ACA Repeal — Where We Are Tonight, Update

17456_1269532813224_1076952025_30803996_7657050_nThe GOP House bill is designed to hurt most Americans. The House committees involved are rushing to vote on this before the nonpartisan Congressional Budget Office (CBO) can weigh in on its economic impact. There’s a reason.

GOP leadership is still trying to rally moderate and conservative members to support the bill.  Among the concessions to conservatives being discussed is the elimination of requirements for mental health care, drug addiction treatment and maternity care from health insurance policies.(8)

The bill keeps three elements of the Affordable Care Act:

  • Insurance companies can’t deny coverage based on pre-existing conditions.
  • No lifetime cap on benefits.
  • People can stay on parents’ coverage until age 26.
  • The revised bill would reduce the Federal deficit by $150 billion over 10 years. That’s less than half of original projections, after amendments were attached increasing tax benefits for the wealthy.

That’s the good news.

The good news for those with high incomes:

  • Tax credits for buying health insurance.
  • Elimination of health insurance related taxes on people with high incomes.
  • No requirement for having health insurance.
  • No tax penalties for not having it.
  • Double the amount they could contribute to Health Savings Accounts (tax benefit).

The bad news:

  • Large employers would no longer be required to offer health insurance.
  • A 30% rate increase is your health insurance lapses.
  • Income tax credits for health insurance based on income are replaced by smaller tax credits based primarily on age and family size. The amount of these credits would be reduced for individuals making more than $75,000 per year or couples making more than $150,000, but even the affluent would receive credits.
    • The credits range from $2,000 to $4,000 per person, with a cap of $14,000 for a family.
  • Rate increases:  According the the nonpartisan Congressional Budget Office, the cost for individual insurance will increase by between 15% and 20% for each of 2018, 2019 and 2020.
  • The special hit for those over 50:  The price range by age will increase from a factor of 3 to a factor of 5.  Under the ACA, people between the ages of 50 and 60 could be charged no more than 3 times what a healthy 20 year old would be charged.  Uncer the bill that changes to a multiplier of 5.  Assuming a 20-something pays roughly $300 for health insurance, here’s the math:
    • Under the ACA. a 60-year-old faced a monthly cost of $900 before subsidy, which could be as much as $500. That’s a net cost of $400 per month.
    • Under the new rules, with a conservative 18% base rate increase, the cost for a 60-year-old would be $1,770 per month, with a maximum subsidy of roughly $330. That’s a net cost of $1,440 per month.
    • Because Trump acted to abolish subsidies for purchasing health insurance before the bill was drafted, the 20% increase for 2018 will probably happen regardless of whether the bill passes.
  • The Medicaid rollback.  Obama extended Medicaid to those who couldn’t afford health insurance; the current bill reverses that, leaving up to 24 million with no health insurance coverage.
  • Reduced cancer screening:  Elimination of funding for Planned Parenthood — which impacts cancer screening for less affluent women.

The bill creates a huge financial burden for Americans.  To put this in context, median weekly income for American workers is $849 (2016, Bureau of Labor Statistics). With deductibles and copays, more than one week of each month’s earnings would go to healthcare. For some Americans in the 50+ age group (pre-Medicare), the cost of health care could approach half of monthly take home.

We have to say “could” because the final rates for health policies for 2018 haven’t been approved by state insurance commissioners yet.  However, the CBO estimates are in line with the increases the insurance industry has said it will request.

That’s a huge dent into household budgets, and into consumer spending for other products and services. So much for economic growth.

The CBO is required by law to assess the economic impact of major legislation. However, backers are trying to rush this bill through Congress before the CBO has time to complete this analysis.(6)

As stated in other posts, part of the purpose of the Affordable Care Act was to allow for early detection of disease and reduced reliance on ER services for healthcare.  Both of those goals would actually reduce total spending on healthcare.  The GOP bill largely undoes both of these.

The mixed news:

  • The elimination of requirement that everyone have healthcare means that the “risk pool” for calculating rates will be smaller, and the cost per person will be higher.
  • The bill would give block grants to the states that could be used to help consumers pay for health insurance. But that would be up to state legislatures.

