Six years after the Affordable Care Act was signed into law, House Republicans finally have a plan to replace it. Well, not quite a plan — they prefer to call it a “broad outline.”
The outline, released by House Speaker Paul Ryan on Wednesday, consists of a cobbled-together greatest hits list of all the GOP’s bad ideas over the past few years — now, all in a single paper. All that’s missing is any indication of how many people would be covered compared to the ACA, or how much they would have to pay, or how much the proposals would cost. Or, of course, any admission that millions of people would lose coverage under these proposals.
Luckily, we don’t have such an information deficit when it comes to the impact of the ACA: we know that 20 million people have gained coverage, and the uninsured rate has fallen to a historic low of 9.1 percent. Let’s see how Speaker Ryan’s ideas measure up.
How many people would be covered? Don’t ask Paul Ryan.
Instead of the ACA’s tax credits to help people afford their premiums, the Republican outline would introduce a new tax credit. There’s no information on how much these new tax credits would be worth, or how much of people’s premiums they would cover.
We do know that, unlike the ACA, the credits would vary by age, not by income — which means low-income people wouldn’t get more help. And since their growth wouldn’t be tied to premium costs, the credits would grow more slowly than premium costs over time, leaving enrollees to shoulder an increasing share of costs on their own.
Furthermore, the ACA’s cost-sharing subsidies to help low-income enrollees afford their deductibles, co-pays, and other cost-sharing would be gone. Instead, Ryan offers an expansion of health savings accounts, which primarily benefit the wealthy.
Currently, 12.7 million people are enrolled in the ACA’s marketplaces, with more than 80 percent of them receiving tax credits to help afford their coverage. Ryan’s paper doesn’t include any estimate of how many people would be covered under his proposals.
Weakened consumer protections
The ACA protects people with pre-existing conditions from being discriminated against or denied coverage by insurers. It’s a very popular provision, which is why Paul Ryan also says he’ll do it.
The only problem is that his policies wouldn’t actually provide that protection. Rather, only people who maintain continuous coverage would be protected from price discrimination for pre-existing conditions. If Ryan’s tax credits aren’t large enough for you to afford your plan and you have to drop your coverage for a few months, then insurers would be free to price discriminate against you and your pre-existing conditions.
Compounding this problem, Ryan proposes that before this goes into effect, there will only be a single, one-time open enrollment period where everyone would be protected from price discrimination. But if you’re uninsured and miss the one-time offer, then insurers are — you guessed it — free to price discriminate against you. Given that almost 60 percent of uninsured people were unaware of the deadline for the most recent ACA open enrollment period, despite large outreach and information campaigns, this is a recipe for locking millions of people out of the insurance market.
For these people, Ryan proposes establishing high-risk pools, subsidized by the government. In practice, however, high-risk pools are only suitable as a temporary solution; since they only cover people in poor health, the premiums are too high to be sustainable in the long term without massive amounts of government funding. Although Ryan would dedicate $25 billion in funding to these pools, a Congressional Budget Office analysis of a similar Republican proposal in 2009 found that it would only cover 3 million people.
The GOP paper does, however, endorse permitting young adults to stay on their parents’ plans until age 26 and banning lifetime limits on coverage — policy changes it characterizes as “build[ing] on the reforms previously proposed by Republicans.” It neglects to mention that both of these reforms are now law thanks to the ACA. Also, the paper makes no reference to ACA’s prohibitions on insurers charging women more then men or imposing annual limits on coverage, raising the possibility that both of these might once again be permitted under the GOP’s replacement.
Massive cuts to low-income health programs
The paper disingenuously accuses the structure of the ACA of creating a “coverage gap” for low-income people in some states — without mentioning that this coverage gap is entirely due to the refusal of some Republican governors and legislators to expand Medicaid under the Affordable Care Act. Incredibly, the paper then abruptly pivots from decrying this coverage gap to proposing that it be permanently locked in, by preventing the remaining 19 states from expanding Medicaid in the future.
