Monday evening, House Republicans finally unveiled eight years of campaign promises in the making, The American Health Care Act.
Reviews are mixed but predictable — Democrats, hair ablaze, have morphed into screaming banshees claiming all the children will be health insurance-less.* Meanwhile, most Republicans are calling the AHCA Obamacare-lite.
What I can say is this — there better be more “replace” in the legislative pipeline if Congressional Republicans plan to use this bill as proof of the long-awaited “repeal and replace” promise.
Because as it stands now:
Obamacare vs GOP replacement pic.twitter.com/LvL39njdFc
— Sammy Rhodes (@sammyrhodes) March 7, 2017
To be clear, I’m not on the GIVE ME ALL THE REFORMS OR TAKE A HIKE train that derailed many-a-good reforms, but there’s little in the AHCA to get pumped about. If you were hoping for a bill that would move towards a market-based, patient-centered health insurance world, one where health insurance might even be disassociated from employment, join the Disappointment Club. Politically jaded welcome.
“If this bill passes, everybody would have to get their insurance either through government, their employer via tax subsidy, or be left to purchase government-designed health policies using federal subsidies,” writes Phillip Klein at the Washington Examiner.
So what does the AHCA do? A brief rundown:
Slashes Obamacare Taxes
According to the House GOP, ” Obamacare taxes that have hurt job creators, increased premium costs, and limited options for patients and health care providers— including taxes on prescription drugs, over-the-counter medications, health- insurance premiums, and medical devices.” Taxes? GONE. Well, they will be as of January 1, 2018.
• Limitation on deductibility of salaries to insurance industry executives
• Tax on tanning services
• Tax on pharmaceuticals
• Health insurer tax
• Net investment tax
• Tax on high-cost health plans (also known as the “Cadillac tax”)—but only through 2025
• Restrictions on use of Health Savings Accounts and Flexible Spending Arrangements to pay for over-the-counter medications
• Increased penalties on non-health care uses of Health Savings Account dollars
• Limits on Flexible Spending Arrangement contributions
• Medical device tax
• Elimination of deduction for employers who receive a subsidy from Medicare for offering retiree prescription drug coverage
• Limitation on medical expenses as an itemized deduction
• Medicare tax on “high-income” individuals
Axes the Individual Mandate…Buuuut imposes an uninsured penalty
This one is pretty shady. The individual mandate would get the ax. Great. No more penalty er, tax, for choosing not to purchase a product from the government. BUT, insurers can charge a 30% penalty for consumers who did not have health insurance the previous year. Better than a mandate, still crappy. I get that this is a kickback to insurers, but is it going to work?
Seth Chandler at Forbes:
The American Health Care Act revealed yesterday by Republicans promises to repeal the individual mandate right now and replace it with a provision that is supposed to prevent the insurance markets from falling into a death spiral. I’m very concerned that this substitute mechanism will not work. But it really doesn’t matter if my concerns are correct. What matters is whether insurers believe it will work. If not, they won’t play and the AHCA will be stillborn.
The substitute mechanism employed in section 133 of the AHCA requires insurers to charge purchasers a 30% “penalty” if they obtain coverage in a given year without having had coverage in the preceding year. The idea is that, in order to avoid those higher rates, individuals will be incentivized to purchase health insurance even in those years when they feel the premiums are high relative to their expected costs. No one will be forced to do so — it won’t be a tax on doing nothing like the Affordable Care Act imposed — but, if people know about the penalty, it might be fairly effective and feel somewhat less coercive.
Chandler outlines the various scenarios and problems this particular bit is likely to face. If you want to get deep into the weeds here, read his post.
Those with Pre-existing Conditions are safe
Insurers are prohibited from charging individuals with pre-existing conditions more or from refusing coverage.
Youngsters Can Still Stay on Parent Plans Until the Ripe Old Age of 26
To “stabilize the marketplace”. But this is all I have to say about that:
Creates a new $100 BILLION Fund
So this one should be fun.
Designed to provide “states with $100 billion to design programs that meet the unique needs of their patient populations and help low-income Americans afford health care.”
