ACA Repeal — the Backdoor Method

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Apparently, the bill to keep the government operating excludes payments to insurance companies that subsidize healthcare for those buying insurance through the Marketplace. The tactic is to force insurers out of the market, thus closing the door on the Affordable Care Act.

In theory, that would cost anyone with a subsidy their healthcare.

We’ll see what happens next.

ACA Repeal, Again

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According to Bloomberg, the White House wants Congress to vote on a revised bill next week.  There are some proposed amendments to the bill that failed in March in an effort to try to unify GOP House members to support the bill, but nothing has been finalized.

One item being considered is a proposal by Representative Tom MacArthur (R, NJ):

The amendment, reported earlier by Huffington Post, would allow insurers to charge higher premiums to people with pre-existing conditions in states that get a waiver. To obtain the waiver, states would have to provide sick people priced out of commercial insurance access to a so-called high-risk pool run by the federal government, or establish their own, and satisfy other conditions. (1)

A separate commentary on the same issue goes further:

According to a draft of the tentative deal obtained by POLITICO, the latest proposal would allow states to apply for “limited waivers” that would undermine Obamacare’s protections for pre-existing conditions. Under these waivers, states could opt out of Obamacare standards setting minimum benefits that health plans must offer and a requirement — called community rating — forbidding insurers from charging different prices to people based on health status. Both are provisions that the GOP’s ultraconservatives have pushed to eliminate as part of the repeal effort, contending that these coverage mandates drive up the cost of insurance.

What this means in practice is a two-tiered health system based on where people live. People in places like Mississippi and Kentucky that have relatively poor healthcare now, will have less access to healthcare and higher costs in the future. Conversely, states that offer better healthcare will maintain existing benefits. That’s a compromise that could pass, or could just make everyone unhappy.

Overall, this attempt keeps the negatives associated with the bill, and adds one more. Historically, risk pools haven’t worked. They’ve been budget-breakers when they’ve been tried for auto and health insurance in several states. If anything, more people will lose health coverage and costs will escalate as predicted by the CBO.


Sources:

  1. Billy House, Jennifer Jacobs, “White House, GOP leaders at odds over plans for Obamacare vote,” BenefitsPro, 20 April 2017. http://www.benefitspro.com/2017/04/20/white-house-gop-leaders-at-odds-over-plans-for-oba?kw=White%20House%2C%20GOP%20leaders%20at%20odds%20over%20plans%20for%20Obamacare%20vote&et=editorial&bu=BenefitsPRO&cn=20170420&src=EMC-Email_editorial&pt=News%20Alert
  2. Adam Cancryn and Josh Dawsey, “White House plans Obamacare showdown next week,” Politico, 20 April 2017. http://www.politico.com/story/2017/04/20/obamacare-repeal-republicans-new-deal-237397

 

ACA Rule Changes

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If you were waiting for changes that would actually help consumers, don’t hold your breath.

Absent the actual repeal the administration sought, it announced rule changes late yesterday affecting consumer access to healthcare and the percent of costs health insurance will cover under marketplace plans. The point of the changes is to incent insurers to continue offering health insurance on the ACA marketplaces. The technical term for this is “market stabilization.”

A cynic might wonder why these changes come out on the even of holidays when most people will be distracted and might not notice.

The rule changes focus on what the insurance industry calls “adverse selection.” Insurers are concerned about people buying coverage only when they expect they will use it, and then dropping it immediately — which forces the insurer to take a loss on the policy.  The rule changes are designed to prevent that.

Here’s the basics:

  • Silver level plans will cover 66% of consumer medical costs, down from the original 70% requirement.
  • The new rules increase also increase subsidies to consumers buying these plans — provided the administration actually commits to making these payments.

At issue are cost-sharing payments that low-income people enrolled under the healthcare law receive to help cover out-of-pocket expenses. Trump has threatened to withhold the payments as a means to force Democrats to negotiate on healthcare legislation.(2)

[Actually, these subsidies can help people making up to $60,000 per year, which is more than “low income.” Half of US households earn less than that.]

