Private and Public Healthcare

In which Bill Cassidy aims to do to health coverage what he did to public health,

Xpostfactoid, Andrew Sprung

I never set up to be a prophet of healthcare policy, or anything else. But when Senator Bill Cassidy floated a plan in early November to extend and modify the enhanced ACA marketplace subsidies that are funded only through 2025, I made a prediction that’s shocked me by its rapid fulfillment:

. . . if Cassidy reverts to form, he may well embrace plans far more toxic than his current sketch. In 2017, as noted above, he co-sponsored the first and least-bad ACA repeal/replace plan, in March. In September 2017, he co-sponsored the last and worst such plan, Graham-Cassidy, which would have liquidated both the ACA marketplace and the Medicaid expansion, replacing both with inflation-capped block grants to states, inequitably distributed to favor red states (penalizing blue states for expanding Medicaid). Then as now, Cassidy unctuously claimed he was advancing a “nonpartisan” approach— which likely would have increased the uninsured population by more than 30 million, with losses increasing over time as per capita caps on block grants bit progressively deeper.

The plan Cassidy announced last month, which never made it into a bill, would have ended the enhanced premium tax credits (ePTC) in their current form but used the $26 billion estimated cost to fund Flexible Spending Accounts (FSAs) for subsidy-eligible ACA enrollees — that is, funds to spend directly on out-of-pocket costs.

Well lo, less than a month later, Cassidy, along with Senator Crapo, is out with a far more toxic plan, this time written into legislation, that would end ePTC funding and use multiple channels to push ACA marketplace enrollees into plans with actuarial values in the 50-60% range — while also, inevitably, radically cutting enrollment and adding complexity to a marketplace that already presents prospective enrollees with a numbingly complex set of choices. The bill would

• Fund HSAs for enrollees in bronze plans (60% AV) or catastrophic plans ( ~ 57% AV) worth $1,000 if they are age 18-49 or $1,500 if they are age 50-64.
• Open catastrophic plans (here co-named “copper” plans) to all enrollees, instead of primarily to enrollees under age 30 as in the original ACA (CMS has already widened access, but retained a cumbersome exemption application process).
• Fund the Cost Sharing Reduction (CSR) subsidies that attach to silver plans for low-income enrollees through direct reimbursement of insurers for its value, as it was funded before Trump cut off those payments in October 2017, instead of pricing it into plan premiums as at present. In most states, CSR is priced into silver plans only, as CSR is available only with silver plans. Since premium subsidies are structured so that enrollees pay a fixed percentage of income for a benchmark silver plan, raising silver plan premiums also increases subsidies, creating effective discounts in bronze and gold plans for subsidized enrollees. The bill would end this silver loading, reducing the value of enrollees’ premium subsidies in addition to the loss of ePTC.

Silver ACA Plans

At present, slightly less than half of marketplace enrollees, about 11.6 million are in CSR-enhanced silver plans with an actuarial value of 94% or 87%. Another 13% are in gold plans with an AV of 80% — which, thanks to silver loading, are available below the cost of a benchmark silver plan in 20 states. By ending ePTC and raising silver plan premiums at low incomes, while adding a modest first-dollar benefit to bronze and catastrophic plans, the Cassidy-Crapo bill would push millions of low-income enrollees into bronze plans.

Ending silver loading would push millions more from gold into bronze — and likely drive additional millions out of the market entirely, as the advent of silver loading (before the Democrats created ePTC in the Biden years) made zero-premium bronze plans available to millions of prospective enrollees. The marketplace — what’s left of it— would be converted largely, if not all but entirely, into a market in which most enrollees obtain just 57-60% AV, leaving them exposed to thousands of dollars in additional out-of-pocket costs. While that exposure would be mitigated for many in some years by the HSA funding, every year a significant minority of low-income enrollees would be exposed to thousands of dollars in extra out-of-pocket costs.