Creates a Patient and State Stability Fund, to be administered by the Centers for Medicare and Medicaid Services (CMS), for the years 2018 through 2026. Grants may be used to cover individuals with pre-existing conditions (whether through high-risk pools or another arrangement), stabilizing or reducing premiums, encouraging insurer participation, promoting access, directly paying providers, or subsidizing cost-sharing (i.e., co- payments, deductibles, etc.).
The $100 billion would be paid out over ten years.
Provides for $15 billion in funding for each of calendar years 2018 and 2019, followed by $10 billion for each of calendar years 2020 through 2026 ($100 billion total). Requires a short, one- time application from states describing their goals and objectives for use of the funding, which will be deemed approved within 60 days absent good cause.
For 2018 and 2019, funding would be provided to states on the basis of two factors. 85% of the funding would be determined via states’ relative claims costs, based on the most recent medical loss ratio (MLR) data. The remaining 15% of funding would be allocated to states 1) whose uninsured populations increased from 2013 through 2015 or 2) have fewer than three health insurers offering Exchange plans in 2017.
For 2020 through 2026, CMS would be charged with determining a formula that takes into account 1) states’ incurred claims, 2) the number of uninsured with incomes below poverty, and 3) the number of participating health insurers in each state market. The bill requires stakeholder consultation regarding the formula, which shall “reflect the goals of improving the health insurance risk pool, promoting a more competitive health insurance market, and increasing choice for health care consumers.”
I’m all for the federalism, but a $100 billion slush fund? What could go wrong?
This is a huge bite to swallow, but here’s the short version:
…the House discussion draft retains eligibility for the able-bodied adult population— making this population optional for states to cover, rather than mandatory. (The Supreme Court’s 2012 ruling in NFIB v. Sebelius made Medicaid expansion optional for states.) Some conservatives may be concerned that this change represents a marked weakening of the 2015/2016 reconciliation bill language, one that will entrench a massive expansion of Medicaid beyond its original focus on the most vulnerable in society.
With respect to the Medicaid match rate, the discussion draft reduces the enhanced federal match to states, effective December 31, 2019. The bill provides that states receiving the enhanced match for individuals enrolled by December 31, 2019 will continue to receive that enhanced federal match, provided they do not have a break in Medicaid coverage of longer than one month. (In the case of states that already expanded Medicaid to able-bodied adults prior to Obamacare’s enactment, the bill provides for an 80 percent federal match for 2017 and all subsequent years.)
Some conservatives may be concerned that—rather than representing a true “freeze” that was advertised, one that would take effect immediately upon enactment—the language in this bill would give states a strong incentive to sign up many more individuals for Medicaid over the next three years, so they can qualify for the higher federal match as long as those individuals remain in the program.
Finally, the bill repeals the requirement that Medicaid “benchmark” plans comply with Obamacare’s essential health benefits, also effective December 31, 2019.
If you’re looking for more, here’s an eight-page section-by-section summary of what the AHCA does to Medicare.
Health Savings Account (HSA) Reform
Yay. This is a good thing. The AHCA promises to almost double the amount allowable for contribution while broadening the scope of the HSA purchase power. Though why the government is involved in setting caps on these things at all is a question I would still like answered.
Tax Credits for Those Not Receiving Health Insurance from the Government or Employer
Sayeth the GOP:
By providing a monthly tax credit—between $2,000 and $14,000 a year—for low- and middle-income individuals and families who don’t receive insurance through work or a government program.
According to Chris Jacobs at the Texas Public Policy Foundation, “this plan replaces Obamacare’s subsidy scheme with a new costly federal entitlement in the form of a refundable tax credit”.
These tax credits are age-rated, as Jacobs summarizes:
Creates a new, age-rated refundable tax credit for the purchase of health insurance. Credits total $2,000 for individuals under age 30, $2,500 for individuals aged 30-39, $3,000 for individuals aged 40-49, $3,500 for individuals aged 50-59, and $4,000 for individuals over age 60, up to a maximum credit of $14,000 per household. The credit would apply for 2020 and subsequent years, and increase every year by general inflation (i.e., CPI) plus one percent. Excess credit amounts can be deposited in individuals’ Health Savings Accounts.
Republicans claim the AHCA will “deliver patient-centered health care” but I guess I’m missing that part of the bill. Like it or not, it looks like Obamacare, in some shape or form, is here to stay.
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