The Known Unknowns of the GOP Health Care Plan

The intended consequences of Trumpcare are scary enough. What about the unintended ones?

Senate Majority Leader Mitch McConnell walks to a hearing on Capitol Hill in Washington on Thursday.

Jonathan Ernst/Reuters

Big laws have glitches and drafting errors that affect millions of lives. That’s an uncomfortable reality, particularly in a complicated area like health care, which accounts for about one-sixth of the U.S. economy. We know many of the ways the House’s American Health Care Act and the Senate’s Better Care Reconciliation Act may harm millions of Americans who rely on the government to regulate and subsidize or cover their health insurance. But there are also impacts of the GOP health care plan that won’t become apparent until after the legislation has become law.

Consider, first, two glitches—one ambiguous, one obvious—in the Affordable Care Act, a bill that was much more carefully constructed than the various proposals Republicans are considering in their effort to repeal and replace Obamacare.

When the ACA was passed, its framers didn’t want consumers to migrate in droves away from employer-based insurance onto federally subsidized marketplace plans. So a worker who can obtain coverage through an affordable employer-based plan is not eligible for ACA’s marketplace subsidies. This policy, one of the myriad judgment calls Congress made in a massive bill, sounded pretty reasonable. Unfortunately, someone screwed up the fine print.

It was my stepsister who first alerted me to this problem, commonly known as the “family glitch.” She and her family live on a modest income. When the ACA passed, they were getting crummy and expensive health insurance through her husband’s employer.  She loved the new law because she really wanted to gain coverage through her state marketplace. Then she discovered that her family was ineligible for financial help.

As the ACA was written—at least as the IRS interprets things—a worker’s employer-based plan is deemed affordable if he can buy insurance for himself than would cost less than 9.69 percent of his income. (This percentage is adjusted annually, as explained here.) The cost of covering an entire family is not considered in this calculation. Thus, my stepsister and her family remained shut out, although they lacked access to an affordable health insurance plan.

That was an obvious screw-up. Had the ACA been a normal bill, this would have been cleaned up through technical amendments and a few billion dollars in subsequent legislation. Al Franken sponsored a bill to do precisely this. Given the political context in which congressional Republicans wanted the ACA to fail, no such legislative fixes were ever possible.

The ACA had a second, much bigger glitch. The bill included a provision known as the Community Living Assistance Services and Supports Act, or CLASS Act. This was a worthy and imaginative effort, in which people could contribute a monthly premium to buy into a program that would protect them if they ever became disabled due to an injury or a chronic illness. The CLASS Act excited many of us in the disability advocacy community. Few other people have ever heard of CLASS, which imploded before it ever got started.

The political and programmatic details get complicated. But from 50,000 feet, the story is depressingly familiar. CLASS was a voluntary disability insurance program with a five-year vesting period for benefits, but with community-rated premiums. With no individual mandate, the CLASS Act faced the poignant structural challenge that the disability community was excited about it, and basically no one else had even heard of it. These problems were widely discussed in Washington. The ACA even included a sensible amendment, inserted by New Hampshire Sen. Judd Gregg—a Republican!—that gave the Department of Health and Human Services discretion to modify CLASS if it appeared to be financially unstable. But the political and technical challenges were sticky.

Democrats hoped to clean things up in conference once ACA was passed. After Scott Brown’s surprise victory in a Massachusetts special election cost Democrats their filibuster-proof majority in the Senate, the endgame got messy, and Democrats were never able to get CLASS right. The Obama administration cut its losses. CLASS became the largely forgotten first casualty of the health reform fight.

These were two bad glitches in a health care bill that was carefully assembled over several years by genuine experts inside and outside of government. The ACA was subject to months of detailed hearings and amendments, repeated consultations with the Congressional Budget Office and with policy experts in the executive branch. The ACA’s framers desperately wanted to get things right. They didn’t always succeed.

That story should worry anyone who contemplates Republican health care efforts. Both the AHCA and the BCRA are horribly crafted legislative documents. Both were produced through a rushed, slipshod process, complete with radical last-minute additions thrown onto the pile to gain one or two final votes.

Their known and intended defects are bad enough: uninsuring an estimated 22 million people, block-granting and cutting Medicaid, weakening protections for people with pre-existing conditions, and more. The unknown and unintended defects could be equally significant.

A few areas to consider:

The illegal benchmark plan: On Thursday, the CBO released its latest analysis of BCRA. This report examined a benchmark plan for the year 2026 with an assumed actuarial value of 58 percent (roughly speaking, an insurance policy that would, on average, pay for 58 percent of consumers’ total costs for covered services). That plan turns out to have a whopping $13,000 deductible. Leaving aside that this terrible policy would harm millions of low-income people, this benchmark plan would be illegal, imposing out-of-pocket spending above what’s permitted under current law. At least that glitch was identified and can be fixed, presumably by weakening consumer protections in current law.

