have mostly accepted this reality.

Until a week or so ago, that is, when Donald Trump, the presumptive Republican nominee for President for a third time in a row decided to dredge his obsession with tearing down "Obamacare" into the public square again...

Cut to yesterday, via NBC News:

WASHINGTON — A new budget by a large and influential group of House Republicans calls for raising the Social Security retirement age for future retirees and restructuring Medicare.

The proposals, which are unlikely to become law this year, reflect how many Republicans will seek to govern if they win the 2024 elections. And they play into a fight President Joe Biden is seeking to have with former President Donald Trump and the Republican Party as he runs for re-election.

The budget was released Wednesday by the Republican Study Committee, a group of more than 170 House GOP lawmakers, including many allies of Republican presidential nominee Donald Trump. Apart from fiscal policy, the budget endorses a series of bills “designed to advance the cause of life,” including the Life at Conception Act, which would aggressively restrict abortion and potentially threaten in vitro fertilization, or IVF, by establishing legal protections for human beings at “the moment of fertilization.”

...For Social Security, the budget endorses "modest adjustments to the retirement age for future retirees to account for increases in life expectancy." It calls for lowering benefits for the highest-earning beneficiaries.

...The new budget also calls for converting Medicare to a "premium support model," echoing a proposal that Republican former Speaker Paul Ryan had rallied support for.

...The RSC budget launches blistering criticism at "Obamacare," or the Affordable Care Act, and calls for rolling back its subsidies and regulations that were aimed at extending insurance coverage.

Whew. There's a lot to chew on here, but for the moment I'm going to focus purely on the last point: "Rolling back" ACA subsidies and "regulations aimed at extending insurance coverage."

Let's dig in, shall we?

Here's the actual Republican Study Committee (RSC) proposal. The section attacking the ACA begins on page 86 and runs about 10 pages (it also includes converting Medicaid & CHIP into "block grants" among other GOP greatest hits) as well as some tinkering with the tax exclusion for Employer Sponsored Insurance, which is actually one area which I agree needs to be discussed, although that's for another day.

Let's take a look at what exactly the RSC wants to do to the ACA itself:

...President Biden and Democrats are hiding the true cost of health care by providing tens of billions billion in annual taxpayer subsidies through the Inflation Reduction Act (IRA). These subsidies are no solution. In fact, they provide taxpayer dollars to those well above the poverty line (including those making as much as $159,000 per year) and drive up premiums in the exchanges.

Ummm...it's not exactly a secret that ACA subsidies are provided to those "well above the poverty line." The original ACA formula provides subsidies on a sliding income scale to those making up to 4x the Federal Poverty Line (FPL). The upgraded subsidies included in the IRA still taper off on a sliding income scale, they just do so gradually instead of cutting off immediately the moment a household makes even $1 more than 400% FPL.

Yes, it's possible that there's a handful of people who earn several hundred thousand dollars per year who could potentially be receiving a nominal amount in ACA subsidies under the IRA. Hell, I was able to come up with an absurdly extreme example of a hypothetical 64-yr old couple, with 25-yr old triplets, living in Kay County, Oklahoma, who would receive a whopping $0.89/month in federal subsidies if they earn $880,000/year.

However, only around 16 million Americans are self-employed, and of those, only 10% of them earn more than $148,000/year. I'd imagine the number who earn more than $250K is well under a million people, and the number who earn $500K or more is likely below 100,000. If some of them are getting, like, $10/month off their premiums I'm not gonna get too hot & bothered about it.

By contrast, the ESI tax exclusion subsidy is currently provided to millionaires and billionaires since there's no income cut off for it whatsoever:

Because the exclusion of premiums for employer-sponsored insurance (ESI) reduces taxable income, it is worth more to taxpayers in higher tax brackets than to those in lower brackets. Consider a worker in the 12 percent income-tax bracket who also faces a payroll tax of 15.3 percent (7.65 percent paid by the employer and 7.65 percent paid by the employee). If his employer-paid insurance premium is $1,000, his taxes are $254 less than they would be if the $1,000 were paid as taxable compensation. His after-tax cost of health insurance is thus $1,000 minus $254, or $746. In contrast, the after-tax cost of a $1,000 premium for a worker in the 22 percent income-tax bracket is just $653 ($1,000 minus $347). Savings on state and local income taxes typically lower the after-tax cost of health insurance even more.

