Sen. Cassidy: ACA subsidies alternative gives power to patients, not profits to insurance companies

Key Concepts

• Enhanced Premium Tax Credits: Additional tax credits on top of baseline Obamacare tax credits.
• Bronze Plan: A cheaper health insurance plan compared to the standard Silver plan.
• Silver Plan: A standard health insurance plan under Obamacare.
• Health Savings Account (HSA): A tax-advantaged savings account used for healthcare expenses.
• Deductible: The amount a patient must pay out-of-pocket before insurance coverage begins.
• Affordable Care Act (ACA) / Obamacare: The healthcare reform law.
• Obamacare Exchanges: The marketplace where individuals can purchase health insurance under the ACA.
• Federal Poverty Level (FPL): A measure used to determine eligibility for certain benefits.
• Center on Budget and Policy Priorities: A non-partisan research organization.

Senator Cassidy's Proposed Healthcare Plan

Senator Bill Cassidy, Chairman of the Health, Education, Labor, and Pensions Committee, outlines a proposal aimed at addressing the rising costs of healthcare, specifically for individuals enrolled in plans on the Obamacare exchanges. His plan focuses on providing financial relief and greater control to patients by leveraging savings from cheaper insurance plans and redirecting funds from insurance companies to consumers.

Core Components of the Plan

Cassidy's proposal centers on modifying the existing enhanced premium tax credits under the Affordable Care Act (ACA). The key elements include:

• Utilizing Enhanced Premium Tax Credits on Bronze Plans: The plan suggests allowing enhanced premium tax credits to be applied to Bronze plans, which are inherently cheaper than the standard Silver plans. This immediate reduction in premium cost is a primary benefit.
• Redirecting Savings to Health Savings Accounts (HSAs): The savings generated from opting for a cheaper Bronze plan, rather than a Silver plan, would be directed into a Health Savings Account (HSA) for the family.
• Deductible Assistance: This HSA would then be used to help cover the deductible. Under the current Silver plan structure, families can face deductibles of $5,000 to $6,000. Cassidy's plan proposes using HSA funds to lower this out-of-pocket burden by $3,000 to $4,000 for a family.
• Overall Cost Savings: The senator argues that this approach leads to savings on premiums, savings on the deductible, and overall financial relief for families.

Addressing the Status Quo and Future Projections

Cassidy contrasts his plan with the potential outcome if no action is taken.

• Impact of Inaction: If his plan is not enacted and no other measures are taken, Cassidy believes that healthcare costs for most Americans will continue to rise over the next 12 to 24 months.
• Scope of the Proposal: He clarifies that his proposal specifically targets the approximately 7% of the insured population who utilize the Obamacare exchanges. The remaining 93% (Medicare, Medicaid, employer-sponsored insurance) are not directly affected by this legislation, though general healthcare cost increases will still impact them.
• Goal of Lowering General Healthcare Costs: While the bill is focused on the ACA exchanges, Cassidy emphasizes the broader necessity of addressing and lowering the overall cost of healthcare.

Financial Implications and Taxpayer Benefits

A significant aspect of Cassidy's proposal involves the reallocation of funds currently designated for insurance companies.

• Reclaiming Funds from Insurance Companies: The plan aims to redirect an estimated $26 billion, which is scheduled to be paid to insurance companies under the current Obamacare law.
• Reducing Insurance Company Overhead and Profit: Currently, insurance companies take approximately 20% of these funds for overhead and profit. Cassidy's plan seeks to eliminate this portion and instead provide it directly to the patient.
• Benefit to Federal Taxpayers: Cassidy asserts that his plan will also result in savings for federal taxpayers, in addition to benefits for patients. The only entities losing money under his proposal are the insurance companies.

Counterarguments and Rebuttals

Cassidy addresses criticisms and potential concerns regarding his plan, particularly those raised by political opponents.

• Critique on High Premiums: A critique suggests that individuals with very high premiums would not receive sufficient help. Cassidy counters this by stating that the enhanced premium tax credits are maintained, ensuring that individuals at up to 600% of the federal poverty level would not pay more than 8.5% of their premium. However, these credits would be applied to a Bronze premium.
• "Privatization" Concerns: Senator Chuck Schumer's critique that Cassidy's plan aims to "privatize health insurance" is addressed. Cassidy reframes this as empowering the patient with "the power of the purse" and control over their health decisions, rather than giving power to insurance companies that take a 20% cut for profit and overhead. He argues that giving this 20% directly to the patient is a more beneficial form of "privatization."
• HSA Funding for Premiums: A common understanding of HSAs is that they cannot be used to pay for premiums. Cassidy clarifies that his plan does allow for the use of savings to pay down premiums for those with excessively high costs. For most individuals, the Bronze premium is already cheaper than the established limits. He also reiterates that the HSA can be used for deductibles, co-pays, and other out-of-pocket expenses like eyeglasses, dental work, and orthodontia, which traditional insurance may not cover.
• Addressing Immediate Needs: A report from the Center on Budget and Policy Priorities and statements from Senator Janine Shaheen are cited, suggesting that HSAs do not address the immediate need for premium relief. Cassidy responds by explaining that his plan does continue to use funds to pay down premiums for those for whom they are too high. He emphasizes that by using a cheaper policy (Bronze), savings are generated that can then be put into the HSA.

Political Viability and Appeal

Cassidy expresses optimism about the political feasibility of his plan.

• Bipartisan Appeal: He describes his plan as an "American plan" rather than a Republican or Democratic one, suggesting it can appeal to a broad range of political figures and constituents.
• Alignment with Different Political Stances: He believes it can appeal to Senator Jeanne Shaheen's concern for premium affordability, President Trump's desire to direct funds to patients rather than insurance companies, and the consumer's need for control over their finances and healthcare choices.

Conclusion

Senator Cassidy's proposal aims to reform the healthcare landscape for individuals on Obamacare exchanges by making insurance more affordable and giving patients greater control. The plan leverages cheaper Bronze plans, redirects funds from insurance company profits to patient HSAs for deductible coverage, and maintains premium affordability caps. Cassidy argues this approach benefits patients, taxpayers, and provides a more patient-centric healthcare system, while also addressing the broader issue of rising healthcare costs. He believes the plan has strong bipartisan appeal and is a viable solution for the upcoming expiration of current ACA provisions.