Medicaid cuts that may or may not happen: In order to get enough votes to even move forward with consideration of a bill, Senate Majority Leader Mitch McConnell has reportedly reassured Republican moderates that BCRA’s Medicaid cuts will never actually happen—meaning, presumably, that these cuts will be overturned in some future legislation before they can take effect. The unintended consequences of passing massive cuts you don’t actually want to impose would be severe. If we consider this cynical sales pitch on its face, moving the baseline of federal budgets like this is a huge gamble. For example, one would have to devise huge pay-for tax increases or other cuts to undo these correspondingly huge Medicaid cuts in a subsequent reconciliation bill. McConnell’s argument is even more reckless when one considers the chain reaction throughout the states and the entire medical economy that curbing Medicaid will cause. Eight states have trigger laws that reduce or kill their Medicaid expansions if federal matching rates are dampened. Academic medical centers and managed care plans are now contemplating major investments in safety-net care predicated on the expansion. These investments won’t happen if decision-makers believe major cuts are coming.

The amendment score we can’t trust: Then there is the Cruz amendment, which would allow insurers that offered some ACA-compliant plans to also offer cheaper, bare-bones, noncompliant ones. This effort to effectively segment the insurance pool is opposed by health insurers, the American Academy of Actuaries, and pretty much everyone else with a rudimentary understanding of the insurance market. Instead of getting the advice of the best experts at CBO or elsewhere to address these problems, Republicans chose to denigrate and bypass CBO. Sens. Mike Lee and Ron Johnson later circulated a shoddy analysis commissioned by the Department of Health and Human Services. The analysis itself was opaque on key details—including which individuals and organization actually performed it. As soon as outside experts examined the accompanying materials, the reaction was brutal. Timothy Jost—arguably America’s leading expert on the legislative fine print of health reform—summarized some of the obvious problems:

[The report] compares premiums for a 40-year old under the Cruz amendment with average premiums for a 47-year old under the ACA; it incorporates some elements of the ACA and others of the BCRA in its comparisons in a way that distorts the final analysis, and it ignores some problematic features of the BCRA and assuming away problems that would be created by others. The manifold problems with the analysis, which seems to have been written to support the Cruz amendment, rather than to provide impartial analysis, demonstrate again why it is essential to have a nonpartisan, impartial, referee like the CBO to analyze the effects of proposed legislation, a point made in a July 21 letter to Congress signed by all eight former directors of the CBO.

It’s not good for senators to disseminate misleading propaganda. It’s even worse that the proponents didn’t put in the work to get things right. If a set of Republican senators wanted to allow insurers to offer non-ACA-compliant plans, the right way to legislate this is to consult with CBO experts within the executive branch, identity likely pitfalls, and iterate to get the intricate provisions right. Not doing so may or may not be momentarily helpful in a political knife fight. It virtually guarantees that the BCRA, if passed with this provision, would have unintended effects—most likely to fracture the individual insurance market by leading the healthiest consumers to abandon the ACA marketplace for loosely regulated off-marketplace plans that don’t provide basic protections for people with costly or pre-existing conditions.

The unheeded parliamentarian: Finally, we have Friday’s rulings by Senate Parliamentarian Elizabeth MacDonough. She determined that key pillars of the BCRA are out of compliance with the Senate’s arcane Byrd rule. (The Byrd rule governs what’s allowed in the filibuster-proof reconciliation process Republicans are trying to use to pass the BCRA.)

Some of the parliamentarian’s decisions affect politically important but specific issues. MacDonough expressed a dim view of the bill’s efforts to defund Planned Parenthood and to cut off insurance funding for abortions. She also decided against measures to buy off specific constituencies such as the House’s “Buffalo Bailout” provision inserted to win the votes of Upstate New York Republican representatives.

Other determinations are more damaging, because they undermine components required for the bill to work as an integrated whole. She ruled out of order the BCRA’s continued funding for cost-sharing subsidies to low-income participants in the insurance marketplaces. She also decided against the BCRA’s continuous coverage requirement, which is the intended replacement for the individual mandate. She could decide against more provisions, including the Cruz amendment mentioned above. The Senate majority leader (and Vice President Mike Pence) could ignore all that by exercising a “nuclear option” to override the Senate parliamentarian.

Most political reporters don’t believe McConnell will do that. No one knows what he will do. (After all, this is the man who blockaded a Supreme Court seat for a year to deny Merrick Garland even a hearing.) If McConnell does not overrule the parliamentarian, he will have to omit key structural provisions or devise some last-minute fixes with unintended consequences of their own.

With all these matters unsettled, Republicans are set for a vote this week, perhaps beginning the floor process. No senators know what they will be voting on, let alone how the bill might be altered by amendments offered in the free-for-all “vote-a-rama” that will follow 20 hours of debate. The shambolic nature of the entire process was underscored by John Cornyn, the No. 2 Senate Republican, who was quoted in the Hill on Thursday that knowing what will be in the Republican health care bill before the procedural vote is a “luxury we don’t have.”

The rest of America doesn’t have the luxury of rewiring our health care system on the basis of a cosmically unpopular, cruel, amateurishly constructed bill. It may pass anyway. McConnell just needs to attract one or two moderate Republicans and to hold conservatives in the fold. Thus far, only Susan Collins of Maine appears to be a definite “no.”

The Senate and House bills are both messes. Everyone in Washington knows that. Republican insiders hope to clean up these messes in conference, while reconciling the two bills and still being able to pass the resulting product with scarcely a vote to spare. Don’t bet your house that they can do that.

They have to pass the bill to find out what’s screwed up in it. I hope we never find out its unknown unknowns and its accidental defects. The intended ones are bad enough.