Moving on...

Further, the Biden Administration has illegally implemented illegal executive actions to provide an additional $34 billion in taxpayer bailouts for the failed Obamacare experiment. These expanded subsidies will only perpetuate a never-ending cycle of rising premiums and federal bailouts-- with taxpayers forced to foot the bill.

Wow! "Illegally implemented illegal executive actions??" Actions so illegal they used the word twice in one sentence? My, that does sound serious! And what's this $34 billion in "taxpayer bailouts" all about? The RSC proposal references this 2022 letter from the Congressional Budget Office to Sen. Mike Crapo:

Proposed Regulation Concerning the Affordability of Employment-Based Coverage for Family Members

In a recent report, CBO and JCT analyzed the effects of a regulation proposed by the Department of the Treasury and the Internal Revenue Service, “Affordability of Employer Coverage for Family Members of Employees” (87 Fed. Reg. 20354, April 7, 2022).

That regulation would change the current-law calculation used to determine whether the plan an employer offers is affordable, for the purpose of determining eligibility for marketplace subsidies. In what is often called the family glitch, the current calculation, which is based on the cost of an individual-only rather than a family plan, leaves some families ineligible for marketplace subsidies because the employee’s contribution for individual coverage does not exceed the affordability standard even though that employee’s contribution for a family plan would do so.

Ah, yes: The Family Glitch, which I've written about several times in the past, but it's better explained by Louise Norris:

We still get calls on a regular basis from people who are shopping for individual insurance because adding dependents to their employer plan is prohibitively expensive. We estimate that roughly 20 percent of the people who contact us are in this situation.

Unfortunately, due to a “glitch” in the ACA, they are not eligible for premium subsidies in the exchange if the amount the employee has to pay for employee-only coverage on the group plan is deemed “affordable” – defined as less than 9.78 percent of household income in 2020.

It doesn’t matter how much the employee would have to pay to purchase family coverage. The family members are not eligible for exchange subsidies if the employee could get employer-sponsored coverage just for him or herself, for less than 9.78 percent of the household’s income in 2020. As long as the employee’s portion of the premium is affordable, the cost for the family could end up being 25 percent — or more — of their household income and they’d still have no access to premium subsidies. They can either pay full price in the individual market, or pay whatever the employer requires to cover the family on the employer’s plan, despite both options being financially unrealistic.

The "Family Glitch" was caused by the Obama Administration deciding to interpret the phrasing of the ACA in a particular way which many experts disagreed with at the time and since. In 2022, this was corrected thanks to the Biden Administration interpreting the phrasing of the law in a more rational way.

So where'd the $34 billion come from? Again, going back to the CBO letter:

Under the May 2022 baseline, CBO and JCT estimate that, if the proposed regulation is made final, the number of people enrolled in nongroup coverage would increase, on average, by 900,000 in each year over the 2023-2032 period. That enrollment estimate is the net result of an estimated decrease of 600,000 people with employment-based coverage, a decrease of 400,000 people who are uninsured, and an increase of 100,000 people enrolled in Medicaid and CHIP. The agencies estimate that those changes would increase the deficit by $33.6 billion over the period as a result of increased direct spending of $43.7 billion, primarily driven by an increase in premium tax credits for people newly receiving them. The increase in direct spending would be partially offset by increased revenues of $10.1 billion collected from people no longer receiving the tax exclusion for employment-based coverage (see Table 4).

Yes, that's right: Closing the Family Glitch is expected to result in 400,000 more Americans receiving healthcare coverage each year. The horror! And the $33.6 billion is over a 10 year period, so that's an average of $3.36 billion/year, or $8,400 per additional enrollee per year. For what it's worth, Medicare spends around $14,157 per enrollee (the U.S. spent $944B on Medicare in 2022 to cover around 65 million enrollees).

The GOP proposal then goes on to claim that...

Additionally, these subsidies would force millions of Americans off quality employer coverage into substandard Obamacare plans. The CBO found that making the IRA taxpayer bailouts permanent would reduce employer coverage by 2.3 million, while the Biden Administration’s executive actions would also reduce access to employer coverage for millions of Americans.

