APPENDIX B2: ACA POSITION PAPER – DISCUSSION OF SPECIFIC REPUBLICAN PROPOSALS

Congressional Republicans are intent on undermining the ACA’s success.

Note: This Appendix was posted February 27, 2017, and relates only to Republican proposals floated prior to the “unveiling” of the House version of Trumpcare.

Congressional Republicans have already shown their hand, using the budget process in an attempt to undermine the ACA. They also champion weakening or eliminating ACA provisions that protect Americans of all walks of life and political affiliations. As stated in What Trump Means for the Affordable Care Act at the Scholars Strategy Network (SSN):

“Keeping a few rules in the law while doing away with the requirement to obtain insurance – and the subsidies to pay for it – simply won’t work. Younger, healthier individuals will choose to go uninsured, and prices would sky-rocket for those with pre-existing conditions who cannot go without health insurance. This would be too costly for insurance companies, which might take many steps to avoid sick individuals. In many states, insurance markets could collapse altogether.”

The SSN noted that “Republican-proposed changes would be especially harmful for certain groups of Americans,” including low-income Americans – especially whites, non-metropolitan communities, children and families, and Republicans.

The Republicans’ retrograde proposals include:

  • converting Medicaid to block grants

A study by the Commonwealth Fund found:

“Current proposals for dramatically reducing federal spending on Medicaid would achieve this goal by creating fixed-funding formulas divorced from the actual costs of providing care. As such, they would create funding gaps for states to either absorb or, more likely, offset through new limits placed on their programs. As a result, block-granting Medicaid or instituting “per capita caps” would most likely reduce the number of Americans eligible for Medicaid and narrow coverage for remaining enrollees.”

Citing this study, SSN scholars concluded:

“Turning Medicaid into a block grant to states would lead to steady reductions in funding for the poor, elderly and disabled in most states. During recessions or health emergencies, states would not have the federal funding to help more needy people without reducing benefits for others.”

During his tenure in Congress, California Congressman Henry Waxman was the go-to Congressperson on health care issues. In his Washington Post Op-Ed, Republicans’ alarming proposal would end Medicaid as we know it, Waxman offers a clear, compelling description of the disastrous impact on Medicaid if the current system is converted to block grants. You may find the Op-Ed here.

  • reverting to high risk pools for people with pre-existing conditions and serious illnesses

Before the ACA, “Stories of sick people unable to get coverage when they needed it most were legion.”

“Mr. Trump insists he wants to keep the pre-existing requirement for insurers, and other top Republicans say people who want coverage should not be turned away. Details about how they will cover people with existing medical conditions have not yet emerged, but many lawmakers have started pushing an idea — known as high-risk pools — that left many people uncovered or with strict limits to their coverage in the past.”

A cautionary tale from California illuminates the serious problems inherent in a return to this approach:

“In California, which relied on lawmakers to allocate money as part of the state budget, there was a waiting list, recalled Richard Figueroa, who was a senior administrator for the program.

“The pool operated on a first-come-first-served basis, Mr. Figueroa said, without regard to people’s income or the severity of their medical condition.

“’There were people literally dying on the waiting list,’ he said.

“In addition, most of the states offering coverage had caps on payments for medical care. Washington’s annual maximum was $2 million, while California’s limit was $75,000 a year. Under the Affordable Care Act, insurance plans cannot have such a limit.

“In California, the program dwindled away until it served only 6,300 at the end of 2011.”

[citation]

See more on high risk pools by Ed Kilgore in The GOP’s New Idea for Dealing With Preexisting Conditions Is Actually an Old, Bad Idea:

Anyway you slice it, though, high-risk pools are not some sort of brilliant new answer to the GOP’s problems with health-care policy. Many states had such pools prior to the Affordable Care Act, and they typically offered really bad insurance at a horrific cost. Throwing new federal money at such pools might make the insurance less bad or somewhat more affordable. But the bottom line is that sequestering people with the most serious health needs in their own little insurance ghetto is a deceptive and cowardly way to avoid the central function of health insurance, which is to spread, not concentrate, risks.

  • allowing insurance companies to raise premiums on people in their 50s and 60s
  • replacing subsidies for moderate income families with tax credits

A Commonwealth Fund study commented that “Under the Affordable Care Act (ACA), tax credits for purchasing health insurance in the marketplaces are designed to limit enrollees’ premium contributions to a percentage of their income. Critics who want to repeal and replace the law have advanced a “premium-support” model, in which tax credits are fixed amounts for enrollees regardless of their premium costs. We have conducted an analysis that indicates that these premium-support models could place financial burdens on low-income and older individuals.”

