GOP Draft Would Phase Out Medicaid Expansion, Charge Older Enrollees More

The bill circulating Friday would allow insurers to charge older Americans 5 times what the youngest group pays; insurers could charge anyone with a lapse in coverage 30% more to re-enter the market.

A draft House Republican bill to repeal portions of the Affordable Care Act (ACA) would end Medicaid expansion by 2020, make adults approaching retirement pay much more for healthcare, and create a different financial stick to keep people insured.

It was unclear if the document circulating Friday, which was already 2 weeks old, represents the most current House Republican plan. But it is consistent with a stripped-down presentation that the caucus discussed before the winter recess.

Both plans replace the ACA’s individual mandate, which charged penalties for those who stayed uninsured, with steep premium increases for those who go off the rolls and try to return. This appears designed to fix insurers’ complaints about Obamacare: the cost of being uninsured was not steep enough to get everyone to sign up, so many waited until they became ill to obtain coverage.

Overall, the plan had several pieces that should drive down premiums for the young and healthy, but this will be at the expense of those who are older and sicker. The plan would:

  • End the requirement for essential health benefits. The ACA requires insurers to pay for 10 areas of coverage, including mental health.
  • Eliminate Medicaid expansion by January 1, 2020. The plan doesn’t bar states from keeping those who earn up to 138% of the federal poverty line in their programs, but it ends the subsidies that funded this change. At the same time, the draft plan would transform Medicaid into a per-capita grant system.
  • Boost the premium difference between the youngest and oldest in the individual market. Those age 60 years and older could pay up to 5 times what adults in their 20s pay.
  • Shift from an income-based to an age-based tax credit. No matter how much people earn, they would be eligible; credits for those under age 30 would be $2000 a year, while those over 60 would get $4000 a year. Thus, those nearing Medicare eligibility would be charged much higher premiums but get more help paying them.
  • Give states $100 billion over 10 years to recharge high-risk pools or create other methods to subsidize coverage for the sickest patients, including those who may have a lapse in coverage.
  • End the individual mandate. Instead, enrollees who try to re-enter the market after a coverage lapse would pay up to 30% more for premiums for a year.

Some of the bill's provisions would start right away, but the most sweeping changes would not take effect until January 1, 2020, well after the mid-term elections.

While the plan addresses flaws that insurers have blamed for an unbalanced risk pool and rising premiums, it also leaves potential gaps in coverage: some insurers may not require coverage for pregnancy, for example; and Hyde amendment limits mean abortion would have to be covered separately, since the tax credits cannot be applied to policies that fund the procedure.

The plan also strips away nearly all the taxes that paid for the ACA. The only remaining funding would tax employer-based benefits that exceed the 90th percentile of current premiums. Notably, the bill draft dated February 10, 2017, had not been scored by the Congressional Budget Office.

AARP, formerly the American Association of Retired Persons, has publicly opposed what it calls the “age tax,” which the group says would make healthcare unaffordable to many aged 50 to 64. People in this age group also have the hardest time finding a new job if they become unemployed, and reports from the Bureau of Labor Statistics say evidence shows this leads to health “shocks,” such as heart attacks or cancer, especially if health coverage becomes out of reach.

In addition, Republican governors in states that have expanded Medicaid are expected to fight efforts to eliminate it. Ohio Governor John Kasich met with President Donald J. Trump Friday on this issue, and in comments to Cleveland.com, he said he could support efforts shrink the pool of those eligible for Medicaid over time, along with efforts to end essential health benefits and rein in prescription drug costs.