Tuesday, June 13, 2017

Understanding the American Health Care Act

The delay in this blog is purely due to my effort to keep you current in the legislative process however, the minute I write an update something changes so by the time you read it, it is no longer relevant.  

This may in fact be the case with this post.

Regardless, it is important to get something out describing what is occurring in our rapidly shifting healthcare paradigm.

The Trump administration hit the ground running with efforts to repeal the Affordable Care Act (ACA). The proposed bill, titled the American Health Care Act (AHCA) did not make it out of the House of Congress due to strong bipartisan opposition to many facets of the proposed bill, specifically the harsh cuts to Medicaid and jeopardizing pre-existing condition coverage. 

After many revisions and a few amendments a second version barely passed through the House this spring. The basics of the AHCA did not change in the second version. As we stand with the current House version of the AHCA, states will be given the opportunity whether to maintain their current form of the ACA including the essential health benefits and coverage of pre-existing conditions. However, the caveat is this; based on the individual states needs they are able to apply for a waiver if they can demonstrate the ability to decrease the cost of healthcare to their constituents. Essentially, this would allow offering of varying plans in the individual exchanges so people will be able to tailor their health care coverage based on their individual needs.  This variety will in theory decrease the premiums by offering less expensive plans to those that don't need comprehensive coverage.  For the far majority of people who receive insurance from their employer-provided plans this will not affect them as they have historically offered essential benefits to be competitive in the employment marketplace. The MacArthur amendment, which ultimately led to the bill to being passed, would allow states that participate in the fund to relax community-rating requirements without continuous coverage, meaning insurers can charge more for patients with pre-existing conditions if they lapse in coverage. However, they are still unable to deny patients coverage based on pre-existing conditions.

The AHCA also allows for insurance companies to increase premiums on the elderly population going away from the cost-sharing mantra of the ACA. Healthy people will be rewarded with lower costs but this in turn will increase premiums for our elderly and sick populations.  The bill however would provide $100 billion under the “Patient and State Stability Fund” to help the states manage the costs of the more expensive patients, including the use of “high risk pools.”  Notoriously these types of pools have been under-funded so it will be imperative for the funds to be comprehensive enough to cover these healthcare expenses.  The amendment provided by Fred Upton added $8 billion to the PSSF to ensure adequate coverage.

The patients who received Medicaid under the expansion of the ACA would not be stripped of coverage, but states will be restricted in enrolling future "able-bodied healthy adults" with the AHCA in place. The AHCA also restructures Medicaid via per capita caps or block grants on the federal spending of Medicaid enrollees.  The idea of block grants concerns many because it will ultimately be less funding for Medicaid which is being considered a "necessary evil" with our current federal deficit.  In an effort to offset the decreased Medicaid funding, the office of Health and Human Services is recommending work requirements on able-bodied adults who receive Medicaid.

The nonpartisan Congressional Budget Office released its estimate on the second AHCA version May 24th, a couple weeks after the bill passed through the House. The passage of the bill through the House prior to its release was unconventional for Washington, but let’s be honest, there is nothing conventional about our current state of governmental affairs. And for some, that is embraced because that is exactly what a large population wanted: a government shakeup. We are in a state of uncertainty bordering chaos at times but there are some, not all, that are rejoicing in the idea of breaking the “wall of Washington.”

By the hour our largest insurance companies are continuing to drop out of the market given the lack of profitability as well as future uncertainty. The ACA has proven financially unsustainable in its current form which has caused numerous insurance companies to leave the market. The few remaining are waiting in the wings to leave because without a solidified replacement plan read to go, they will follow suit in removing themselves from the ACA exchanges.

Up next? Will the Senate provide a stop-gap for continued federal funded subsidies? If they do, this will provide a temporary stabilization of the healthcare system until the three branches of legislation solidifies their plans. If not, more insurance companies will leave the exchange leaving little to no options in many counties across the United States and those that remain will have sky-rocketing premiums potentially speeding up the process in providing a replacement plan.

The AHCA bill itself still maintains some bipartisan opposition and will undoubtedly undergo significant changes while in the Senate, if not a complete rewrite. Bottom line: Whatever you think the future of healthcare is, it likely will not be. No one has a firm grasp on what will come out of the Senate so until then, we wait.

Categories: Legislation, 2017, JuneNumber of views: 7505