Healthcare policy has long been one of the most politicized topics in modern day government. From the creation of Medicare in 1965, to the failed attempts at reform under President Bill Clinton, and of course, now the Affordable Care Act, health policy changes are always faced with both criticism and accolades. So, it should come as no surprise that both the Left and the Right are scrutinizing the pending repeal of the ACA and its possible replacement plan.
I have spent most of my career in health policy. I co-authored both Ohio’s Medicaid reform and health insurance prior authorization reform laws. I’m also a licensed social worker trained in my local safety net hospital and free clinic. I have direct experience with how policy decisions impact both providers and patients alike. It is through this lens that I am evaluating the House Republicans’ American Health Care Act.
The nonpartisan Congressional Budget Office released its scoring of the AHCA yesterday, and by all accounts it’s a mixed bag. In a nutshell, the CBO’s analysis concluded the GOP health proposal would reduce the deficit over a decade, cause premiums to spike then become lower than current Obamacare costs, but also result in much higher premiums for older Americans at the same time. The report has provoked outcry over the estimated 24 million people that would become uninsured as a result of proposed policy changes along with an additional 14 million people would lose coverage due to the phase-out of Medicaid expansion.
Now, I am all for deficit reduction and allowing states to innovate, but the AHCA as it stands will come with a long-term cost. There are real people behind these numbers who will go without coverage. This is bad for patients and bad for business. When people are uninsured, they put off routine care. And, when they finally find themselves at the doctor or hospital, they are sicker, and have more unmanaged chronic conditions leading to a higher cost to the system over all.
I also recognize the desire to eliminate the individual mandate, but without it, private insurers will not take on people with pre-existing conditions, as high-risk individuals are too costly.
The CBO concluded fewer healthy people would seek coverage due to the elimination of the penalty. Without the balance of healthy people in the system, insurance companies will never be in the business of providing coverage to individuals with more complex needs. This could result in the government, likely at the state level, to essentially become the insurer of last resort for expensive patients. In the meantime, the AHCA is eliminating the individual mandate in name only. It instead replaces it with a requirement to carry continuous coverage or face a penalty, a lose-lose for patients and providers alike.
Admittedly, there are flaws with Obamacare. One of the largest issues is how high deductible plans essentially cause individuals purchasing coverage through the exchange to be underinsured. They either do not utilize health services frequently enough to meet the deductible, or more often, they cannot afford to pay the out-of-pocket costs so their benefit never kicks in. This problem must be addressed, but neither the tax credits nor the Patient and State Stability Fund proposed adequately address the issue of the underinsured.
The CBO report asserts that tax credits available to lower-income individuals would be lower than under the ACA. In addition, the AHCA allows premiums for older beneficiaries to increase at a rate larger than the available tax credits to older adults. This seems to me like a recipe for continuing a class of underinsured Americans.
The Patient and State Stability Fund would allocate $100 billion to states aimed to help reduce premiums for those in the individual market place, especially people who are considered higher risk and more costly. The CBO estimates $80 billion of these federal funds would be given to states between 2018-2026. Even if that is allocated on a per capita basis for each state, it is unclear how states would sustain such a program into the future or what happens if there is population growth. Again, this model essentially makes the states the de facto insurer of the sickest and most costly amongst them.
Having served at the state level for a decade, I am all for empowering the states to have more control. However, I am not convinced the AHCA would be effective in providing states with the tools necessary to meet their obligations to the most vulnerable.
The phase-out of Medicaid expansion will leave the working poor without coverage, creating a perverse incentive to avoid seeking higher-paying employment. In addition, block-granting money to the states does not necessarily take into account what would happen if we were to face another major recession.
I was minority leader of the Ohio Senate during the last economic crisis and clearly recall the dire need we had for more federal dollars to meet the surge in Medicaid-eligible individuals. Under the AHCA, states could be left holding the bag trying to find a way to pay for those in need of safety net coverage through no fault of their own.
Furthermore, the dialogue on health insurance often does not sufficiently address the impact on providers. According to the Kaiser Family Foundation, roughly 12.5 million Americans are employed in the healthcare sector. If individuals are uninsured, providers may not be able to afford to carry the cost of uncompensated care, even if the disproportional share payments to safety net hospitals are restored as proposed. Providers may lay people off and that could lead to more individuals in need of social assistance programs costing the government even more money.
Finally, there are a number of provisions in the ACA that are never talked about that, if eliminated, could have a detrimental impact on Medicare beneficiaries as well as curtail state innovation efforts. The ACA allows for coverage of wellness visits for Medicare patients that was previously not available. It also eliminates the “donut hole,” or out of pocket costs, for drugs under Medicare Part D over time. If these provisions were to go away, it would mean both higher Part B costs for doctor visits and higher Part D costs. That certainly does not make care more affordable for our seniors.
Obamacare also created the Center for Medicare and Medicaid Innovation under the Center for Medicare and Medicaid Services. CMMI allows states to apply for waivers and grants to test new payment and healthcare delivery models that could reduce costs and improve care. Taking away CMMI through a full repeal of Obamacare would be counterproductive to a strategy that Republicans claim to support: increased state flexibility and public-private sector innovation to reduce costs and improve efficiencies.
In light of the CBO report and unintended consequences of the ACA repeal, I have a feeling many inside the Beltway are quickly realizing it was easier to campaign on “repeal and replace” than to actually find a way to do it.
Capri Cafaro (@thehonorablecsc) is a contributor to the Washington Examiner’s Beltway Confidential blog. She is a former member of the Ohio State Senate, where she was the Senate minority leader. She is now an Executive in Residence at American University’s School of Public Affairs.
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