The Senate Bill Needs Obamacare to Work

Percentage change in Medicaid coverage from 2013 to 2017 — Kaiser Family Foundation March 2017

So I’m digging into this Senate bill, and it sucks, of course. But something in particular is sticking out to me that I think the American people should know. Something that exposes so much of Republican rhetoric around the healthcare debate as hollow.

In many ways, this Senate bill is actually a lot more “Obamacare”, not less.

As far as most people have come to understand the term, that is. Specifically, Obamacare as describing the state-based exchanges where individuals can purchase group rate insurance with government subsidy.

The Senate bill cuts the Medicaid expansion over four years starting in 2020. Cutting this expansion will force at least 11 million people from coverage under a cost controlled and relatively well liked single-payer plan, and compel them to move to the Obamacare exchanges where they still qualify for extensive subsidies. The Senate bill also fixed the coverage gap created by the Supreme Court decision of NFIB v Sibelius that made Medicaid expansion voluntary. Therefore, expansion eligible people in non-expansion states, around 3 million folks, are now eligible, not for Medicaid, but again for extensive exchange subsidies. Those 3 million can qualify for subsidy and move to exchanges immediately and don’t have to wait for 2020.

So all in all you are looking at many many millions more on the exchanges, starting soon. These exchanges currently have only 13 million people on them, so with 11–14 million people getting kicked off or denied medicaid, new enrollees could represent a sea change in the number, characteristics, and costs to insurers of the group. Previously insurers had been complaining about the people on the exchanges being sicker than they planned for. I can’t imagine how much worse it will be when only the sickest of the medicaid expansion enrollees come to the exchanges.

So with the Senate bill, Republicans are relying on Obamacare exchanges to insure a lot more people. That could maybe work out if lawmakers and implementers were careful and prepared favorable conditions for the transition period. But guess what? We aren’t anywhere near the favorable conditions necessary. In fact, Trump and Congressional Republicans are actively sabotaging the exchanges by eliminating the exchanges’ funding mechanism, lowering the subsidies to insurers, removing the mandate requiring healthy people to join, and in general providing the wavering insurance industry with chaos and uncertainty.

So overall costs are going to balloon (Medicaid is cheap compared to private insurance), exchange prices are going to skyrocket (no mandate and newly arrived sick medicaid patients will cause a death spiral of the insurance exchanges), providers are going to exit (they already are and this plan has them covering sicker people with less subsidy), all for a shallow and likely short lived political win?

My guess is that at least some Senate Republicans know this whole plan is a bad idea. Thats why they want to push it down the road as much as possible. Pass something to show your base you kept your promise. Push off the real pain to another year, another Congress. But still, the chance that this bill will be enacted deserves to be taken seriously.

And seriously, this Senate bill will not only to kick people off Medicaid but is likely to kill the Obamacare exchanges at a time it comes to rely more on them.