Coverage

Low-AV coverage as a default option for low-income people is a perpetual Republican goal, the party’s favored alternative to the ACA marketplace. The House and Senate ACA “repeal/replace” bills of 2017 also would have pushed most enrollees into bronze or sub-bronze coverage. Republicans are wed to the discredited premise that high out-of-pocket exposure will reduce waste in healthcare spending and make smart shoppers of people in need of medical care. In fact, Democrats also bought into this canard enough to expose millions of market= place enrollees to damagingly high out-of-pocket costs. Republicans’ only consistent healthcare “reform” idea is to make those costs even higher, exposing ever more Americans to ever more medical debt.

The bill also picks up where OBBBA left off by gratuitously penalizing states that have enacted the ACA Medicaid expansion (further radically cutting high-AV coverage for low-income people); penalizes states that use their own funds to provide coverage to select undocumented populations; prohibits federal Medicaid funding for gender transition services and bars states from including gender transition in EHBs; bars CSR funding for plans that cover abortion, as mandated in many blue states (federal funds already can’t be used to fund abortion coverage, which must be offered for a separate, small premium). In other words, in addition to increasing the ranks of the uninsured and the underinsured, the bills takes vicious swipes at undocumented, trans, and female human beings. For a more detailed provision-by-provision rundown, see Charles Gaba.

The etiology of this steaming pile of legislative aggression is somewhat mysterious. On the one hand, the Republican plans diverting ACA funds to HSAs multiplied like hydra heads in response to Trump’s seemingly incoherent babble on Truth Social in mid-November, calling on Congress to “Take from the BIG, BAD Insurance Companies, give it to the people, and terminate, per Dollar spent, the worst Healthcare anywhere in the World, ObamaCare.” The Cassidy-Crapo fact sheet fawningly boasts that the bill “sends money to patients instead of insurance companies” (so much for the fond Democratic dreams of circa 2007-2009 of defanging Republican opposition to reducing the uninsured population by centering their plans on a market of private insurance plans).

At the same time, Trump’s sudden turn on insurers and apparently nonsensical call to make healthcare more affordable neither through government-run insurance nor through private insurance looks like his senile transcription of longstanding Republican plans to fund healthcare through tax-favored individual spending accounts. Specifically, the Cassidy-Crap crap, which the whole Republican party now looks to align behind, is essentially the plan floated by Trump whisperer Brian Blase of the Paragon Institute, originally in 2022 and recently updated. Cassidy’s earlier iteration, as I noticed in the prior post, was essentially Blase lite.

Blase’s proposal, like the Cassidy-Crapo bill, would end ePTC funding and instead use the funding earmarked for Cost Sharing Reduction (CSR) in the original ACA to fund HSA accounts linked to bronze plans — ending ePTC and silver loading in one fell swoop, and pushing most of the shrunken ranks in marketplace coverage into bronze plans (Blase specifically looks forward to cutting the ranks of the CSR eligible by more than half — see my prior post on this). As is so often the case, Trump’s policy choices are a debased version of already-debased versions of longstanding Republican policy.

You can’t change how much sleep you need by going to bed earlier, and you can’t change how much medical attention people need by reducing the actuarial value of their coverage. You can choose how much healthcare people access by cutting AV, but faced with wildly unaffordable out-of-pocket costs, enrollees they will cut down on desperately needed as well as unnecessary care — and go into debt to boot. In fact, the relatively slow rise of U.S. healthcare spending from about 2013-2023 was mostly likely driven mainly by Americans’ terror of being saddled with unaffordable medical bills. Republicans would cut federal spending by cutting AV along with premium subsidies — increasing the underinsured as well as the uninsured population. By so doing, they will degrade Americans’ physical as well as financial health. Par for the course for a party of corrupt oligarchic-serving thieves and autocrats.

Cassidy, let us not forget cast the deciding vote allowing confirmation of RFK Jr. as HHS director and the resulting destruction of public health administration by the federal government. He is a cowardly go-along who purports to care for his constituents and offer nonpartisan solutions while in the end always partnering with party hardliners to undermine public welfare. I’m not happy that he’s made a prophet of me. But he is … predictable.