The AHCA and the ACA in two charts

The House passed the American Health Care Act (AHCA) this afternoon. It’s still a considerable way from becoming law, but if it does it will repeal the Affordable Care Act (ACA). Here are two charts that explain why this happened.

The first chart is from Henry Aaron of the Brookings Institution (previously discussed here). For each decile of the US income distribution, it projects the income gains and losses from the ACA, where the cash value of the health insurance benefit is treated as income. The positive bars on the left are income gains by the people in the lowest 20% of the US distribution. They are balanced by losses in the upper 80% of the income distribution.

The horizontal axis on the Urban Institute graph represents income ranges, not income deciles. The four bars that are positive on the right represent people making $50,000 or more (the upper 37% of the US income distribution). The bar on the far right, with the huge positive income transfer, represents people earning $200,000 or more (the top 0.33% of the income distribution). Notice also that the vertical axis of the Brookings chart represents percentage changes in income, whereas the axis in the Urban Institute chart represents changes in dollars. If you converted the Urban Institute chart to percents, the magnitude of the bars on the left (low) side would grow and those on right (high) side would shrink. The Institute projects that the average person earning $200,000 or more will get a 1% increase in income. They project that the average person earning less than $10,000 will experience a 33% net loss of income. Think about that for a moment.

Here is why the AHCA is moving forward. The ACA used tax funds to pay for the healthcare of people in the bottom 20% of the income distribution. High earning people pay most of the taxes, so the ACA transferred money from them down to people in the bottom deciles of the US economic hierarchy. The AHCA cuts taxes in the ACA and reduces the amount that the government will spend on the health care of the poor. The net effect of the AHCA is a massive loss for the poor and a benefit for the very top of the economic scale.

I would love to be able to say that these bills represent clashing views about the best way to deliver health care. Unfortunately, I am unable to find a conservative health policy expert who thinks the AHCA is optimal. There may not be one who thinks it’s even good. The AHCA did not pass based on its merits as a health policy solution. The AHCA passed because Republicans wanted these transfer effects.

The House narrowly passed a health care bill on Thursday that would repeal and replace major parts of the Affordable Care Act. Every Democrat voted no, joining 20 Republicans.

As House Republicans on Thursday shoved their health care bill across the finish line, stuffing it with amendments and extra dollars to secure a hard-won majority, the lawmakers who will inherit the legislation delivered their own message from across the Capitol:

That’s cute.

On the Senate side, where several Republicans have long been deeply skeptical of the House effort, the bill is expected to undergo sweeping changes that might leave it unrecognizable — perhaps stripping away some of the provisions that helped earn the support of hard-right House members and ultimately secure its passage.

The Republicans’ narrow 52-member majority in the Senate leaves little room for defections, and several Republican senators have worried aloud about the House measure. Their concerns include insurance costs for poorer, older Americans and funding issues in states with high populations of hard-to-insure people.

http://www.politico.com/story/2017/05/04/house-health-care-bill-senate-doa-238000?cmpid=sf

After all the energy the House just expended on ramming through its Obamacare repeal, the Senate is about to start over.

“We’re writing a Senate bill and not passing the House bill,” said Sen. Lamar Alexander (R-Tenn). “We’ll take whatever good ideas we find there that meet our goals.”

They need to end up with a bill that can win over 50 of the 52 GOP senators in the narrowly divided chamber. And even if they accomplish that, their bill could be unpalatable to House conservatives. The House bill squeaked through on a 217-213 vote.

The two chambers have not coordinated much in recent weeks as the House — with an assist from the White House — frantically worked to kick the health care bill to the other side of the Capitol. Senate Republicans say they’ll take the time they need to understand the House bill’s ramifications. And they will insist on a score from the Congressional Budget Office before voting, unlike the House.

“Like y’all, I’m still waiting to see if it’s a boy or a girl,” said Sen. Lindsey Graham (R-S.C.). “Any bill that has been posted less than 24 hours, going to be debated three or four hours, not scored? Needs to be viewed with suspicion.”

http://www.commonwealthfund.org/publications/blog/2017/apr/amendment-aca-repeal-and-replace-bill?omnicid=EALERT1205401&mid=henrykotula@yahoo.com

Yesterday, House Republicans passed by a narrow 217–213 vote margin an amended version of the American Health Care Act (AHCA), their proposed repeal and replacement of the Affordable Care Act (ACA). Two amendments to the original AHCA won over members who had initially opposed the bill.

