The Republicans’ Jekyll-and-Hyde Health Care Plan

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The Senate Republicans’ health bill that was made public today is a Jekyll-and-Hyde plan: in some ways kinder than the House Republican plan, and in some ways meaner, to use President Donald Trump’s yardstick. Overall the plan will benefit the wealthy and young adults, but hurt larger numbers of people who are old or poor.

On Medicaid, the federal-state health program covering 69 million lower-income people, the Senate plan is harsher than the House plan. Like the House bill, the Senate bill would effectively kill the expansion of Medicaid that was allowed under the Affordable Care Act. It will do this by phasing out, over four years, the law’s requirement that the federal government cover 90 percent of the cost for people added under Medicaid expansion — many of them single adults below or just above the poverty line. Medicaid expansion covers 14 million people in 30 states and the District of Columbia. (The remaining states chose not to expand their programs.) Expansion states would have to come up with hundreds of millions, in some states billions, of dollars from their own budgets to replace those lost federal funds. Based on my experience as a state human services commissioner — for a Republican governor — I predict that few if any states will be able to do that. It is also highly unlikely that other states will join the expansion once the federal match is gone.

Both the Senate and the House plans also impose a per capita cap on future federal Medicaid spending. The Senate plan imposes a harsher formula for its cap than the House plan, which already cuts Medicaid spending by $834 billion over 10 years. Because states have to balance their budgets every year, unlike the federal government, many will struggle to compensate for reductions in federal aid caused by a spending cap. Many states will be forced to choose between Medicaid and other priorities, like education, law enforcement and prisons. The inevitable result will be a reduction in health care spending on low-income people. And you cannot cut over $800 billion from Medicaid without adversely affecting health services for the poor.

Governors might be expected to loudly protest these Medicaid cuts, but the Senate bill delays the harshest cuts until 2025, after the current governors are gone. We will see how those governors balance their states’ health care futures and their own political interests.

That’s Mr. Hyde. Now for Dr. Jekyll. The part of the Senate bill that deals with the individual insurance market and the A.C.A. marketplaces is in some respects Obamacare-lite. The House bill was sharply criticized for replacing Obamacare’s system of tax credits and subsidies, intended to make insurance more affordable, with a system of tax credits that were far less generous. The Senate bill would maintain Obamacare’s tax credit system, but it would scale back the value of the credits. And as under the A.C.A. but not the House plan, the tax credits will be adjusted for income and geography — which will benefit people in parts of the country with high premiums, especially rural areas. Still, deductibles are likely to rise under the Senate plan.

Another key difference involves community rating, which prohibits insurance companies from charging sick people more than healthy people. The House bill would authorize states to apply for waivers allowing insurers to charge sick people more. The Senate bill would not allow such waivers. But it would make it easier for states to seek exemptions from other provisions of the law, including the essential benefits insurers must cover, such as maternity care and mental health. How this would play out nationally would vary greatly from state to state, but it seems certain that some states would allow significant reductions in essential benefits.

Each of the plans would eliminate funding for Planned Parenthood for one year, as well as prevent plans participating in the insurance marketplaces from providing abortions.

Conservatives may like the idea of capping and cutting Medicaid, but they will not like the Senate bill’s Obamacare-lite tax credits. Liberals and moderates will resist what they consider the near decimation of the Medicaid program. Nor will they like the idea of handing so much control over Medicaid to the states. They will see little logic in reducing eligibility for the A.C.A.’s tax credits. How, they will rightly ask, would that “fix Obamacare” when middle-class consumers who buy their own insurance are struggling to pay their bills now?

Overall, it’s important not to focus too much on the differences between the Senate and House plans. Both plans will reduce federal health care spending and cap Medicaid while shifting greater responsibility to the states. And both plans will cause more Americans to go without coverage and struggle with health care bills. Both bills are likely to increase the number of Americans having problems paying medical bills — about a quarter of the public today. For voters, that is the single most important barometer of the performance of the health care system.

If the plan passes and is signed into law, congressional Republicans and the president will win plaudits from their base for repealing Obamacare. But then they will own the problems in the health care system, including those created by their own legislation.

A Brief Analysis of Health Insurance Competition and Commercial Market Share

Pennsylvanias Commercial Market as of December 2016

Health plan market share is an important measure of competitive positioning for insurers. Health insurance carriers often assess the number of people enrolled in their health plans at the state level or at a more defined geographic area to determine their market position. Companies not only look at their own market position but also routinely analyze competitor membership to evaluate relative market share. In this brief, Mark Farrah Associates (MFA) presents an overview of market demographics and market share data, with a focus on health plan market position in three Metropolitan Statistical Areas in Pennsylvania.

Market Demographics

Health insurance competition can be assessed by using many performance variables with health plan enrollment and market share metrics being the most common. Enrollment can be divided into two core segments, commercial health insurance and government-sponsored programs. The largest segment within the commercial market is employer-based plans, also known as the group segment. The group segment includes fully-insured/risk-based policies or self-funded/ASO (administrative services only) arrangements with employers. Individual or non-group plans, including Marketplace products, are also part of the commercial segment. Government programs, Medicare and Medicaid, provide coverage for the elderly or people with disabilities and low income populations.

As of December 31, 2016, insurance companies provided medical coverage for approximately 264 million people, based on enrollment as reported in Mark Farrah Associates’ Health Coverage Portal™. The employer-based ASO and risk-based segments remained the largest sources of coverage in the industry, collectively enrolling 196 million people in the commercial segment. Medicaid and SCHIP programs enrolled nearly 75 million people and within this segment, approximately 51 million are covered by managed care plans. Approximately 57 million seniors were enrolled in Medicare programs at year-end 2016. This included more than 38.7 million people with original Medicare and 18.7 million members enrolled in Medicare Advantage plans.

Competition and Market Share

To analyze health insurance competition, analysts often start with state-by-state assessments of competitor enrollment and market share. Data from statutory filings can provide valuable insights about state health insurance competition. Based on data filed in statutory financial reports from the NAIC (National Association of Insurance Commissioners) and the CA DMHC (California Department of Managed Health Care), Mark Farrah Associates’ Health Coverage Portal™ is a tool widely used by health plans for easy access to market share data and financial performance metrics.

For the purposes of this brief, MFA first looked at the competitive mix in Pennsylvania’s commercial market by analyzing state enrollment figures from the Health Coverage Portal™. The chart below illustrates the leading companies in Pennsylvania’s commercial health insurance market. Three Blue Cross Blue Shield affiliates and Aetna comprise the largest percentage of market share for the state.