At this writing, the fate of the bill is uncertain.  Some extremists want the elimination of any government support for healthcare for Americans.  For them, the current bill offers too much to consumers.  The AARP has gone to war because of who the bill will impact people over age 50. GOP congressmen who are worried about re-election are nervous about supporting this bill.  Seniors are much higher rates of voting than other Americans and can swing close elections.  The vote on the bill in the House has been postponed as backers don’t have enough votes to pass it.

To gain additional support, the bill was changed this week to add more tax benefits for the wealthy. These changes may undo potential reductions to the Federal deficit from the Act.(7)

Even if the bill passes the House, the ability to get it through the Senate is questionable.

Apart from extreme conservatives, opponents to the bill include:

  • The AARP.
  • The AMA and all other associations of medical professionals.
  • Hospitals and clinics, who don’t want and can’t afford an influx of clients without insurance.
  • Democrats who don’t want to see people lose coverage.

Four Senate Republicans have voiced opposition to the Medicaid rollback.

“We will not support a plan that does not include stability for Medicaid expansion populations or flexibility for states,” Sens. Rob Portman (Ohio), Shelley Moore Capito (W.Va.), Cory Gardner (Colo.) and Lisa Murkowski (Alaska) wrote in a letter to Senate Majority Leader Mitch McConnell (R-Ky.).

However, there are the tone deaf in Washington:

One senior Republican suggested that under his party’s bill, Americans would have to pay a larger share of their own health care costs.

“Americans have choices, and they’ve got to make a choice,” Representative Jason Chaffetz of Utah, the chairman of the Oversight Committee, said on CNN Tuesday. “So rather than getting that new iPhone that they just love and want to go spend hundreds of dollars on that, maybe they should invest in their own health care.” (4)

This is as close to the infamous Marie Antoinette quote, “Let them eat cake,” as we have ever seen in American politics.

What you need to remember

  • Insurance policies/contracts for 2017 will be unaffected. 
  • However, if you let policies lapse this year, that may affect what you pay in 2018, by a lot.

Sources:

  1. Robert Pear and Thomas Kaplan, “House Republicans Unveil Plan to Replace Health Law,” The New York Times, 6 March 2017.
  2. House Republicans release long-awaited plan to replace Obamacare,” The Washington Post, 6 March 2017. https://www.washingtonpost.com/powerpost/new-details-emerge-on-gop-plans-to-repeal-and-replace-obamacare/2017/03/06/04751e3e-028f-11e7-ad5b-d22680e18d10_story.html
  3. FoxNews, “House Republicans release long-awaited ObamaCare replacement bill,” 6 March 2017. http://www.foxnews.com/politics/2017/03/06/house-republicans-release-obamacare-replacement-bill.html
  4. Zachary Tracer, Anna Edney, and Steven Dennis, “Aiming to bridge gaps within the party, GOP releases health care reform details,” BenefitsPro, 7 arch 2017.  http://www.benefitspro.com/2017/03/07/aiming-to-bridge-gaps-within-the-party-gop-release?kw=GOP+releases+health+care+reform+details&et=editorial&Zbu=BenefitsPRO&cn=20170307&src=EMC-Email_editorial&pt=News+Alert&t=wellness&page=2
  5. Robert Lowes, “House Releases ACA Repeal, Replace Bill That Transforms Medicaid,” Medscape, 8 March 2017. http://www.medscape.com/viewarticle/876718
  6. Congressional Budget Office, “American Health Care Act,” 13 March 2017. https://www.cbo.gov/publication/52486
  7. Timothy Jost, “What’s in the Manager’s Amendment to the AHCA?” Health Blog, 21 March 2017. http://healthaffairs.org/blog/2017/03/21/whats-in-the-managers-amendment-to-ahca/
  8. CNN, “Trump team ultimatum: No more talks, time to vote,” http://www.cnn.com/2017/03/23/politics/house-health-care-vote/index.html
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