  • As previously noted, the enrollment period is being shortened from three months to six weeks, starting November 1st.  Given the problem that CMS has had in handling the volume of people applying for coverage in the longer period in the past, it’s essential for consumers to apply as early as possible.
  • The administration is making it harder for consumers to qualify for special enrollment periods (SEPs). More people will be required to submit supporting documentation than in the past, which will extend the time required for enrollment. If approval is delayed by three months, the consumer will be required to pay for coverage for two of those months.
  • Consumers are being restricted in terms of their ability to change levels of coverage using a SEP.
  • Insurers can refuse to cover people who have failed to pay premiums for this insurance in the past. If you’ve had coverage and dropped it, you may have to wait a year or more before being able to get coverage again.
  • The determination of whether an insurer has an adequate network of doctors and hospitals in a state will be turned over to the state. Some states are much more rigorous than others.

The new rules don’t address some of the key issues challenging insurers:

  • Will the government continue to pay subsidies to help people afford insurance?
  • Will the government use financial penalties to force consumers to carry insurance?

Trump has said that he would eliminate the penalties and the subsidy, but his bill didn’t pass and no one knows about  his current thinking. A negative on the first question will drive insurers out of the market. A negative on the second will raise costs for everyone who needs insurance.

There’s speculation that the reduction in benefits for the silver policy might allow insurers to reduce the cost of these policies. However, any reduction will be subject to higher out-of-pocket costs for consumers who do incur expenses. The net impact isn’t clear.

Are these rule changes even needed? The Congressional Budget Office has stated that it expected the insurance markets to be stable in 2017 without these changes.  So, what is the point?


Sources:

  1. Virgil Dickson, “White House finalizes ACA rule to strengthen individual market,” Modern Healthcare, 13 April 2017. http://www.modernhealthcare.com/article/20170413/NEWS/170419936?utm_source=modernhealthcare&utm_medium=email&utm_content=20170413-NEWS-170419936&utm_campaign=am
  2. Associated Press, “Democrats seek to resolve health payments on spending bill,” 14 April 2017.
  3. Timothy Jost, “Examining The Final Market Stabilization Rule: What’s There, What’s Not, And How Might It Work?” Health Affairs Blog, 14 April 2017. http://healthaffairs.org/blog/2017/04/14/examining-the-final-market-stabilization-rule-whats-there-whats-not-and-how-might-it-work/

ACA Repeal: Here we go again

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According to one report, VP Pence has offered three changes to the repeal bill to win Freedom Caucus support for the Trumpcare bill:

  • Elimination of requirements for what insurers must cover
  • Eliminating coverage for pre-existing medical conditions
  • Eliminating limits on what insurers can charge people with medical conditions

Whether the bill can retain any support among moderates in the GOP with these changes is questionable. These provisions will cause problems for hospitals and healthcare providers, and result in more people having no health insurance coverage, and may allow a sharp increase in insurance prices for consumers, as the Congressional Budget Office has predicted.

This simply makes a terrible bill worse.


Sources:

  1. Marlene Satter, “Freedom Caucus would support health care bill that kills 3 ACA provisions,” BenefitsPro, 10 April, 2017. http://www.benefitspro.com/2017/04/10/freedom-caucus-would-support-health-care-bill-that?kw=Freedom%20Caucus%20would%20support%20health%20care%20bill%20that%20kills%203%20ACA%20provisions&et=editorial&bu=BenefitsPRO&cn=20170413&src=EMC-Email_editorial&pt=Consumer%20Driven%20PRO

AHCA Outcome: questions?

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As described in my previous post, the AHCA was a bad bill that would have hurt most Americans.  The damage became worse in the late night negotiations, will traded away deficit reduction for more tax breaks for the rich and less care for everyone else.  That trade was to woo members of the ultra-conservative “Freedom Caucus” to vote for the bill, and it failed.  However, it forced GOP moderates to abandon the bill.  The final vote would have been ugly, so Trump opted to pull the bill.

What I don’t understand is why Trump supported this piece of legislation at all.  It didn’t match with his public statements about what he wanted to do.  He could have had his staff assemble the bill he said he wanted instead of wasting his efforts on this mess.

Frankly, I’m not sure Trump ever read this bill.  His tweets never were in sync with the content of this legislation.

Very strange.

ACA Repeal — Where We Are Tonight, Update

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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