For states that have already expanded Medicaid, Ryan’s proposal would not repeal expansion outright. Instead, it would partially or fully roll it back by massively cutting federal funding for it. Currently, the federal government pays for the full cost of Medicaid expansion enrollees; its share gradually decreases to 90 percent in 2020, with states covering the remaining 10 percent. This is a much better deal than states get under traditional Medicaid. Ryan proposes gradually eliminating this enhanced payment share and replacing it with the traditional share. While disingenuously pitched as increasing state “flexibility,” this would massively shift costs onto state budgets in an effort to force them to roll back Medicaid expansion. As a result, millions of low-income people would lose coverage or see benefit cuts.
In the past, Speaker Ryan and other Republicans have also proposed block granting Medicaid. While sold as a way increase state flexibility, in reality this would dramatically cut funding for Medicaid over time, forcing states to cut benefits and eligibility. Analyses of Speaker Ryan’s budgets in the past have estimated that 14 to 20 million low-income people would eventually lose their coverage under block grants.
In this new paper, Ryan offers states a choice: either accept block grants or per-capita caps. Per-capita caps would similarly limit funding in the long term, resulting in large Medicaid cuts over time. In fact, the paper explicitly states that the per-capita caps would grow more slowly over time than Medicaid funding under current law. Ultimately, this would result in millions of people losing coverage or seeing reduced benefits as states pared back eligibility.
Furthermore, the GOP outline proposes to give states the power to impose work requirements on Medicaid enrollees. Apart from the fact that most Medicaid enrollees who can work are already employed, such a change would be bad policy. Ironically, although Ryan talks about the need to improve health care portability between jobs in the private sector, imposing work requirements in Medicaid would reduce portability, since low-income enrollees who got laid off would also lose their health coverage.
The paper also endorses giving states greater flexibility to impose premium hikes, waiting lists, and enrollment caps in Medicaid. And of course, no GOP greatest hits list would be complete without a measure allowing states to defund Planned Parenthood, restricting health care access for women covered by Medicaid across the country.
Finally, it would also cut federal payment rates for the Children’s Health Insurance Program, which covers low-income kids — once again shifting costs to state budgets and low-income families.
Fewer people eligible for Medicare
Paul Ryan also wants to raise the Medicare eligibility age from 65 to 67. In 2012, the Congressional Budget Office estimated that this change would affect 5.4 million seniors, forcing them to find alternative sources of coverage. The Center for American Progress estimated at the time that almost 435,000 of these seniors would be at risk of becoming uninsured. Yet since these estimates assumed that low-income seniors could rely on Medicaid expansion in states that had chosen that option, Ryan’s Medicaid proposals would even further limit choices for seniors pushed out of Medicare. Furthermore, such a change would cost the rest of the health care system — including patients, employers, and states — twice the amount that the federal government would save.
Although Ryan justifies this change by the fact that average life spans have increased since the creation of Medicare, these averages mask deep inequities across society. Some socio-economic groups have seen little to no increase. Furthermore, lower-income workers are more likely to have physically demanding jobs, where an extra two years is much more strenuous than, say, an extra two years spent voting repeatedly to repeal the ACA.
Furthermore, similar to his previous budget proposals, Ryan includes an even more dramatic proposal to shift to a premium support model for Medicare. Similar to a voucher system, under this model seniors would have a set amount of money to purchase health insurance either from private health insurers or from traditional Medicare, with seniors on the hook for any costs not covered by the premium support payment.
Since the growth in these premium support payments would be slower than the growth in health costs, these payments would be worth less and less over time — shifting costs from the federal government to seniors. Analyzing a 2012 version of this proposal, the Center for American Progress estimated that it could raise costs for new beneficiaries by up to $1,200 per year by 2030 and $5,900 per year by 2050. In a follow-up analysis, CAP found that the proposal could increase lifetime Medicare costs by up to hundreds of thousands of dollars for new beneficiaries after 2030.
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As all of this makes clear, this isn’t a real plan. The lack of details is embarrassing, and the details that do exist are worse. Even more embarrassing is the fact that Paul Ryan knows it’s not a real plan — that’s why he starts off the paper by calling his broad outline “the beginning of the conversation, not the end.”
The rest of the country moved past the beginning of this conversation six years ago. It’s time for congressional Republicans to catch up.
Thomas Huelskoetter is the Research Associate for Health Policy at the Center for American Progress.