Federalism and the End of American Healthcare Act

http://www.yalelawjournal.org/forum/federalism-and-the-end-of-obamacare

Federalism and the American Health Care Act

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Republicans may talk the talk of devolving health care policy to the states, but that’s not what the American Health Care Act does. Instead, it starves health reform of the funding upon which it depends.

Most significantly, Republicans intend to phase out the Medicaid expansion and to impose a hard cap on federal contributions. If a recession forces a state to exceed its cap in a given year, any overruns will come out of its Medicaid payments the following year. With that kind of shortfall, the states will have to make savage Medicaid cuts to make ends meet.

Republicans also want to slash the subsidies that make insurance affordable in the private market. Under the ACA, no one making less than four times the poverty level has to devote more than 10 percent of her income toward private coverage; most pay much less. The American Health Care Act would erase that affordability guarantee and, instead, extend age-based subsidies that would be much too meager for most people to afford coverage.

If federal money is withdrawn, states will be stuck. Because of the countercyclical trap and ERISA, they won’t be able to enact and sustain coverage expansions on their own. The end result will not be the diversity that federalism celebrates. It will be a uniformly crappy system that leaves millions of the sick and poor without coverage.

It doesn’t have to be this way. A group of Republican senators led by Bill Cassidy (R-LA) and Susan Collins (R-ME) has floated an alternative, the Patient Freedom Act of 2017, that retains the ACA’s funding streams while giving the states more room to choose how to use that money. That’s a model that deserves serious attention from both Republicans and Democrats. It might enable partisans on both sides move past the rancorous debate over the ACA.

For now, however, the Republicans seem intent on dismantling coverage gains across the entire United States. Their proposals trade on the rhetoric of states’ rights, but they would have the perverse effect of inhibiting state power. That’s bad for federalism — and bad for the country.

 

Healthcare Triage – The American Health Care Act: A Republican Response to The Affordable Care Act

Healthcare Triage – The American Health Care Act: A Republican Response to The Affordable Care Act

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After so many, many years, it’s finally here. The Republican bill for repeal and replace. Kudos to Mark and Stan for getting this up so fast.

Welcome to a very special episode of Healthcare Triage.

The AHCA’s mandate replacement doesn’t make sense to me

The AHCA’s mandate replacement doesn’t make sense to me

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I’m having a really hard time with this. I’m going to try and walk through my dilemma in the hope that someone will be able to make me understand.

The Republicans hate the individual mandate. I get that. I don’t necessarily understand their rationale, but I accept it. They also, however, understand the need for some sort of carrot/stick to get healthy people to buy insurance so that we don’t get adverse selection and see the private insurance market enter a death spiral. So they need to replace it.

We have discussed this before. There are many ways to solve this adverse selection problem without a mandate. Open enrollment periods, penalties for not signing up, loss of protections, inducements for keeping coverage, etc. We have written about this again and again and again and again and again and again. So I’m not saying that you can’t replace the individual mandate.

Many wonks believe that too few healthy people are joining the exchanges. This is leaving the risk pool too expensive and leading to higher premiums. To fix that, we could increase the size of the mandate penalty (stick), increase the size of the subsidies to make insurance cheaper (carrot), or both (carrot and stick).

The AHCA plan, though, goes at this sideways. It eliminates the stick. It reduces the carrot. And it then puts in a new plan – the 30% insurance markup if people lose continuous coverage.

In theory, making people pay a lot more if they don’t buy insurance as soon as they need to will make healthy people join the market. If they know it will cost a lot more if they wait until they are sick, or if they know it will mean they won’t have community ratings if they don’t purchase plans early, they should buy in – reducing adverse selection.

But this plan doesn’t really do that. It’s a one-time, one year, 30% markup on insurance. That’s a tiny, tiny penalty in the scheme of things.

 

The American Health Care Act: 10 things to know

http://www.beckershospitalreview.com/hospital-management-administration/gop-health-bill-is-out-10-things-to-know-this-morning.html

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After years of lobbying to repeal and replace the ACA, House Republicans put forth The American Health Care Act on Monday. Here are 10 things to know about the legislation.

1. The AHCA would eliminate the ACA’s individual mandate, or requirement for American adults to enroll in health insurance. Further, the legislation eliminates the tax penalty adults faced if they were not covered. However, the concept of penalties still remains in some form: To encourage people to buy coverage, the AHCA lets insurers charge a 30 percent penalty for those who let their health plans lapse and try to buy a new policy, according to NPR.

2. The AHCA calls for Medicaid expansion to remain in effect through Jan. 1, 2020. This is different from earlier drafts of legislation, which called for an immediate reversal of Medicaid expansion. Thirty-one states, plus Washington, D.C., have opted to expand Medicaid under the ACA. By 2020, the government will “freeze” the expanded programs and restrict funding only to people who were in the program as of then — no added enrollees from that date on. States would keep getting that amount of federal aid for each Medicaid enrollee as long as the enrollee doesn’t lose eligibility for more than a month. There is also a provision in the AHCA that calls for grants of extra Medicaid provider reimbursement funds to go toward states that didn’t expand Medicaid.

