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Andy Friedman: Left, Right and Center Slug It Out on Health Care

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With three new health care overhaul initiatives floating in the Senate — from the political right, left and center — the GOP version crafted by Sens. Lindsay Graham and William Cassidy, dubbed the Graham-Cassidy bill, currently has the most support as it comes up for a vote next week, according to political analyst Andy Friedman.

But Sen. John McCain, R-Arizona, all but doomed passage of the Graham-Cassidy bill by stating Friday: “I cannot in good conscience vote for the Graham-Cassidy proposal. I believe we could do better working together, Republicans and Democrats, and have not yet really tried. Nor could I support it without knowing how much it will cost, how it will affect insurance premiums, and how many people will be helped or hurt by it. Without a full CBO score, which won’t be available by the end of the month, we won’t have reliable answers to any of those questions.”

(Related: 7 HSA/FSA Facts Your Clients’ Employees Should Know)

In his most recent insights, Friedman of The Washington Update analyzes the three reform initiatives — Graham-Cassidy on the right, Sen. Bernie Sanders’ left-leaning plan to create a single-payer system, as well as the bipartisan plan to “stabilize” the Affordable Care Act.

Senate Majority Leader Mitch McConnell’s office announced Wednesday that the Senate would hold a vote on the Graham-Cassidy bill next week.

The Senate “must consider the bill this month to use arcane procedural rules that allow passage with 51 votes,” Friedman said. “After then, the Democrats could filibuster the bill to prevent its passage.”

As Friedman explains in his recent analysis, the Graham-Cassidy bill would keep in place “virtually all of the taxes and fees imposed by the ACA and transfer those funds to the states proportionally. Each state then would use the funds to adopt its own health care program.”

Those with pre-existing medical conditions would also still be allowed to purchase insurance “on the same terms as healthy people,” but the bill “would do away with the individual mandate penalty that requires everyone to obtain health insurance,” Friedman explained.

By allocating money proportionally among states, the bill would reduce funds received by states that expanded Medicaid and give those funds to states that didn’t. “Thus, some low-income residents of the former states likely would lose insurance coverage,” Freidman said. 

Eliminating the individual mandate, Friedman continued, “could result in fewer healthy people purchasing insurance, leaving the insurance pool with a greater proportion of sick people.”

This create a troublesome situation in that “fewer healthy people” would be available to spread the risks to, so “insurance companies likely would have to raise premiums to cover the greater proportional outlays.”

Less coverage and higher premiums are what doomed the prior Republican attempts to reform the ACA, Friedman added.

The Congressional Budget Office has said it will not be able to estimate the comparable effects of Graham-Cassidy before the bill comes to the Senate floor. 

The looming question now, Friedman said, is whether the Republican senators who voted against the prior attempt at health care repeal “will maintain their objections in the absence of a CBO estimate.” 

Using prior estimates by CBO, the Brookings Institution released an analysis Friday estimating that the Graham-Cassidy legislation would reduce the number of people with insurance coverage by around 21 million each year during the 2020 through 2026 period.

In separate comments to ThinkAdvisor on Friday, Friedman said that the question now “is whether enough Republican senators will accept such a radical change to health coverage without knowing its effect on premium levels and the number of people losing coverage.”

Graham-Cassidy “gives the states leeway to circumvent the guarantee that people with pre-existing health conditions can purchase insurance at the same rates as healthy folks,” Freidman continued. “That possible circumvention arguably reinforces the need for a CBO estimate.”

If Graham-Cassidy fails, “I do think senators will reinstate negotiating the bipartisan measure,” Friedman said.

At issue in that measure, Friedman said in his analysis, “are ACA subsidies that defray the cost of deductibles and expenses imposed on lower-income families.”

The subsidies, he said, “are discretionary with the administration, and President Trump has not yet decided whether to pay them.” 

Without those subsidies, “insurance companies must raise premiums, as much as 20% according to the CBO,” Friedman added.

Also, the administration “could choose not to enforce penalties imposed on people who do not purchase insurance. If the administration announced such, then fewer healthy people might purchase insurance, causing an increase in premiums to cover a pool with a higher proportion of sick individuals,” Friedman said.

Sanders’ and democrats’ “single payer” system, meanwhile, basically put the onus on government to cover virtually all medical expenses, without the need for private insurance, Friedman said. “Essentially this proposal would expand Medicare to cover everyone, not just the elderly,” he said, and “stands no chance in a Republican-controlled Congress, but could be a factor in next year’s election campaigns.”

— Check out How to Get Medicaid for Nursing Home Care Without Going Broke on ThinkAdvisor.


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