On Thursday, December 11th, both the Democratic and Republican parties in the United States Congress submitted different versions of healthcare bills in the Senate. Both sides claimed that their respective bills would provide more affordable premiums for tens of millions of people purchasing the Affordable Care Act (ACA), also known as Obamacare. Currently, both of these bills have been rejected in the Senate.
According to experts’ analysis, the actual beneficiaries of these two bills are significantly different. For healthier individuals with higher incomes, the Republican proposal would save costs, while the Democratic plan could result in more savings for those with lower incomes, older individuals, or poorer health conditions.
Larry Levitt, Vice President of Health Policy at the Kaiser Family Foundation (KFF), stated: “The Republican Senate bill would indeed benefit a few and reduce taxpayers’ expenses. However, overall, the Democratic Senate bill, while increasing federal government spending, would make health insurance more affordable for more people.”
The Democratic version proposed by Senate Minority Leader Chuck Schumer simply extends for three years the strengthened subsidies of the “Affordable Care Act” introduced by the Democrats in 2021. These subsidies make premiums zero for many low-income individuals and provide subsidies for the first time to middle-class households with incomes above four times the poverty line, with a premium cap set at 8.5% of income. The Congressional Budget Office (CBO) estimates that this bill would cost approximately $900 billion.
Under this bill, low-income individuals, those with chronic illnesses, and older insured individuals can still purchase Silver-level policies at low or even zero premiums after 2025, and continue to receive premium subsidies and reduce their out-of-pocket costs through Cost Sharing Reduction (CSR).
The bill proposed by Republican Senators Bill Cassidy and Mike Crapo would allow the Obamacare premium subsidies to expire and instead encourage people to purchase high-deductible Bronze-level policies or “catastrophic” health insurance plans.
According to this bill, individuals with incomes below 700% of the poverty line who choose Bronze or catastrophic policies can receive a subsidy deposited into a Health Savings Account (HSA): people aged 18 to 49 can receive $1,000, and those aged 50 to 65 can receive $1,500.
This policy may benefit those who rarely use healthcare services or do not reach their deductibles. According to data from the Kaiser Family Foundation (KFF), the average deductible for Bronze plans last year was around $7,000. These individuals may only need to pay very low premiums or even no premiums and can use the $1,000 or $1,500 in their HSA for healthcare expenses.
HSA account holders can contribute additional pre-tax funds to their accounts and invest them in stocks and bonds. If the funds are used for healthcare, including dental, vision care, non-prescription drugs, and health products, withdrawals are tax-free. These funds do not expire and can be withdrawn for any purpose after age 65. If the money is used for non-healthcare purposes, it is subject to income tax.
KFF data shows that the average deductible for Bronze plans in 2023 was about $7,000, which is a heavy burden for those needing significant healthcare services. If the enhanced subsidies end, the actual insurance costs for low-income and less healthy individuals could increase significantly.
Policy experts point out that for families with incomes between 100% and 250% of the poverty line, the Democratic plan to extend subsidies would allow them to continue purchasing Silver plans with lower deductibles at low costs and benefit from cost-sharing reductions. In contrast, the Republican bill could lead to a significant increase in costs for this group.
In summary, the differences between the two bills can be simply summarized as follows: the Republican plan is cheaper for healthier individuals with moderate to high incomes, while the Democratic proposal is more advantageous and secure for those with low incomes, older individuals, chronic illnesses, or higher healthcare needs.
In terms of federal spending, the Democratic plan has higher costs, while the Republican plan is more budget-conscious.