3. The AHCA restructures Medicaid’s federal funding to a per-capita cap opposed to the current open-ended federal entitlement, reports Politico. States would receive capped payments based on how many people are enrolled in Medicaid. The plan also calls for more frequent eligibility testing of Medicaid enrollees.

4. The AHCA restructures Americans’ tax credits to buy health insurance. It replaces income-based subsidies under the ACA with refundable, age-based and income-capped tax credits, according to Politico. These credits increase with age, from as low as $2,000 for those under 30 or as high as $4,000 for those over 60. There would be a limit as far as credits for a single household — $14,000 — and subsidies would be eliminated over time for individuals with annual income of $75,000 and for families with annual income of $150,000, according to the report.

5. A few ACA staples roll over in the AHCA. The ACA provision related to pre-existing conditions would remain intact, meaning insurers would not be able to deny coverage or increase prices for people with such conditions, reports Reuters. Also, the AHCA retains provisions allowing adults up to age 26 to maintain coverage through their parents’ health plans, according to the report.

6. The AHCA eliminates the cap on the tax exemption for employer-sponsored insurance. Although earlier drafts of legislation capped the exemption at 90 percent of current premiums, the final version eliminated the proposal, according to Politico. The bill also gets rid of the penalty for businesses that do not offer employees health coverage.

7. The AHCA delays the effective date for the ACA’s Cadillac Tax on costly health plans from 2020 to 2025, according to The Hill. GOP lawmakers are delaying but keeping the tax to make certain their replacement plan will not increase the national deficit after a decade.

8. The AHCA bars federal Medicaid funds or federal family planning grants for Planned Parenthood clinics, according to the report. (Separate from the AHCA, the White House earlier this week extended terms for a compromise to Planned Parenthood by proposing maintained federal funding if the group agrees to discontinue providing abortions, according to ABC News.)

9. The cost of the AHCA is not yet known. The nonpartisan Congressional Budget Office has not yet scored the legislation, which means there is neither a cost estimate for the plan or how many Americans would gain or lose insurance under it.

10. What’s next? The House Ways and Means and Energy and Commerce committees are expected to review the AHCA legislation Wednesday. If the committees approve the measure, the full House could potentially act on it before April 7, according to The New York Times. The measure would then be taken up by the Senate.

Fitch: Changes to Medicaid in ACA repeal bill pose risks for hospitals

http://www.beckershospitalreview.com/finance/fitch-changes-to-medicaid-in-aca-repeal-bill-pose-risks-for-hospitals.html

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House Republicans’ proposed ACA repeal and replacement plan, known as the American Health Care Act, calls for changes to Medicaid that expose states and hospitals to new fiscal risks, according to a Fitch Ratings report.

The AHCA would eliminate Medicaid’s entitlement structure and restructure the program’s federal funding to a per-capita cap system on Jan. 1, 2020. This change is intended to slow Medicaid spending growth. The Kaiser Commission on Medicaid and the Uninsured estimates switching to a per-capita cap system would reduce federal spending on Medicaid by $1 trillion (or 26 percent) over 10 years. This reduction would require states to make significant budgetary changes and could result in reduced reimbursement for hospitals, according to the report.

The AHCA calls for the government to freeze expanded Medicaid programs on Jan. 1, 2020, and restrict funding only to people who were enrolled in the expanded programs as of Dec. 31, 2019. Under the ACHA, states that expanded Medicaid “will be faced with a unique policy predicament of denying Medicaid access to individuals who would otherwise qualify beginning in 2020, or taking on significant costs they had anticipated would be bored largely by the federal government,” according to Fitch.

Moody’s: GOP’s American Health Care Act is credit negative for nonprofit hospitals

http://www.beckershospitalreview.com/finance/moody-s-gop-s-american-health-care-act-is-credit-negative-for-nonprofit-hospitals.html

OR Efficiencies

If House Republicans’ proposed ACA repeal and replacement plan, known as the American Health Care Act, were to become law in its current form it would be credit negative for nonprofit hospitals, according to Moody’s Investors Service.

The components of the AHCA most likely to negatively affect hospitals are transitioning federal Medicaid payments to a per-capita payment to the states, the Medicaid expansion freeze in 2020 and how subsidies are calculated for individuals who purchase insurance on the exchanges, according to Moody’s.

Under the legislation, the uninsured rate would rise, which would cause hospitals’ bad debt and uncompensated care costs to increase, according to Moody’s.

The AHCA’s retention of Medicaid expansion and elimination of scheduled disproportionate share cuts for states that did not expand Medicaid would have a positive impact on nonprofit hospitals, according to Moody’s. However, the rating agency said the positive effects are not enough to compensate for the credit negative components of the AHCA.

