What Does the American Health Care Act Mean for Americans? - Pacific Standard

What Does the American Health Care Act Mean for Americans?

Last week, the House of Representatives passed the Affordable Health Care Act. That could spell big trouble for elderly and low-income Americans—especially those with pre-existing conditions.
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Paul Ryan.

Paul Ryan.

Following several high-profile failures, Paul Ryan and the House Republicans finally managed to pass their American Health Care Act. As recently as last Tuesday, the latest iteration of the bill, which included a compromise amendment worked out by the far-right Freedom Caucus and moderate Tuesday Group member Tom MacArthur, seemed dead in the water, with moderate Republicans saying they couldn't support the bill because it jeopardized coverage for people with pre-existing conditions.

Last Wednesday, however, Republican representatives Fred Upton (Michigan) and Billy Long (Missouri) proposed an amendment adding an additional $8 billion of funding to go toward those with pre-existing conditions. And, just like that, the AHCA was revived. Despite numerous analyses by both conservative and liberal experts suggesting that $8 billion was nowhere near enough money to provide meaningful protections for sick patients, the last-minute add-on won over just enough moderates: The AHCA passed the House of Representatives, 217 to 213.

Let's start by reviewing what's in this bill. As I wrote in March, there are a few keys changes the AHCA presents to the Affordable Care Act:

  • Eliminates both the individual mandate and the employer mandate.
  • Retains the ACA's popular pre-existing conditions requirement, but allows insurers to charge higher premiums to consumers who allow their coverage to lapse.
  • Medicaid-expansion states (as well as states that haven't yet expanded) would still be able to enroll people (and would still receive ACA funding levels) in the expanded program until 2020, at which point new enrollment would freeze. Also beginning in 2020, the bill replaces Medicaid's current open-ended federal funding system with a capped, per-capita federal payment to states.
  • Eliminates the ACA's cost-sharing subsidies for low-income Americans and replaces the ACA's tax credits with credits that do not rise with income (although, in the latest version of the bill, high-income people will not be eligible for the credits). The credits range in value from $2,000 per year (for younger people), to $4,000 per year (for older folks).

The Congressional Budget Office score of this prior version of the AHCA concluded that it would result in 24 million fewer Americans having insurance by 2026. The CBO also predicted that premiums would increase in the short-run and that, while some Americans would see lower premiums by 2026, other (especially older) Americans would have much higher premiums. Separate analyses concluded that low-income, older Americans, particularly those in high-cost (often rural) areas would be particularly damaged by the AHCA's changes to the nature of the tax credits. The CBO also concluded (contrary to ongoing GOP rhetoric on the topic) that the AHCA would result in higher deductibles and out-of-pocket costs.

The version of the AHCA that the House passed on Thursday made several important changes to the original:

  • States would be permitted to apply for waivers to "opt out" of the ACA's essential health benefits, age rating requirements (insurers could charge older people more), and the ACA's community rating provisions. Opting out of the community rating provision means that insurers in opt-out states would be able to charge more to people with pre-existing conditions who didn't maintain continuous insurance coverage. To be granted a waiver, states that opted out would be required to operate some kind of program to insure people with pre-existing conditions could obtain insurance—high-risk pools, reinsurance programs, etc.
  • The bill set aside $8 billion for the operation of these programs (these funds would only be available to states that opted out). This $8 billion is in addition to an existing $130 billion state stability fund.

The CBO hasn't yet scored this version of the bill, so its exact effects on coverage, premiums, and out-of-pocket costs are still unknown, but some predictions can be made. Premiums for healthy people in states that opted out of the essential health benefits and community ratings provisions would likely decline, which might draw more young, healthy people into the market (increasing enrollment). On the other hand, the number of people with pre-existing conditions who are insured is likely to decline, possibly very dramatically, in opt-out states, and those folks would see much higher premiums. Further complicating matters, it's unclear if the CBO will count people with extremely skimpy insurance plans (such as plans that don't cover any of the essential health benefits) as "insured."

"Their funds run out after nine years. Where do they think all the sick people go after that?"

As with the original version of the AHCA, most everyone will see higher deductibles. And since the latest version maintains the same tax credit structure, low-income, older people in high-cost areas will still see the biggest declines in the value of their premium credits (and thus the biggest increase in the portion of their premiums they have to pay themselves).

In justifying their decision to vote for this bill, a number of moderate Republicans have argued that people with pre-existing conditions in opt-out states will be able to access insurance through high-risk pools, and that the Senate could always add more money to the $8 billion set aside for this purpose if it's deemed necessary. Now, as numerous journalists and policy experts have pointed out over the last few weeks, states have tried to implement these pools before; they have an abysmal track record, generally serving only a fraction of the people in need. These pools are frequently characterized by high premiums and pre-existing condition exclusions—the latter meaning people can't get treatment for the very ailment that's resulted in them needing to access the pool in the first place (usually for the first six to 12 months in the pool).

But could more money and better-designed programs—such as an invisible risk pool program similar to the state of Maine's pre-ACA program—fix the historic problems of high-risk pools (the AHCA actually already includes some funds for invisible risk sharing)?

Linda Blumberg, a senior fellow at the Healthy Policy Center at the Urban Institute, believes adequately funded high-risk pools could, indeed, work—but points out that achieving such an outcome would require a good deal more money than the AHCA is currently allocating.

"It is all about the money," she says. "By my calculations, if you took all the money in this bill that could potentially go to high-risk pools, that gets you to $138 billion over nine years. It would take multiples of that to adequately fund these pools. We're not talking about adding peanuts on—kicking in another $10, $20, even $100 billion, isn't going to cut it. And also, their funds run out after nine years. Where do they think all the sick people go after that?"

Moderate Republicans have also argued that very few states will apply for these waivers. Fred Upton, for example, said, "I would guess that most governors, maybe all, don't know, will not seek a waiver." He also said that Rick Snyder, the Republican Governor of Michigan, told him he wouldn't be interested in a waiver. Not all healthy policy experts, however, are convinced. Blumberg, too, is skeptical of this argument. She points out that the AHCA's less generous tax credits will mean that many people will be facing dramatically higher effective premiums.

"I actually think even the progressive states are going to have a hard time holding on to these provisions, especially the EHBs," she says. "When you look at the size of the premium tax credits, relative to what is available under the ACA, they're smaller. I think there's going to be a lot of pressure on governors to bring premiums down by relaxing some of these regulations. There's not a safe haven here due to living in a progressive state. It may not happen right away, but I think you'll start to see it happen eventually."

Of course, the AHCA is a long way from becoming law. For one, it's not clear that the bill, in particular the MacArthur amendment, will pass through the Senate. In response, Republican senators said they were planning to essentially write their own bill and ignore the House's version. But even if the Senate does manage to reach agreement on a revised piece of legislation, it's unclear if hard-liners in the House would agree to a different (probably less radical) version of the bill. Dave Brat, a Freedom Caucus member from Virginia, has already warned the Senate against changing the bill "one iota."

But for Ryan and his cohorts, the last week offered much cause for celebration: They're now one giant step closer to repealing the Affordable Care Act.

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