Um...nonsense. It wouldn't "force" anyone off of anything (and their use of the terms "quality" and "substandard" to describe employer coverage vs. ACA plans is...subjective, let's just say). The CBO said that ~600,000 people would choose to switch over to ACA exchange coverage because it would become far more affordable for them to do so thanks to becoming eligible for the subsidies. And while it's true that the CBO projected that making the enhanced IRA subsidies permanent would indeed "reduce employer coverage by 2.3 million," that's because it would also INCREASE the NET number of Americans with healthcare coverage by 2.2 million:

CBO and JCT expect that if the enhancement became permanent, 2.2 million fewer people would be without health insurance, on average, in each year over the 2023-2032 period, relative to current law. That decrease is the result of increases and decreases among different types of coverage:

• A 4.8 million net increase in enrollments for marketplace coverage resulting from an increase in subsidized enrollment of 5.2 million and a decline of 400,000 people enrolled without subsidies;

• A 200,000 combined increase in enrollment in Medicaid and the Children’s Health Insurance Program (CHIP);

• A 500,000 decrease in nongroup coverage purchased outside the marketplaces; and

• A 2.3 million decrease in enrollment in employment-based coverage.

In any event, what exactly is the House GOP proposing to do instead? Well...

The RSC Budget would end these taxpayer bailouts while adopting reforms that reduce premiums and increase access to and choice of care for all Americans.

Danger, Will Robinson. The first part is pretty obvious: They plan on letting the enhanced IRA subsidies expire at the end of 2025 as they're currently scheduled to. This would cause plenty of economic pain to ~21 million ACA exchange enrollees all by itself, and is already a major threat since they'll sunset on 12/31/25 if no legislative action is taken.

It's the second part "adopting reforms" which is truly chilling, however.

Among the reforms proposed in the RSC Budget, protecting individuals with pre-existing conditions is a top priority. The reforms contained in this budget would produce guaranteed coverage pools, more efficient and competitive markets, more tailored and portable health insurance policies, and would refocus aid to those that need it most.

Ut-oh. "Guaranteed Coverage Pools" sounds an awful lot like "High Risk Pools," but I'll bite my tongue on that for the moment...

...Major insurers have fled the Obamacare market, leaving many Americans over the years with the Hobson’s choice to “shop” for insurance in a market with only one option available. At times, insurers completely fled a market leaving whole communities without a single marketplace plan available.

This claim caught my eye, since it was indeed true at one time but has since completely reversed itself. Sure enough, the RSC proposal decided to cite data from June 2017...when insurance carriers were indeed dropping out of the ACA exchanges. That was seven years ago. Since then the ACA has rebounded to become an overwhelming success, with carrier participation dramatically increasing across the country...thus the "...at times" caveat thrown in there.

The RSC Budget also opposes any attempts to hand more control over health care decisions that rightly belong to patients and doctors to federal bureaucrats.

HOLY CRAP. Read that again. Slowly.

Democrats’ preferred option, taxpayer-funded “Medicare-for-All,” would constitute an unprecedented expansion of the federal government. It would also cost Americans an estimated $32 trillion in new taxes to artificially control premium increases and would inevitably lead to long wait times and a reduced quality of care.

Um....in case the House GOP hasn't noticed, "Democrats preferred option" isn't "Medicare for All." If it was, we would have elected Bernie Sanders and/or would have passed it into law in 2021 or 2022, when Democrats had control of the White House, Senate and House of Representatives. Our preferred option, for the most part, is strengthening & expanding the ACA to achieve universal healthcare coverage.

The RSC Budget adopts regulatory reforms developed by the RSC’s Health Care Task Force, chaired by then-Representative and current Senator Roger Marshall (R-KS) in the 116th Congress, and set forth in its report: A Framework for Personalized, Affordable Care. The reforms contained in A Framework for Personalized, Affordable Care would transform the individual marketplace’s current regulatory structure, unwind the ACA’s Washington-centric approach, and largely return regulatory authority to the individual states.

Hoo boy.

OK, this is getting pretty long so I'm gonna break the rest of it off into a second blog post...stay tuned...

OK, HERE'S PART 2, WHICH INCLUDES THE UGLIEST PARTS OF THE PLAN.