The House GOP Leadership’s Health Care Bill Is ObamaCare-Lite — Or Worse

https://www.cato.org/blog/house-gop-leaderships-health-care-bill-obamacare-lite-or-worse

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During the presidential campaign, Donald Trump promised legislation that “fully repeals ObamaCare.” Monday night, the Republican leadership of the House of Representatives released legislation it claims would repeal and replace ObamaCare. Tuesday afternoon, Vice President Mike Pence will travel to Capitol Hill to pressure members of Congress to support the bill. On Wednesday, two House Committees will begin to mark-up the legislation. House and Senate leaders are hoping for quick consideration and a signing ceremony, maybe by May, so they can move on to other things, like tax reform and confirming Supreme Court nominee Judge Neil Gorsuch.

Everyone needs to take a step back. This bill is a train wreck waiting to happen.

The House leadership bill isn’t even a repeal bill. Not by a long shot. It would repeal far less of ObamaCare than the bill Republicans sent to President Obama one year ago. The ObamaCare regulations it retains are already causing insurance markets to collapse. It would allow that collapse to continue, and even accelerate the collapse. Republicans would then own whatever damage ObamaCare causes, such as when the law leaves seriously ill patients with no coverage at all. Congress would have to revisit ObamaCare again and again to address problems they failed to fix the first time around. ObamaCare would consume the rest of Congress’ and President Trump’s agenda. Delaying or dooming other priorities like tax reform, infrastructure spending, and Gorsuch. The fallout could dog Republicans all the way into 2018 and 2020, when it could lead to a Democratic wave election like the one we saw in 2008. Only then, Democrats won’t have ObamaCare on their mind but single-payer.

First, let’s look at how the main features of this bill fall short of repeal.

 

Negative reactions roll in for Republican ACA replacement bill

http://www.healthcaredive.com/news/aca-repeal-bill-reactions/437591/

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Dive Brief:

Dive Insight:

The AHCA is getting criticism from all sides and is centered in a big pile of uncertainty regarding varying ACA repeal bills. But when push comes to vote, it will come down to the Republicans to decide whether to go forward with the new repeal-and-replace bill.

So far, the bill hasn’t been taken positively from either side of the aisle. Democrats obviously oppose the legislation but several conservatives have taken shots at the measure as well. Heritage Action CEO Michael Needham released a statement on Tuesday saying, “Many Americans seeking health insurance on the individual market will notice no significant difference between the Affordable Care Act (i.e., Obamacare) and the American Health Care Act.  That is bad politics and, more importantly, bad policy.”

The American Medical Association called the bill “critically flawed.”

“The AMA supported health system reform legislation in 2010 because it was a significant improvement on the status quo at the time; and although it was imperfect, we continue to embrace its primary goal – making high-quality, affordable health coverage accessible to all Americans,” AMA President Dr. Andrew Gurman said. “As drafted, the AHCA would result in millions of Americans losing coverage and benefits. By replacing income-based premium subsidies with age-based tax credits, the AHCA will also make coverage more expensive – if not out of reach – for poor and sick Americans. For these reasons, the AMA cannot support the AHCA as it is currently written.”

Washington Post stating the most lasting impacts of the measure would be steps toward “forcing permanent changes to Medicaid and Medicare.” He added, “If this bill became law, [House Speaker Paul Ryan] would finally be positioned to change Medicare to a voucher program.” AARP EVP Nancy Leamond had similiar concerns with Medicare, writing in a statement the organization opposes the AHCA stating it would “would weaken Medicare, leaving the door open to a voucher program that shifts costs and risks to seniors.”

The American Hospital Association released a letter on Tuesday stating any ability to evaluate the bill is “severely hampered by the lack of coverage estimates by the Congressional Budget Office…[I]t appears that the effort to restructure the Medicaid program will have the effect of making significant reductions in a program that provides services to our most vulnerable populations, and already pays providers significantly less than the cost of providing care.”

Getting the Brush-off on Health

http://otherwords.org/getting-the-brush-off-on-health/

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Someone recently asked me whether I consider myself a liberal or a conservative on healthcare. But what does that even mean?

We all want the same thing: affordable coverage we can actually use, lower costs, and a healthier population. I don’t think the ACA achieved all of these goals, but getting coverage for over 20 million people was a huge step in the right direction.

Why tear down years of progress and start from scratch when we can simply fix what we have?

Behold the G.O.P. Civil War on Health Care

 

As people began to digest the Republican health care plan on Tuesday, a few things became clear:

1. “This isn’t an Obamacare repeal, it’s a Medicaid repeal,” as the political writer Jonathan Allen put it.

Many Republicans have long viewed Medicaid — a health insurance program for the poor, the disabled and some elderly — with skepticism. This plan would make very large cuts to the program. The details are somewhat technical, and Edwin Park of the Center on Budget and Policy Priorities explains them. But the real-world effects will be concrete: Many people will lose coverage, and some kinds of care, if the bill becomes law.

2. Conservative policy experts hate the bill, and the criticisms come from both the far right and the center right.

Peter Suderman of Reason had an excellent frame for understanding the right’s civil war over health care: Conservatives don’t even agree on what their goals are. Making health care less expensive? Reducing the government’s role? Ensuring that the poor receive fewer subsidies?

Lacking this agreement, many Republicans have pretended that a magical health plan exists, one that would cover everyone, provide good insurance and cost less money. Wouldn’t that be nice!