How US Senate Republicans plan to dismantle Obamacare

House Speaker Paul Ryan holding up a copy of the American Health Care Act, flanked by House Majority Leader Kevin McCarthy (left) and House Energy and Commerce Committee chairman Greg Walden.
House Speaker Paul Ryan holding up a copy of the American Health Care Act, flanked by House Majority Leader Kevin McCarthy (left) and House Energy and Commerce Committee chairman Greg Walden.PHOTO: AGENCE FRANCE-PRESSE

NEW YORK (NYTIMES) - US Senate Republicans on Thursday (June 22) unveiled a draft of their plan to repeal and replace former president Barack Obama's signature Affordable Care Act, which they expect to vote on next week.

The Bill is similar to the one passed by the House in May, but it makes several significant alterations, including deeper cuts and structural changes to Medicaid, a programme that insures one in five Americans, including two-thirds of nursing home residents.

How the Senate Bill alters major parts of the Affordable Care Act, commonly known as Obamacare:

1. Medicaid expansion: Change

OBAMACARE - Raised the eligibility cutoff to 138 per cent of the poverty level in any state that chose to expand the programme, around US$16,000 (S$22,242) for a single person. The federal government pays at least 90 per cent of the costs for newly eligible beneficiaries.

SENATE BILL - Allows the 31 states that expanded Medicaid to continue getting federal funding through 2023, with reduced funding starting in 2021. The Bill sharply curtails federal support for Medicaid expansion in 2024, likely causing many states to end the expansion.

Separate from the expansion, the Bill caps future federal funding per enrollee, based on how much each state has spent historically. States also have the option to receive a lump-sum block grant for some beneficiaries.

The Congressional Budget Office estimated that similar policies in the Bill passed by the House would cut more than US$800 billion from the programme over a decade. The Senate formula puts the programme on a budget and substantially reduces future Medicaid spending.

2. Taxes created under the Affordable Care Act: Repeal

OBAMACARE - Imposed new taxes to help pay for coverage expansion. They include taxes on investment income, wages above US$200,000, medical devices, prescription drugs and indoor tanning.

SENATE BILL - Permanently eliminates most of the taxes. A tax on high-cost employer health plans, established under Obamacare, but yet to kick in, would be imposed beginning in 2026.

3. Subsidies for out-of-pocket costs: Repeal

OBAMACARE - Provides subsidies to help people with lower incomes pay for out-of-pocket costs like deductibles and co-payments.

SENATE BILL - Preserves the subsidies through 2019, then eliminates them altogether. This means many low-income people would face high deductibles.

4. Tax credits for premiums: Change

OBAMACARE - Gives tax credits to middle-income Americans to offset the cost of premiums, based on their income and the cost of insurance in their area.

SENATE BILL - Changes the formula for subsidies to make them less generous, and lowers the threshold for people who can receive financial assistance from 400 per cent to 350 per cent of the federal poverty level, or about US$42,000 for a single person. The Bill also expands the subsidies to Americans living below the poverty line, who were ineligible under Obamacare.

5. Essential health benefits: Change

OBAMACARE - Requires all insurers to offer 10 categories of essential health benefits, like maternity treatment and hospital care.

SENATE BILL - Preserves this rule, but states could apply to waive the standards. This means that some types of care, like maternity benefits, prescription drugs or addiction treatment, might not be covered in states that waive the rule.

6. Prohibitions on annual and lifetime limits: Change

OBAMACARE - Bars insurers from setting a limit on how much they have to pay to cover someone.

SENATE BILL - Preserves this rule, but gives states the option to eliminate it as part of a waiver of insurance market rules.

7. Pre-existing conditions policy: Keep

OBAMACARE - Requires insurers to cover people regardless of pre-existing medical conditions and bars them from setting prices based on a person's health history.

SENATE BILL - Preserves this rule, but patients with serious illnesses may find that their coverage is less valuable if they live in a state that eliminates benefit requirements or allows limits on coverage.

8. Restrictions on charging more for older Americans: Change

OBAMACARE - Bans insurers selling policies directly to individuals from charging their oldest customers more than three times what they charge their youngest ones.

SENATE BILL - Allows insurers to charge older customers five times as much as younger ones.

9. Individual mandate: Repeal

OBAMACARE - Requires all Americans to buy health insurance or pay a tax penalty, with exceptions for people who have experienced hardships.

SENATE BILL - Eliminates the penalties.

10. Employer mandate: Repeal

OBAMACARE - Requires larger companies to provide affordable insurance to their employees, or face financial penalties.

SENATE BILL - Eliminates the penalties.

11. Health savings account: Change

OBAMACARE - In 2017, allows an individual to put US$3,400 and a family to put US$6,750 into a tax-free health savings account.

SENATE BILL - Allows people to put more money into their health savings accounts, up to the maximum allowed for out-of-pocket costs, and lets spouses make additional contributions.

12. Dependant coverage until 26: Keep

OBAMACARE - Allows children to stay on their parents' insurance policies until age 26.

SENATE BILL - Keeps this intact.