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The Health Care Freedom Act: the Senate’s last-ditch attempt at repeal, explained

Senators Debate Health Care Bill On Capitol Hill Photo by Drew Angerer/Getty Images

The Health Care Freedom Act is the Senate Republicans’ last-ditch attempt to repeal Obamacare. Released around 10 o’clock Thursday night, it is expected to come to a vote early Friday morning.

In coming into existence at this late hour, it shatters years of Republican complaints about the process that birthed the Affordable Care Act. "If the people who wrote this bill were proud of it, they wouldn’t be forcing this vote in the dead of night," Sen. Mitch McConnell said in 2009. Senate Republicans clearly are not proud of this bill. But then, in one of the strangest legislative contortions in modern memory, they say this is a bill they want to see pass but don’t want to see become law.

This HCFA would repeal the Affordable Care Act’s mandate that all Americans carry coverage. It would nix the requirement that large employers provide coverage to all workers, too. The bill includes a three-year repeal of the medical device tax and a one-year defunding of Planned Parenthood.

The Congressional Budget Office released an analysis late Thursday estimating that the HCFA would cause 16 million fewer Americans to have health coverage. The CBO has previously estimated that repealing the mandate to purchase coverage would raise premiums about 20 percent.


The bill also includes revised provisions around state flexibility waivers that health policy experts are still attempting to digest. The bill does not include any cuts to Medicaid.

Senate Republicans have framed this bill as a vehicle to simply move the health care process toward further negotiations with the House. But it doesn’t read like that at all. It reads like one meant to woo conservative Republicans. It makes careful tweaks to provisions to defund Planned Parenthood and allow states more flexibility, meant to comport with strict reconciliation rules. These are key issues that House Republicans in the conservative Freedom Caucus, for example, have raised that are reflected in this new draft.

It’s possible the House will reject this out of hand as not nearly enough of a repeal bill. But if this bill leaves the Senate, it’s also possible that the House sees enough that its members like in the bill and passes it. The Senate has little leverage over next steps if it passes the HCFA tomorrow morning.

This is real legislation that would, if passed into law, have dire consequences for Americans who rely on the Affordable Care Act for coverage. It’s a bill that would see premiums rise and millions lose insurance. It’s a bill that breaks the GOP’s promises on both policy and process. It’s a bill we just saw for the first time after the sun went down Thursday night, and one expected to get a vote before the sun rises on Friday morning.

The HCFA would repeal the individual mandate, a big threat to the individual market

Health care nerds like to talk about the Affordable Care Act as a “three-legged stool.”

One leg is the expansion of coverage to all Americans, including those with costly preexisting conditions. That requires the second leg: the requirement that everybody purchase coverage so the market doesn’t get swamped with the sickest enrollees.

The third leg is subsidies — if the government is going to require all Americans to purchase coverage, after all, it needs to make sure that product is affordable.

Kick out one leg of the stool and the whole thing falls apart. The CBO estimates, for example, that premiums would rise 20 percent without an individual mandate as healthy people leave the market and a sicker population remains. An estimated 15 million would lose coverage, based on an analysis of a similar bill.

That’s what the HCFA does. The biggest and most obvious policy in this new health bill is the repeal of the Affordable Care Act’s requirement that all Americans purchase health coverage.

The HCFA, if passed, would no longer penalize those who remain uninsured. Right now, uncovered Americans are subject to an annual fine of $695 or 2 percent of their income, whichever is greater.

The individual mandate is a crucial part of the Affordable Care Act’s expansion of coverage. It is meant to induce those with low medical costs — healthier, younger people — to sign up for a plan anyway. This is necessary to create a market that can accept all patients — including those with expensive medical conditions — while maintaining reasonable premiums.

This is something Republican senators are aware of. We know this because in 2012, 27 of them (many still sitting today) signed on to an amicus brief arguing in favor of the Supreme Court striking down the individual mandate.

“The individual mandate is at the heart of the PPACA, and the remainder of the statute necessarily depends on its inclusion because without the mandate, the statute’s reforms cannot work as intended,” the group wrote. “Indeed, the proponents of the PPACA knew at the time Congress considered the legislation that without the mandate both the number of uninsured and the price of premiums would skyrocket.”

So Senate Republicans are, by their own admission, seeking passage of legislation that would cause “both the number of uninsured and the price of premiums [to] skyrocket.”

The Senate bill would also repeal the health law’s employer mandate through 2025. This part of the health care requires businesses with 50 or more employees to offer coverage to all workers or face a penalty. This is thought to have less of an impact, however, because most businesses provided coverage even before this mandate went into effect. In fact, the Obama administration even delayed the implementation of this provision by one year when the health law initially took effect.