Projections of the amended bill’s effects on coverage and the federal budget are not yet available from the Congressional Budget Office. But it is still likely to significantly increase the numbers of uninsured Americans and raise the cost of insurance for many of the nation’s most-vulnerable citizens. Both the original and the new version dramatically cut and reconfigure the Medicaid program. And the latest amendments allow states to weaken consumer protections, particularly regarding preexisting conditions, while adding just $8 billion over five years to cover those with preexisting conditions who are unable to afford coverage.

What the AHCA Does

The amended bill as passed does little to change many provisions of the original AHCA including:

• a phase out of the ACA’s Medicaid expansion;
• capped federal payments to states for their Medicaid programs;
• flat premium tax credits for individual market coverage that adjust for age but not income or premiums;
• the option for insurers to charge older people as much as five times what they charge young people (instead of the ACA’s three-to-one maximum differential);
• replacement of the ACA’s individual mandate penalties with a 30 percent premium surcharge for those who fail to maintain continuous coverage;
• repeal of taxes that helped fund the ACA’s coverage provisions;
• state funding for reinsurance or other programs to stabilize the individual market.

The CBO estimated in March that the combined effects of these provisions would increase the number of people without health insurance by 24 million by 2026. Older Americans would be particularly hard hit by the bill, experiencing much higher premiums relative to the ACA and the greatest coverage losses.

What the Amendments Change

The amendments offer states the option to apply for waivers to reduce ACA consumer protections that have enabled people with health problems to buy private health insurance. Beginning in 2019, states could waive the ban on charging people with preexisting conditions higher premiums for those who do not maintain continuous coverage. But states could only do this if they set up special programs to help people with conditions like cancer or heart disease who could no longer afford coverage. States could also change the ACA’s required minimum package of health benefits for health plans sold in the individual and small-group markets.

Despite the fact the federal ban on preexisting condition exclusions would remain under the AHCA, as Tim Jost points out, insurers could reach the same end by not covering services like chemotherapy that sick people need, or by charging very high premiums for individuals with expensive, preexisting problems. In addition, waiving the ACA’s essential benefit requirement could weaken other consumer protections like bans on lifetime and annual benefit limits and caps on out-of-pocket costs.

States that allowed higher premiums for people with health problems would be required to set up programs such as high-risk pools or reinsurance for high claims costs. Or under an AHCA amendment proposed earlier in the month, states could also participate in an “invisible risk-sharing” program, a hybrid between a high-risk pool and reinsurance for high claims costs. The federal government would provide $15 billion over 2018–2026 for states to share. But while reinsurance options might protect insurers from high claims costs, giving them the ability to charge premiums based on health status would result in many people with preexisting conditions facing unaffordable premiums. As for high-risk pools, prior research has found that such pools operated by states before the ACA were expensive both for states and for people enrolled in them, and covered only a small fraction of the individuals who would have benefited. Avalere estimates that there are currently more than 2.2 million people with preexisting conditions in the individual market. The new funding of $8 billion under the amended AHCA, in addition to the previously designated $15 billion, amounts to just $3.3 billion for states to share in 2019. Assuming states used this funding for high-risk pools, it is sufficient to help only 110,000 people, or 5 percent of those with preexisting conditions. Moreover, even this group of people could have critical services excluded from their benefits if their state weakened the essential benefit package.

Looking Forward

Setting aside the amended AHCA’s potential effects on the health and health care of Americans, many questions and uncertainties remain about the bill’s timing and fate. First, the fate of the amended AHCA in the Senate remains uncertain. Some possible provisions—affecting essential health benefits, premium increases based on health, and other features—may not withstand scrutiny by the Senate parliamentarian as she evaluates whether they are appropriate parts of a budget reconciliation bill, and thus exempt from filibuster. Furthermore, many moderate Senate Republicans reportedly have concerns about the Medicaid provisions of the AHCA.

It now appears that the Senate may actually set aside the House legislation and write their own bill from scratch. The resulting bill would undoubtedly be designed to meet the requirements of the Senate reconciliation process, and thus be exempt from filibuster—something the House bill did not accomplish. Newly crafted Senate legislation might take a very different approach to the ACA’s Medicaid provisions, and even drop budget restrictions such as individual caps or block grants. Senators may also make the premium subsidies more generous to reduce the numbers of Americans who will lose private insurance under the AHCA.

From a legislative viewpoint, the greater the divergence between the House-passed and Senate-passed bills (if the Senate actually passes legislation), the more complicated it will be for House leadership to hold its fragile 217 vote majority together to pass a House–Senate compromise.

Second, the complex legislative maneuvering around the AHCA should not detract attention from the fundamental facts. Health insurance saves lives and protects Americans from crippling medical debt and even bankruptcy. Changes to existing legislation that result in fewer insured Americans will undermine the health and quality of life of millions of people, as well as increase economic inequality in this country.