The SSN observed: “Research and analyses amply demonstrate that “Replacing subsidies with tax credits, pre-tax Health Savings Accounts, or insurance plans sold across state lines would leave most current beneficiaries unable to avoid comparable coverage.” In other words, and particularly in conjunction with a proposal to allow selling insurance plans like these across state lines, the available options would likely devolve down to the lowest, and least optimal, common denominator.

[Quotation is from SSN, What Trump Means for the Affordable Care Act]

  • eliminating the requirement for coverage of preventive services (such as cancer screenings)
  • stripping out subsidies and individual mandate requirements will significantly erode ACA coverage gains, raise premiums for many consumers, and could cause the collapse of insurance markets in some states

As explained by the SSN: “Keeping a few rules in the law while doing away with the requirement to obtain insurance – and the subsidies to pay for it – simply won’t work. Younger, healthier individuals will choose to go un-insured, and prices would sky-rocket for those with pre-existing conditions who cannot go without health insurance. This would be too costly for insurance companies, which might take many steps to avoid sick individuals. In many states, insurance markets could collapse altogether.”

A Commonwealth Fund study concluded that “Most legislative proposals to modify the ACA would eliminate [the individual mandate] requirement, which—along with subsidies to make coverage affordable and bans on denying people coverage or charging them more on the basis of their health—is critical to achieving the law’s goal of near-universal coverage. In this post, we explore the effects of eliminating the mandate on health insurance enrollment and individual-market premiums. We find that repealing the requirement would significantly reduce health insurance enrollment and cause individual market premiums to rise.”

  • the fallacy of “freedom” to purchase health insurance across state lines

Catherine Rampell, in Trump’s health insurance proposal would start a race to the bottom, notes that the ACA already provides for “health-care choice compacts” . . . to allow plans to be sold across borders, conditional on mutually agreed-upon rules.” In contrast,  “When Republicans talk about allowing health insurance to be sold across state lines, this is shorthand for a bigger suite of deregulatory proposals. What they’re usually referring to is (A) lowering or eliminating the federal minimum standards for all states, and (B) allowing insurers from one state to sell a product that undermines another’s laws. . . .

“Just as credit card companies tend to domicile in South Dakota, and many other companies wanting to minimize their tax liabilities incorporate in Delaware, every health insurer would have an incentive to park in the state with the least restrictive regulations.

“They could then cherry-pick the youngest, healthiest patients in the higher-regulation states who don’t expect to consume much health care, according to Urban Institute senior fellow Linda Blumberg. That would leave behind older, less-healthy people in those relatively higher-regulation states, driving up average costs and making premiums less affordable.”

Don’t be fooled by the Cassidy-Collins bill

No one should be beguiled by the Cassidy-Collins “compromise.” See Cassidy-Collins ACA ‘Replacement’ Plan Forces States to Choose from 3 Bad Options:

 “Under the proposal, the Patient Freedom Act of 2017, states must choose from one of three options: (1) to continue implementing the Affordable Care Act, or ACA, albeit with reduced funding for the financial assistance that makes coverage affordable for lower- and moderate-income individuals; (2) to opt for the legislation’s preferred State Alternative Option; or (3) to reject any federal funding, though the state would still have to follow some ACA provisions.”

The report concludes:

“The Cassidy-Collins legislation would create massive inequities between the states, with people’s access to affordable health care and consumer protections varying wildly depending on geography. Ultimately, in most states, consumers and patients would lose key benefits and financial protections.

“In the meantime, the uncertainty about what states would do would affect people’s ability to stay on their marketplace plans in the short term. As states figured out what action to take, insurers would likely increase premiums or drop out of markets until there was more certainty about what different state markets would look like going forward. This legislation cannot be considered a serious alternative to the ACA when it would cause millions of people to lose their comprehensive health care coverage and expose them to far greater financial risk.”

Don’t be fooled by Republican versions of association health plans

In his Poughkeepsie Journal Op-Ed piece, John Faso said. “I would like to see small businesses be able to aggregate their employees to be able to participate once again in what are called association health plans and those were specifically eliminated under the Affordable Care Act.”

Here is a well-informed, countervailing view: “Association health plans remain legal under the ACA but have lost much of their luster because they are limited in their ability to discriminate based on health status. Their supporters argue that they allow individuals to band together to bargain for lower rates from insurers, but the ACA marketplaces generally offer insurers much larger pools of enrollees. In fact, to the extent that association health plans can offer lower rates, it may be because they can cherry pick their enrollees and avoid covering high-cost individuals, rather than because they can purchase coverage less expensively.”

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