Under Graham-Cassidy, This Is How Healthcare Could Look in Red, Blue States

Under Graham-Cassidy, This Is How Healthcare Could Look in Red, Blue States | Under Graham-Cassidy, This Is How Healthcare Could Look in Red, Blue States
Image: Gage Skidmore / Flickr

The Graham-Cassidy bill is the Republicans’ final effort at Obamacare repeal. If passed, it could drastically change health insurance systems in both red and blue states – and, likely, for the worse.

Five Republican Senators are spearheading a last, last, last ditch effort to pass a simplified bill that will replace Obamacare with a massive shift of block grants to the states. Led by Lindsey Graham (R – SC) and Bill Cassidy (R-LA), the measure – referred to simply as the Graham-Cassidy bill – has gotten some support from Senate Majority Leader Mitch McConnell, and looks likely to reach the Senate floor for voting soon. If passed, the Graham-Cassidy bill will ultimately overhaul Obamacare and change the way health insurance works in red and blue states alike.

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Republicans’ Final Effort to Repeal Obamacare

The Republican effort to dismantle Obamacare has been dead for some time. About two months ago, a last ditch effort to replace Obamacare died in the Senate by one vote. It was chalked up as a huge failure to make good on election promises.

Turns out the Republicans’ efforts are — in the words of Billy Crystal’s immortal character, Miracle Max, in The Princess Bride — “…only mostly dead…mostly dead is [still] slightly alive.” And, indeed, despite several failures to repeal Obamacare – first with Rep. Paul Ryan’s (R-WI) “Trumpcare”(which failed to move beyond the House), followed by the American Health Care Act (AHCA), then with the Better Care Reconciliation Act (BCRA), and ending with July’s skinny repeal put forth by McConnell – the Republicans’ persistence is undying.

What Happens if the Graham-Cassidy Plan Passes?

If — and it’s a big if — the Graham-Cassidy legislation is approved, and makes its way quickly through the House, and then to the president for signing, it will transfer $1.2 trillion to the states to pretty much use as they please. All of this will have to happen by September 30th, though, meaning the proposed bill must reach the Senate floor for a vote within the next few days.

What Stays the Same Per Graham-Cassidy

If this Miracle Max of legislation does come to life, it will not begin until 2019, but it will change certain rules retroactively to 2016. Only one part of Obamacare will remain the same: individuals under age 26 could remain on their parents’ health plan.

What Changes Per Graham-Cassidy

Graham-Cassidy essentially leaves it up to each state to decide how comprehensive or how limited their health insurance systems should be. With that goal in mind, most things will change if Graham-Cassidy passes:

  • Removes Protections for Pre-Existing Conditions: Insurance companies will, once again, be granted the ability to charge people with pre-existing conditions at higher (and, many times, prohibitively higher) rates;
  • Repeals Several Taxes: Several taxes (such as taxes on over-the-counter medication, health savings accounts, and medical devices) that were used to fund Obamacare will be eliminated;
  • Takes Away Subsidies: Subsidies to help people buy individual health insurance policies will go away, as will reimbursements to insurance companies giving price breaks to their lowest-income customers;
  • Rolls Back Medicaid Expansions: Medicaid expansions adopted by 31 states and D.C. will be rolled back;
  • Work Requirements for Medicaid: States will be able to require adult Medicaid recipients to work (with exceptions for the disabled, women, and the elderly);
  • Gets Rid of Individual Mandate: The individual mandate to buy insurance (or risk paying a tax penalty) will be scrapped;
  • Defunds Planned Parenthood: Federal funding for Planned Parenthood will be prohibited (but only for a year);
  • Expands Eligibility for Catastrophic Plans:  Catastrophic health insurance (currently only permitted for those under 30) will become available to all people; and
  • Increases Max Contributions to HSAs: Health savings account (HSA) limits will be expanded to the annual out-of-pocket maximum, allowing people to use more tax-free dollars to pay for health insurance. Under Graham-Cassidy, max contributions will increase from $3,400 to $6,650 for individuals and from $6,750 to $13,300 for families.

State Health Insurance Under Graham-Cassidy: How Red and Blue States Will Fare

If Graham-Cassidy passes, states will be given “block grants”. Each state will get money from the federal government in proportion to its population. From there, it’s up to each state to decide what to do with the money. They could use that money only for healthcare – a state could, for instance, choose to sustain the current subsidies it offers or use it to expand Medicaid.

Under the bill, the rest of Obamacare — its heart and soul — will be left entirely to the states to decide. Medicaid expansion will be gone, yes, but a state could technically use funds to revive a part of it. Protections that prevented health insurance companies from denying individuals based on pre-existing conditions — gone (although a state could keep the protection using its own rules). Requirements that health insurance policies cover certain minimum benefits; provide unlimited maximums; and protect men, women, and the LGBT community equally — all of that will be decided by each state.

The result will be a patchwork of conflicting state rules. Some states will use the their share of the $1.2 trillion to expand the principles of Obamacare to a “Medicare-for-All” type of single-payer system. Most states will likely return to the rules of a pre-Obamacare health marketplace. Hypothetically, if the bill passes both houses of Congress, here’s how health insurance systems in blue and red states could potentially turn out:

Health Insurance Systems in Red States

In certain red states here is how insurance could look:

  • If you’re sick, then you’re denied coverage or pay more;
  • Older people are charged 8x as much as younger people;
  • The income level to qualify for Medicaid drops;
  • Maternity, baby care, and cancer screenings are all optional;
  • Prices for the healthy are really affordable; and
  • Young entrepreneurs are given free insurance for starting jobs, and have fewer health expenses.

Health Insurance Systems in Blue States

In certain Blue States here is how it could work:

  • Everyone is charged the same amount no matter their age;
  • There are subsidies for the working pool;
  • There are state penalties for not having insurance;
  • Instead of providing less coverage than Obamacare, coverage is expanded;
  • Those under age 30 are automatically covered on parents’ plan, or through a state pool;
  • Health insurance costs are higher because the coverage and benefits are very good; and
  • There are very few uninsured people overall.

It will be up to the states, though, to secure the funding and the systems in place. According to a new report released this morning, federal healthcare spending will decrease by $215 billion by 2026 and $4 trillion by 2036 under the Graham-Cassidy plan. In some states, it will be difficult to sustain their current coverage levels if and when less federal funding is provided.

A Potential Shift in State Economies

If Graham-Cassidy succeeds, individuals will respond in their own best interests. America has increasingly transformed into a gig economy and many professions have allowed for greater fluidity; as a result, people are provided the freedom to move around more. Those with higher medical costs might temporarily move to states that offer the best healthcare benefits. The healthiest, youngest might move to places that have the lowest insurance costs.

In the movies, people and things often come back to life after being dead. In real life, that’s never the case. In politics…well, politics is somewhere in the middle — not quite real, and not quite fantasy.

Taking the Next Steps

Approximately 20 million people will shop for health insurance during this Open Enrollment Period. If you’re shopping for healthcare coverage on your own, check out HealthCare.com to see what Marketplace and off-Marketplace plans are available to you.

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