6 Keys to Understanding Graham-Cassidy & the “Last Best Chance” to Repeal ObamaCare
The GOP has put forward their final attempt to repeal ObamaCare this year: The Graham-Cassidy-Heller-Johnson bill, also known as Graham-Cassidy. Vice President Mike Pence has aptly described this as “our last best chance to stop and turn [ObamaCare] around.”
Time is of the essence because the reconciliation process that allows the Senate leadership to pass this reform with a simple majority vote expires on September 30, 2017. After this, there is no chance that the unified Left will allow any reform through Senate.
The ACLJ has engaged the fight to defeat this healthcare disaster for years, and we are monitoring this latest healthcare reform effort. What follows is a brief, common-sense analysis of this latest attempt to repeal ObamaCare.
In short, Graham-Cassidy converts $1.2 trillion dollars of Obamacare subsidies and spending into block grants for States to craft healthcare plans to address the needs of its citizens. The bill also ends ObamaCare mandates and defunds Planned Parenthood. Here are the six major changes Graham-Cassidy makes to ObamaCare:
- Ends the Individual and Employer Mandates
Graham-Cassidy eliminates the penalties for failing to comply with either ObamaCare mandate.
Under ObamaCare, the individual mandate required individuals to either obtain insurance or pay a penalty. Likewise, the employer mandate requires that larger companies provide their employees access to insurance or else pay a penalty.
Under Graham-Cassidy, the penalties for non-compliance with these mandates are reduced to zero. This change would be retroactive to include 2016.
This would finally end the immense burden of both the individual and employer mandates.
- Converts Medicaid Expansion into Block Grants to the States
Graham-Cassidy ends the Medicaid expansion and replaces it with block grants to the States. It does this in two phases.
First, as part of a “short term assistance” program for States, Graham-Cassidy approves $10 billion for 2019 and $15 billion for 2020 to “assist in the purchase of health benefits coverage by addressing coverage and access disrupting and responding to urgent health care needs within States.” States must apply for the funds and the funds can only be used for a limited number of purposes all designed to lower the cost of insurance and out of pocket healthcare expenses.
Second, after 2019, the short-term program is replaced with “merit based” block grants to the States. Graham-Cassidy authorizes $1.2 trillion dollars in funds from 2020 to 2026 in the following disbursements: 2020 ($146 billion); 2021 ($146 billion); 2022 ($157 billion); 2023 ($168 billion); 2024 ($179 billion); 2025 ($190 billion); 2026 ($190 billion).
The States could use this block grant funding for nearly any legitimate healthcare need, including premium assistance, reducing out-of-pocket expenses, the creation of high risk pools, or even their own Medicaid expansions.
Another key component of the bill is that it restores equality among the States. Currently, four states (New York, California, Massachusetts, and Maryland) receive 37% of all ObamaCcare funding . Graham-Cassidy would equalize this by assigning funding based on a per capita cap. Instead of playing favorites, Graham-Cassidy would allocate needed funds to the States based on population.
The amount of block grants each State receives is based on a per capita calculation and cap. From 2021 to 2023, this is determined solely based on the number of eligible recipients residing in the State. From 2023 to 2026, this is determined by a combination of the number of eligible recipients residing in the State and a percentage of eligible individuals enrolled in credible coverage the previous year. After 2024, Graham-Cassidy would tie the annual growth rate for funding to children and non-disabled adults to standard inflation.
States could also require non-disabled adults to work to receive Medicaid benefits.
In the end, Graham-Cassidy gives the States $1.2 trillion to create tailor made healthcare systems within each State, and does so in a more equitable manner.
- Cuts ObamaCare Taxes and Subsidies
Graham-Cassidy ends ObamaCare’s out-of-pocket in 2020. Instead, States could choose to use a portion of their block grant funding for this purpose. There is no requirement they do so.
Graham-Cassidy ends ObamaCare’s insurance premium tax credits. Again, States could choose to use a portion of their block grant funding for this purpose but there is no requirement they do so.
Graham-Cassidy actually repeals three key ObamaCare taxes: 1) the medical device tax; 2) the tax on over-the-counter medicine; and, 3) the tax on health savings accounts. However, it leaves all others in place, including taxes on those making over $200,000, investment income, and health insurers. Revenue from the remaining taxes are used to fund the $1.2 trillion dollars in block grants Graham-Cassidy would give to the States.
In the end, Graham-Cassidy cuts some taxes and reduces government spending while also ensuring States are funded to create effective, State-specific healthcare systems.
- Gives States Control Over Insurance Plans
Graham-Cassidy bars insurers from denying a person health insurance coverage based on pre-existing conditions. It also prohibits insurers from capping annual or lifetime limits on their coverage of insured individuals. Graham-Cassidy does not end essential health benefits currently required of each healthcare plan.
However, Graham-Cassidy allows States that want to receive federal block grant funds to apply for a waiver to these three requirements. But to receive these waivers, the States must make satisfactory provisions to cover those who would be affected by these waivers. In other words, States cannot take taxpayer money and leave anyone out to dry.
In the end, States cannot alter these vital protections without first putting in place their own, localized, protections to ensure everyone has access to affordable health insurance. They could do this by creating premium assistance programs, subsidizing out-of-pocket expenses, or even creating high risk pools to help those in need.
- Bolsters Health Savings Accounts
Graham-Cassidy nearly doubles the amount individuals and families may put into their health savings plans (often referred to as an HSA) tax-free and, importantly, even use that money to pay insurance premiums.
Under ObamaCare, the amount was limited to $3,400.00 for individuals and $6,750.00 for families. Instead, Graham-Cassidy, would increase this to $6,650.00 for individuals and $13,300.00 for families.
Under ObamaCare, the money saved in health savings accounts cannot be used to pay premiums. Graham-Cassidy, however, would allow the savings accounts to be used to pay insurance premiums. It also caps the annual out-of-pocket maximum deductible for high-deductible “catastrophic” plans.
- Defunds Planned Parenthood
Graham-Cassidy “defunds” Planned Parenthood and the abortion industry.
It does this in two key ways: 1) It defines abortion providers with more than $1 million in annual Medicaid reimbursements as a “prohibited entity” for one year, denying them from being reimbursed by Medicaid (effectively preventing approximately $400 million of taxpayer funding from flowing to Planned Parenthood; 2) bars any plan that covers abortions (except in the case of rape, incest, or health of the mother) from reimbursement under the small employer health insurance expense credit. Together, these two provisions provide the strongest pro-life protections of any of the recent ObamaCare repeal efforts.