HOUSE REPUBLICANS RELEASE THEIR ACA REPEAL AND REPLACE BILL

Is "The AHCA" really just Obamacare Lite or something entirely different?

House Republicans released their long-awaited health care bill earlier today; 123 pages of text with more details than previously shared. It’s not clear what the goal was but it would appear to have something for everyone… to not like. For the most ardent Trump supporters, they will not like how much it resembles Obamacare. If you wanted the ACA repealed immediately, there are some long delays and some ACA features will remain, prompting some to call it Obamacare 2.0 or Obamacare Lite. For supporters of the ACA, they will point to some significant changes to subsidies and reduced funding for Medicaid and subsidies, which means millions will likely be left without coverage due to affordability. I’ll get into that in a minute.

First, there are still lots of questions, like how much will it cost and how many Americans will be covered by the new ACA replacement plan. There’s a process for calculating the financial impact of a new bill and that work has not been done yet. If as promised it will be “less expensive and much better”. The cost will be shared soon but I will share a brief assessment whether it’s better or covers more people.

(spoiler alert: It won’t do either):

• Individual Mandate – The tax penalty is immediately repealed
• Pre-existing conditions – Protected as long as you don’t lapse coverage.
• Continuous Coverage - 30% surcharge if you lapse coverage more than 63 days.
• Dependents to Age 26 – Kids can stay on parent’s plans. Just like the ACA did.
• No lifetime or annual maximums – Just like the ACA did.
• Freezes Medicaid enrollment – Starting in 2020, stops new enrollment.
• Carriers may charge more for higher risk – Like before the ACA.
• Keeps “Essential Health Benefits” – Just like the ACA.
• Pricing ratio – Rates for oldest people allowed to be 5 times higher than youngest.
• Medicaid changes – States get a lump sum or “per capita” funding caps.
• No selling plans across state lines – This would not have helped anyway.
• Age-Based Subsidies – Instead of Income-Based ($2,000 to $4,000 tax credit)
• Health Savings Accounts – Enhancements and allows catch up contributions.
• Reduces taxes for wealthy – Top 0.1% of earners save $195,000 annually.
• Lottery winners – To reduce Medicaid costs, states may disenroll lottery winners
• Planned Parenthood - A one-year ban on Planned Parenthood funding.

Surprisingly, the new bill keeps the Cadillac tax and other ACA taxes for health insurers, hospitals, and tanning salons. Because it could not be done through this process, the new bill will not apply a cap on the employer tax exemption. That’s a good thing. A cap would have reduced the tax incentive for employers to continue to provide benefits to their workers.  

“We have to pass the bill so that you can find out what is in it..." - Nancy Pelosi (2010)

The GOP will start committee votes on Wednesday (tomorrow)… even without the Congressional Budget Office estimate or score of the budget impact. That’s not much time to review or comment, and appears to be intentional. This short window will draw major criticism from both Dems and GOP as this was the same problem and complaint with how the ACA was rushed under the Obama administration. The GOP said they would be open and transparent but this is neither. You may recall hearing just last week that Sen. Paul Ryan was literally searching the halls of the Senate building for the private meeting room where house republicans were marking up the new draft bill but would not allow a printed copy of the bill to leave the room. This is off to a bad start, especially for the House GOP members who have to vote on this bill and also be accountable to their constituents who shared their health care concerns at angry town hall meetings and will remember how they voted during the midterm elections.

The bill has a long path to become law. It would have to be marked up by the Energy & Commerce Committee, passed by the House, debated by the Senate, and passed by the Senate before it could go to the President's desk for signature.

Does it cover more people? Not likely. How many will lose coverage? It’s not a question if, but how many. At best, only 10 million may lose coverage. More likely, as many as 15 to 20 million Americans who currently have coverage may not be able to afford and keep their coverage, according to earlier CBO estimates. Without the mandate, younger and healthy people are less likely to keep their coverage they don’t believe they need or can afford. That makes the risk pool less healthy and adds more adverse selection and weakens the individual market. This is the worry many had about the failing individual market, where more insurance carriers are exiting the exchanges and the individual market altogether due to poor risk selection and an impending “death spiral”.

Is it better? I don’t see how. Deductibles and copays (co-insurance) continue to increase to painfully high levels, but some may now use these high deductible plans with a funded Health Savings Account. That is not a likely solution for many lower income folks who can barely afford the insurance premium, let alone the added cash needed to fund the HSA. 

Is it less expensive? Health care costs are not reduced by this plan. More Americans are paying closer attention to the difference between health insurance and health care. The reason health insurance premiums are so expensive is directly associated with the cost of health care; what it costs to stay in the hospital, pay for prescriptions and other medical costs. The growth rate for these costs have slowed recently (post ACA) but still expected to outpace wages and inflation. Learn more here.

Since the ACA and AHCA are mostly focused on insurance rules and reforms, they do little to impact the actual cost of care and the underlying drivers of rising insurance premiums.

The repeal and replace debate is really just about who gets to keep their expensive coverage and who else should pay for it.

We will learn more about the CBO budget estimates but consumers will quickly learn this bill offers no short or long term strategy for bending the trend and lowering costs. For many, the only reason health insurance was affordable was because they qualified for a premium tax credit. AHCA will disappoint many across part lines, age and income groups… both supporters and critics of Obamacare.

Coincidentally, I was touring LA County-USC Medical Center yesterday with a group of journalists from the USC Center for Health Journalism fellows when I saw the bill text was released. We were just listening to two brilliant emergency room physicians share their take on what the ACA has done to help improve access to health care for many low-income and uninsured. As a safety-net hospital, LA-County USC serves on the front line providing critical life-saving care for anyone regardless of insurance status. My mother’s life was saved at LAC-USC… a very personal story I have briefly shared and why I am an advocate for the uninsured today. Severely underfunded and overburden, these community hospitals also see a surge of patients who have insurance coverage but cannot afford their high deductibles. AHCA does not restore the DSH funding to help support these hospitals of last resort. I could not help but wonder what how these safety net hospitals will continue to serve the growing number of uninsured that will crowd their waiting rooms for critical care if this bill becomes law.

In 1986, Congress enacted the Emergency Medical Treatment & Labor Act (EMTALA) to ensure public access to emergency services regardless of ability to pay. We should get reacquainted with this law and how AHCA will shift more medical care and costs to hospital emergency rooms, the most expensive place to access health care.

We can do better and hopefully, House republicans will reconsider the bill and take more time to get it right. My summary may seem pessimistic or even partisan. I would argue it comes from a deeper understanding of both basic insurance principles and health policy acquired over 30 years. I know bad policy when I see it and this is bad. Just like the ACA was far from perfect, the AHCA has some serious flaws. Here is the actual bill and the FAQ posted on the House GOP website. Please read it and judge for yourself. I welcome your comments and questions.

*Views and opinions my own.