ACA Repeal: The Latest

The Senate proposal is out. The proposed law is 142 pages of (perhaps unnecessary) complexity, and, given the rushed nature, probable errors. But it’s out.

It’s not out in time to prevent damage for 2018.

• Withdrawal of insurers: Aetna notified agents that it will be withdrawing from individual markets in 18 states. Notices to policy holders will be sent on or about July 1st. Other firms have announced withdrawals from a few states, most particularly Iowa and Indiana.
• Heavy rate increases: Insurers in the individual market in Virgina have asked for a 30% rate increase for 2018, based on uncertainty about whether the Federal government will continue subsidies for health insurance. Insurers in NY State have asked for a 16.6% increase. Most other states will be in that range.

The proposal represents a mixed signal for consumers.

• Pre-existing conditions: The Senate version conforms with the House version in requiring insurers to cover people with pre-existing conditions. HOWEVER . . .
• Coverage: States can apply for waivers allowing insurers to reduce the coverage they provide. Services required by people with pre-existing conditions may not be covered.
• Medicaid: The bill supports a contraction of Federal Medicaid funding, but delays the start of cutbacks until 2021. The House version started cuts in 2020, an election year. The Senate version of the cuts are later and deeper.
  • The Medicaid expansion was an increase of the income limit for eligibility from 100% of poverty level to 138%.
  • Under the Senate version people making more than 100% of poverty level would be prevented from enrolling in Medicaid starting in 2020.
  • All Federal funding for the expansion would be limited in 2023.
  • The impact on the Medicaid program for children, CHIP, is unclear at this time.
  • Inflation adjustments for Medicaid funding would be changed from an index based on medical costs to the overall Consumer Price Index (CPI), which would reduce annual increases in funding in all future years. (See graph.) (4) The focus of this change is strictly on reducing Federal spending, not helping consumers. Federal payments would lag behind increases in medical costs — who pays the difference?
• Tax credits to help pay for insurance: The House version based subsidies on age; the Senate version reverts to income as the basis, consistent with the existing ACA rules. However,
  • The Senate version reduces the maximum income eligible for these subsidies, making some people now receiving subsidies ineligible for them in the future. On low low end, the Senate version makes subsidies available for people earning below below poverty level who might not be eligible for Medicaid in their state. The Senate version maintains cost-sharing subsidies for insurers through 2019.
  • The Senate version reduces the amount of subsidy people receive, increasing out of pocket costs for everyone, and especially for those between age 50 and 64.
• Planned Parenthood: Both House and Senate versions remove funding for Planned Parenthood.
• Tax reductions for affluent households: The Senate and House versions are in agreement on this; the reductions remain intact.
• Individual mandate: Penalties for not having insurance are eliminated.

Sticking points:

• For conservatives: Treating healthcare as a human right. They would rather see the ACA eliminated without replacement.
• For moderates and those in competitive districts

Collateral damage:

• Insurance coverage: There’s a debate as to how many people will not have insurance coverage with this law.  Estimates vary between 13 and 23 million.  The reasons for the variance in estimates include:
  • Time frame — loss of coverage will build over time as insurance costs increase and subsidies don’t.
  • Medicaid — how many people will lose coverage under Medicaid. That impacts more people than you would expect. Most people don’t have Long Term Care insurance, and Medicaid has become the prime vehicle for paying for home health aides and nursing home costs. Since nursing home costs average nationally more than $9,000 per month and Medicare pays for only the first 100 days, there are a lot of middle income families that will be in trouble. Even some moderately affluent families will be affected, and the poor . . . forget about it.
• Tax increases: Healthcare for the uninsured will fall back on emergency rooms, largely of public hospitals. That will drive costs and budget increases and increases in local taxes. Tax savings for the rich will mean tax increases for everyone else.
• Economic stagnation: The US is a consumer economy. I’ve argued previously that money siphoned from consumers for education, housing and healthcare is money they can’t spend for anything else. One analyst sees 1.1 million jobs disappearing by 2020 with passage of the AHCA. (3)

 

---

Sources:

1. M. J. Lee, Tami Luhby, Lauren Fox, Phil Mattingley, “Senate GOP finally unveils secret health care bill; currently lacks votes to pass,” CNN, 22 June 2017. http://www.cnn.com/2017/06/22/politics/senate-health-care-bill/index.html
2. Stephanie Armour, Kristina Peterson and Louise Radnofsky, “Battle Lines Drawn on Health Care,” The Wall Street Journal, 23 June 2017, P. A1.
3. Josh Bivens, “Millions of people have a lot to lose under the AHCA,” Economic Policy Institute, 21 June 2017. http://www.epi.org/publication/millions-of-people-have-a-lot-to-lose-under-the-ahca/?utm_source=Economic+Policy+Institute&utm_campaign=50e819bfcb-EMAIL_CAMPAIGN_2017_06_23&utm_medium=email&utm_term=0_e7c5826c50-50e819bfcb-58834721&mc_cid=50e819bfcb&mc_eid=0541ad0f29
4. Federal Reserve Bank of St. Louis, Economic Research. Chart downloaded 25 June 2017. https://fred.stlouisfed.org/graph/?id=CPIMEDSL,
5. Bob Bryan, “Unveiled: The Secret Senate Healthcare bill,” Business Insider, 22 June 2017. http://www.businessinsider.com/senate-healthcare-bill-trumpcare-ahca-details-2017-6