The Senate bill repeals the medical device tax for three years

Attacking the individual mandate makes some sense, politically: It routinely polls as one of Obamacare’s most hated provisions. That the medical device tax has also become a key repeal target is perplexing. This is not a crucial part of the health care law, nor does it appear to be an Obamacare provision that angers voters.

Nevertheless, a three-year delay of this provision has survived into this final health care bill. The tax is, as the name implies, a 2.3 percent tax on the various items that medical device manufacturers sell. This includes things like pacemakers and hip implants. It does not include eyeglasses, contact lenses, or other medical equipment that patients typically buy themselves in retail settings. The tax took effect in 2013.

Obamacare didn't single out the medical device industry specifically; instead, the medical device tax is part of a larger suite of taxes on different sectors of the health care industry. There is a new tax on insurance plans and another one on hospitals. The whole idea behind these taxes was to raise revenue to pay for the law’s insurance expansion. If health care industries were going to get millions of new customers through that expansion, legislators decided that they should help chip in, via these taxes, for the cost of coverage.

The Congressional Budget Office estimates that the medical device tax will raise $23.9 billion in revenue over the next decade, all of which is supposed to be plowed back into Affordable Care Act programs.

Read more about the medical device tax in a fuller explainer here.

Planned Parenthood is defunded for one year — but we don’t know if that provision will stay in

This bill prohibits the federal government from spending money at health clinics that provide abortions for one year, starting when it’s signed into law.

This part of the bill doesn’t call out Planned Parenthood by name, but the group is widely understood as the target of this provision.

Planned Parenthood and other abortion providers are already barred from receiving federal funds to pay for abortion. But they are allowed to receive funds from public programs like Medicaid to provide other services, such as STD screening and birth control prescriptions. This bill would put a halt to all of that.

A previous version of this provision was stripped from another Senate repeal bill for violating reconciliation’s strict rules. But legislators have tried to tweak the language to make this work on a second go-around. Warning: This next bit gets very far in the weeds, so read at your own peril!

The first draft of this provision, which turned up in the Better Care of Reconciliation Act, said that health providers with revenue above $350 million and who provided abortion could not receive federal payments. This provision clearly targeted Planned Parenthood, as it’s the only clinic system with such high revenue. For that reason, the Senate parliamentarian ruled that this ran afoul of reconciliation rules. The goal wasn’t about the federal budget; it was about targeting Planned Parenthood.

This new version sets a lower threshold. It says that clinics with revenue above $1 million that provide abortion cannot receive federal funding. At least from the outside, the goal here seems to be to convince the parliamentarian that this provision isn’t meant to target Planned Parenthood. We haven’t seen a ruling yet on this language, so we don’t know whether it has worked.

The Senate bill includes waivers for state flexibility. We’re not quite sure yet how they work.

There is a section of this bill that reforms the Affordable Care Act’s 1332 waivers. These waivers are meant to give states more flexibility to run their health care systems, so long as states can cover an equal number of people as they’d be expected to under Obamacare at no additional costs. Some states have mulled using these waivers, for example, to use federal funds to build single-payer systems.

The 1332 waiver changes are, quite honestly, a little hard to digest. But according to analyses from health policy experts Nicholas Bagley and Timothy Jost, these waivers do not let states waive out of the requirement to cover preexisting conditions, nor would they allow some plans not to cover essential health benefits.

Instead, they seem to give the federal government a bit more leeway to approve these waivers more easily and for a longer period of time. I’ll update this section as I learn more.

There’s nothing “skinny” about this bill

This plan has come to be called “skinny repeal” in part because it’s a whole lot shorter than the last few proposals. I’ve used the term skinny repeal in my own reporting. But I’ve come to believe that is wrong and stopped using the term.

I don’t think there is anything “skinny” or “small” about what the HCFA would do. This is a bill that would cause 16 million fewer Americans to have health coverage.

Repealing the individual mandate is only skinny when you compare it to other Republican bills, like the House-passed American Health Care Act, which would cause an estimated 23 million to lose coverage. But the world of the AHCA isn’t the world we live in. The world we live in is one in which the Affordable Care Act is law, and that is the appropriate baseline for thinking about any health bills floating around Capitol Hill.

Skinny repeal is, simply put, a misnomer. This is a bill that would cause millions of Americans to lose coverage, individual market premiums to rise, and the size of that market to shrink. There is nothing skinny about that.