WASHINGTON — A group of moderate Republican Senators have announced an Obamacare replacement plan that would give states the choice to pick a new health insurance system or keep the Affordable Care Act in place.
Louisiana Sen. Bill Cassidy and Maine Sen. Susan Collins unveiled the legislation on Capitol Hill Monday, which, in short, would create a bare-bones publicly funded insurance plan that could be used to expand coverage to virtually every American, while allowing states that are happy with existing Obamacare options to keep them instead.
The Cassidy and Collins plan would do away with Obamacare’s individual mandate, while fulfilling President Donald Trump's promise to preserve the ban on denying coverage to people with pre-existing conditions. And the senators said Monday that they’re hopeful that that last provision will give them a chance to win over Democratic senators, whom Congress will need to pass any new health care legislation.
The bill would allow states to opt out of the ACA and into a publicly subsidized "default option" plan that every uninsured citizen would be automatically entered into. Federal money would cover the premium payments for the default plan. The plan would have high deductibles and include basic pharmaceutical coverage, catastrophic injury coverage, and some preventative care such as free childhood immunizations.
The senators predict that with more Americans covered for major health costs, their plan will bend the cost curve down over the long term. They’re joined by two other Republicans, West Virginia Senator Shelley Moore Capito and Georgia Senator Johnny Isakson, in co-sponsoring the bill.
The Cassidy and Collins plan is a major departure from traditional Republican rhetoric on health care because it requires keeping the costs of Obamacare exchanges and Medicaid expansion in place.
But the two senators argue it is consistent with Republican ideals because it ultimately gives the states the power to decide their own path, while perhaps offering enough of a compromise for Democrats to actually agree to pass it.
It will be a tough sell for Republicans, but Cassidy said keeping the revenue streams from Obamacare is the only way to pay for the parts of the ACA that Republicans want to save.
"President Trump has said he wishes to cover all, take care of those with pre-existing conditions without mandates. For that you need revenue, bottom line," said Cassidy.
Cassidy and Collins said they have talked to Republican leadership about their proposal and that leadership is waiting to see how the debate plays out.
Here's how their alternative plan would work:
- States opting out of Obamacare will receive the same amount of funding as they would under the existing health care law with full Medicaid expansion. Some states opted not to accept the Medicaid expansion under Obamacare, but would still get the full funding equivalent as if they had. This money will go towards health savings accounts (HSAs) for every eligible citizen in the state. The value of the HSA will be enough to pay for a "default option" health care plan.
- The state would call on the insurance industry to bid on who will be the provider for the default plan. Whoever can provide the best coverage for the amount of money in the HSAs will win the bid.
- All uninsured people in states that opt into the new GOP plan will be automatically enrolled in the default option plan. Many people may not even know they are insured until they end up needing to use the coverage. The plan envisions states will contract a private company to set up and manage these accounts across the state.
- People can choose to opt out of the default plan and put the value of their HSA towards a private plan of their choice.
- People who are already covered through their work may receive some subsidies depending on their income, but would otherwise be unaffected.
- States can choose to take up to two percent of the federal money they receive and put it towards health initiatives of their choice. Cassidy said that his home state of Louisiana may be able to get better health outcomes by putting that two percent toward lowering HIV rates, for example, rather than contributing to the default option.
The plan includes other possibilities as well. States could decide not to manage their default plans, in which case the federal government would take responsibility. States could also decline federal subsidies altogether, but given that they would still be beholden to the pre-existing condition ban, that does not seem like a realistic option.
Sen. Collins described the plan as "a generous approach that would allow states to cover uninsured individuals."
Sen. Rand Paul is expected to release his own Obamacare replacement plan this week, which will likely be radically different than the one released by Cassidy and Collins on Monday. President Trump has not yet released a replacement plan and members say that what that might entail remains unknown.