Archive for March 13, 2017
It’s here, it’s here, the House Republican ACA repeal and replace bill!
How it’s evolved since A Better Way
House Republicans released their draft of the ACA repeal and replace bill, the American Health Care Act, they have been working so hard on. To the surprise of many, several parts of the ACA that were in question (esp. the first two) survive in this bill:
- Essential health benefits, including maternity care
- Prohibitions on annual and lifetime limits
- Dependent coverage until age 26
- No raising rates for pre-existing conditions
- Medicaid expansion through 2020
In addition, there were things expected that didn’t materialize (both of which might be inappropriate in a budget reconciliation bill):
- Sale of insurance products across state lines
- Association health plans
In a prior post, I talked about high-risk pools, and how simply segregating people with high cost doesn’t change the overall amount paid for the care, just how the cost for that care is redistributed. What this is looking more and more like, in my opinion, is very similar coverage paid for through alternative mechanisms. Because AHCA repeals all of the ACA’s taxes on the wealthy and industry, this largely results in substantial tax relief for the wealthy, and additional cost for the sick and the poor.
In addition, since AHCA allows the premium multiple for older people to be as much as five times that for the young, older Americans on average are likely to see rising premiums, while younger ones will see reductions in prices. Again to cite the prior post, this and continuous coverage provisions are how Republicans seek to draw young invincibles into the pool, without an individual mandate.
All in all, this bill seems to me to be much closer to what John Boehner said a few weeks ago at HIMSS: “They’re basically going to fix the flaws and put a more conservative box around it.” There are ideologic points made in it. They did get rid of the individual and employer mandates, and replaced it with a 30% premium penalty for going without insurance and then enrolling when you get sick. The jury is out on whether that’s a strong enough incentive to maintain continuous coverage, as the Republicans hope. But if the penalty is only 30% for a year, then a young invincible could go without coverage and make up the penalty by staying healthy for a mere four months. Why would I buy insurance under that scenario, until I absolutely needed it? That then risks setting off a death spiral, where there are not enough healthy people in the pool to offset the cost of the sick.
Various organizations are reporting big increases in premiums are the likely result of the tax credit levels proposed, netted against the subsidies that will be lost on the exchanges, especially for older and sicker adults. Defenders of AHCA seem to imply that these increases will be offset by the appearance of cheaper policies that are the result of lifting many of the essential benefits provisions of the ACA and the formation of high risk pools. But again, recall that high risk pooling doesn’t lower overall cost per se, only who pays and how much. And as we saw at the beginning of this piece, many of the provisions that raised the cost of ACA-compliant policies are still in AHCA.
The early reporting on AHCA is that neither moderate nor conservative Republicans are happy with the bill (Democrats are counted as an automatic no). Almost certainly there will be revisions as the relevant committees get to dissect it and weigh in with changes. But it is likely that movement to the left will strengthen resolve on the right, and vice versa. The window of acceptability to both poles is likely pretty narrow, if indeed it exists at all.
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